by Jon Sanders
Research Editor and Senior Fellow, Regulatory Studies, John Locke Foundation
The bad news is, the new state budget would also not reduce or end the film grant program. Instead, it would tweak it to make it easier for film productions to qualify and make the grants more lucrative on a per-project basis. Here’s what the changes would do:
The new budget would require less spending depending on the type of feature film, distinctions not in current law. If the movie is for theatrical release, the production company would have to spend only $3 million (a 40 percent decrease in required spending). If it’s a made-for-TV movie, the production company would need only spend $1 million (an 80 percent decrease).
In 2014, North Carolina adopted the film grant program after letting an uncapped film production tax credits program get out of control. Since then, however, North Carolina has again headed off in the wrong direction. Nearly a decade ago, most states had at least one program to incentivize film productions within their borders. Today over one-third of states don’t. Of the remaining states, most aren’t expanding their programs, at least five are cutting back or capping their programs, and just three (including North Carolina) are expanding them.
States began getting rid of film incentives programs because when they study them, they find film incentives programs simply don’t work. They provide no net boost to the state’s economy while only helping outside film production companies and current workers.
They also provide no lasting benefits. Unlike other economic incentive programs, film grants don’t require recipients to earn them over time by hitting specific local job-creation targets or fulfilling other long-term promises. When the project is over, the grant money is gone and so are the jobs.
As explained in the John Locke Foundation’s policy position on film grants:
Thanks in part to recent tax and regulatory reforms, North Carolina boasts a freer business climate, a vibrant economy, and lower costs of doing business. Those are appealing factors to add to the state’s many natural amenities in attracting outside film productions. Importantly, they’re already attracting hosts of other business endeavors that will be here for the long haul.
Several states have chosen to let their relatively freer tax climates do the recruiting for them when it comes to film production companies seeking a favorable business climate for filming. There’s no reason to think North Carolina isn’t competitive on those terms.
Rather than tweak and try to slip in increases to the film production grant program, state policymakers should simply end it and let North Carolina’s pro-growth tax and regulatory reforms add to its many other amenities in attracting outside film productions, as they are doing for business enterprises that are here for the long haul.