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The answer is pretty straightforward: a $15 million cap in fiscal year 2011-12, followed by $35 million in 2012-13 and $25 million each for the subsequent three years. Those are the terms spelled out in the Tennessee Entertainment Industry Investment Act, the proposed legislation that lays out the cards the state means to play against its high-stakes competitors.
"Our fear is, we have a lot of good production people, and unless we address the issue quickly, we're going to start losing those production people," says McManus, who signed on to sponsor the bill in the state House. "It's tough to compete when 44 other states have some kind of incentives in place."
The lack of a competitive ongoing incentives package has been a source of major consternation to Tennessee film and TV professionals — filmmakers, actors, soundtrack musicians, supply houses, key grips and best boys, all of whom rely on steady work to stay in business. Their frustration was clear at an afternoon town hall meeting Jan. 4 at The Belcourt, attended by nearly 100 film and TV workers representing a variety of professional alliances.
The meeting was called by an outsider with impeccable credentials: Laray Mayfield, a Los Angeles-based casting director with longtime ties to the Nashville area. Mayfield, who recently moved back to Middle Tennessee full time, is best known as David Fincher's casting director from Fight Club all the way through the Oscar-nominated The Social Network and the upcoming The Girl with the Dragon Tattoo. Yet it was a non-Fincher project she cast — Footloose — that had people buzzing.
Mayfield, with the aid of The Belcourt, sent word through the local film community that she wanted to meet to discuss getting an incentives package in place that would stop Tennessee from hemorrhaging production work. That came as news to Jan Austin, founder of the Association for the Future of Film and Television in Tennessee (AFFT), a trade organization formed specifically to court legislators on behalf of the state industry. Austin had been quietly working on just such a bill for two years.
What emerged from the meeting — which at times took on a kind of Braveheart call-to-arms intensity — was that despite the many organizations representing factions of film and TV workers, precious few knew what the others were doing. When Austin, a small, slight woman with a raptor's fixity of purpose, stood and mentioned that her bill would be pending in the next legislative session, heads turned throughout the 1925 hall. Especially when she told the tantalized crowd that AFFT wasn't ready to share details.
"It wasn't the right time," said Austin that afternoon in The Belcourt's lobby. A deputy to former Tennessee film commission executive director David Bennett, Austin got a front-row seat as her boss butted heads with some of Gov. Phil Bredesen's highest-ranking associates over film incentives and other matters. The experience left her keenly sensitive to the workings of politics — one reason she formed AFFT, and a reason she kept the bill's terms under wraps until now.
As outlined in summary, the bill — known as HB 0555 in the House and SB 0354 in the Senate, where it's being sponsored by state Senate Majority Leader Mark Norris — addresses problems with Tennessee's previous incentives attempt while fixing some of the practices that have come under fire in other states. For a start, it finds a way around the main headscratcher: How do you offer tax credits in a state with no income tax?
In the states getting the most business, production incentives hinge upon the concept of transferable tax credits. Say you're an L.A.-based producer for 20th Century Fox, and your latest feature just wrapped in Atlanta after spending $10 million locally. Georgia offers a tax credit of up to 30 percent based on what you spent in the state — meaning the bearer gets an equal amount off his state income tax, or $3 million. But you aren't based in Georgia and hence pay no such tax. The solution? You sell that credit for 80 cents on the dollar (or so) to a local company that does — for example, Atlanta-based Coca-Cola. You get a wad of cash, Coke gets a discounted tax break, and everybody wins — sort of, as we'll get into shortly.
But Tennessee has no income tax — which, as Mayfield pointed out, should be a draw for the state, not a deterrent. Taking several cues from Florida, which doesn't have an income tax either, the proposed incentives package would offer credits but apply them toward taxes Tennessee does have: sales and excise taxes, and franchise taxes. Under the proposed terms, projects spending a minimum of $500,000 in-state would be eligible for tax credits equaling 20 percent of their total expenditure, with the maximum capped at $5 million.
Other provisions include:
• Up to $500,000 in tax credits toward companies that spend a cumulative $500,000 or more on commercial and music-video production within the fiscal year.
• Up to $100,000 in tax credits for projects loosely defined as "Tennessee independent film, digital media projects, and emerging media production."
• An additional tax credit up to 5 percent of expenditures for productions that use music created by Tennessee residents or recorded in Tennessee.
• Tax credits for post-production work in Tennessee, such as editing, sound mixing or color correction.
"This is not a nebulous thing," Austin says of the bill's provisions. "This names criteria." And each criterion is aimed at an issue — the issue — that incoming Gov. Haslam said during his campaign would be the key plank of his platform when elected.
