RALEIGH — A plan that would trim state spending to attract the film industry to North Carolina was tentatively approved by the Senate Thursday.
The new plan would replace a nearly decade old tax credit by creating a fund to award grants to film companies that come to the state. It would also trim state spending to promote films from last year’s $61 million down to no more than $20 million.
The $20 million fund would pay for grants to projects like feature-length films and television or video series productions that spend a certain amount in North Carolina. It would be created by reallocating $10 million from the Repairs and Renovations Reserve and $10 million from the Savings Reserve to replace the tax credit for the industry that is scheduled to expire at the end of the year. Grants capped at $5 million could be given to single projects for up to three years, with priority for those that bring the most benefit to local economies and provide jobs for residents.
The grant fund is a provision in a Senate plan to reorganize the state Commerce Department, creating a nonprofit to partner with the state to improve business recruiting.
Lawmakers approved the program following a lobbying day by the film industry Wednesday. A grant program gives the state more control and oversight over the money it spends on the industry and allows it to make changes, said Sen. Harry Brown, R-Onslow.
Money spent on the tax credits, which started in 2005, has jumped significantly since 2010, when the credit increased from 15 percent to 25 percent. Last year, $61 million was spent on the credit, according to the North Carolina Department of Revenue.
“(It) was a moving target,” he said. Officials didn’t know how much it would cost from year to year because it was a tax credit, he said.
Brown said the grant fund allows for Department of Commerce review and doesn’t obligate the state to payouts that don’t bring benefits. The current law gives a 25 percent refund to productions that spend more than $250,000, with a payout cap of $20 million for most productions and no monetary limit on TV series.
Film advocates are still hoping for improvements.
The North Carolina Film Alliance says stability is one of the biggest draws for film companies when deciding where to shoot. They are hopeful a more permanent and comprehensive incentive structure can still be worked out, said alliance spokeswoman Katy Feinberg.
“We’re confident this isn’t the final product, this isn’t the end,” she said. “If you want to keep what’s good about film, I don’t think a grant program is where we want to head ... it’s basically saying, ‘all right, there’s no real guarantee here.’”
About 40 states have film incentives. In states that have transitioned from a tax credit to a grant program, film business has fallen, Feinberg said. South Carolina, Louisiana, and Georgia, which has raised its tax credit rate, are the state’s biggest competitors.
Following the committee meeting, Commerce Secretary Sharon Decker said she would have preferred to separate her department’s reorganization bill from the film credit. But she still supports increasing film industry jobs in North Carolina.
Sen. Andrew Brock, R-Davie, one of a handful of Republicans voting against the Senate bill, said he didn’t like the grant funding coming from the rainy day reserves and repairs and renovations fund at a time when the need for government building improvements are great.