"This is all about job creation," says House sponsor McManus, who, like Senate sponsor Norris, represents Shelby County, which has often led the state in high-profile film and TV work. "Not only do we want to bring jobs back into the state that we have lost, we don't want to lose people [to other states]. When we pass it, I have a feeling people will say, 'Let's stay where we are.' "
Yet as much of a no-brainer as film incentives would seem as economic development, they've tended to face skepticism in recent years from state administrators. In 2006, when a small but determined group of film workers began to informally lobby the General Assembly to pass what would become the Visual Content Act — the bill that created the state's one-time pool of production rebate money — a veteran film professional summed up the resistance from state officials: "They can't see why you need to hand money to Steven Spielberg."
But that resistance is catching, even in states where lucrative incentives packages have proved only too successful. Michael Cieply of The New York Times reported in January that Michigan and New Mexico, two states that have seized a lion's share of film work in recent years, are re-examining incentives plans that can suck enormous sums out of state coffers. Other states are questioning the wisdom of subsidizing huge chunks of a film's cost — such as the $27 million that Louisiana reportedly shelled out to 2007's The Curious Case of Benjamin Button (a movie that Mayfield cast).
What is happening, Austin believes, is that state film commissions in these areas are starting to feel a "pushback" from state legislators concerned that too many outsiders are coming in and helping themselves to jobs. Meanwhile, she says, incentives in other states are stranding Tennessee's deep crew base — not the A team of top technicians, but the B, C and D roster needed to fill out multiple shoots — at home without work.
Even so, Cieply reports that evidence is inconclusive whether incentives programs add jobs or drain state tax revenue. He cites conflicting studies: one that says New Jersey gained $2,000 for every job created by production incentives, and another that says each job created in Massachusetts actually ended up costing the state $88,000. And it is true that the plan proposed in Tennessee would pull money from our cash-strapped state's taxes — though the plan is that the lost revenue would be more than supplanted by additional spending.
Following the data in the UT study, productions would have to spend about $140 million to generate $15 million in sales taxes — roughly 10 Hannah Montanas — but only $75 million to get $15 million in tax credits. By the same token, it's hard to estimate how many jobs would be created by that many productions, or how much economic impact.
"Yes, the state will see less taxes coming in as a result, but nothing like the tax credits being given to other industries," Austin says. "If you look at what the state gave Volkswagen to come here and create 2,000 jobs, you'll see that we are just a ripple compared to their write-offs." According to the Chattanooga Times Free Press, the state could shell out as much as $400 million in incentives to secure VW's estimated $1 billion investment in Hamilton County.
Passing the bill, Austin says, will require overcoming two major obstacles: the state's empty pockets, and the complex transferable-tax-credit concept, hitherto alien to many legislators. But the Tennessee plan benefits from some of the mistakes made by other states — such as placing no monetary restrictions. By instituting a cap on the amount of money the state will give, the bill limits how much Tennessee can award from its coffers in a single fiscal year. The first-year cap is $15 million, and companies have five years to claim their credits.
That amount can go far. According to TFEMC project director Bob Raines, the $15 million spent so far in Tennessee's production-rebate pool has gone to 39 projects, which have spent a total of $95 million over the past four years. That's without factoring in economic multipliers, which try to measure how money trickles down through state and local economies — for example, Gwyneth Paltrow buying hot chicken at Prince's during Country Strong's Nashville shoot. As to how that breaks down for Tennessee's rank-and-file, Scott Satterfield estimates that a technician working a key position on a monthlong shoot can make $1,500 a week.
For moviegoers, though, there are benefits to keeping Tennessee and other states competitive that go beyond the bottom line. As naïve as it may seem to raise aesthetics in any discussion of the movie business, has there ever been a movie that was made better by forced economic relocation? The verisimilitude of location shooting adds a lot to a movie or TV show. Compare the 1973 version of Walking Tall, with its gritty West Tennessee back roads — a sense of place so strong you can practically taste the pollen of the Queen Anne's lace — to the 2004 remake, updated to a generic Pacific Northwest indistinguishable from a dozen other action movies. The inauthenticity seeps into the scripts like mold. Memphis residents groaned when a character on Memphis Beat referred to a nearby "parish," as if the Bluff City were overlooking Lake Pontchartrain.
"To me, every script should begin with, 'Fade in: Tax-incentive state,' " James L. Brooks lamented recently in Esquire. "That's what's happened." If Robert Altman were shooting Nashville today, the Star Community Bar in Atlanta's Little Five Points would likely be playing the part of the Exit/In.
Nevertheless, hope springs eternal. In December, word came that ABC had ordered a pilot from Desperate Housewives creator Marc Cherry with a Tennessee setting. So far, according to the state film commission, there's been no word on where Cherry will shoot the proposed series, called Hallelujah. It concerns a stranger who comes to the small Tennessee town of the title, where the forces of good and evil are locked in constant struggle.
If it goes to Georgia or Louisiana, the Tennessee film and TV industry will know which side won.
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