BizParentz Foundation

Supporting families of children working in the entertainment industry

What is a Filming Incentive and Why Should I Care?


State Filming Incentives are the single most important influence on the industry today, but most actors don't understand them, and don't know why it would affect them.  We're here to provide you the short, sweet, and plain English version. 

  What is a Filming Incentive?

Filming incentives are state-funded programs passed by individual states to encourage Hollywood productions to come to their location. When the work leaves the expected or usual location, it is commonly called  "runaway production".  This is the practice of taking film production to other non-traditional areas with a more favorable financial environment (cheaper labor, tax credits, etc). 
 Currently, 44 states have some sort of "filming incentive".  Each of them are hoping to lure production to their state so that the costs related to the production will infuse money into their local economy.  No state can really compete with California, New York, or Vancouver in terms of technical skill and experience of the workers, so they have responded by saving studios a bundle of money in taxes instead. California and New York see this as "runaway production" and have passed their own filming incentives.  In short, the states are battling for Hollywood's production dollar and a savvy producer is going to do the most financially lucrative thing possible.  

The incentive package for each state is a little different, but typically the programs have four components:  local hiring requirements (usually applying to crew and background performers),  a tax credit (usually 15%-40%), a logo of the film to encourage tourism, and a minimum amount of spending in the local community (for things like restaurants, hotels, props, and equipment rentals).   In addition, some states such as North Carolina and Michigan have built physical studios to encourage film makers to find a more permanent home there. The current hotspot is Detroit, which offers a 40% tax credit.  They are desperate to replace the failed auto industry, and are hoping they can transition to an entertainment based economy instead.      

Filming incentives seem to work, at least temporarily.  According the Georgia's Entertainment Office,  the entertainment industry producers invested more than $521 million in Georgia in 2008-2009.  Louisiana, who hosted one of the original film incentives, says they have infused $2 billion into the economy since 2002 when their program began.  That's big bucks. 

The news isn't all good though: 

--Some critics say that the affect is only temporary, because most jobs being "created" are just short term.  Not to mention, when the state next door offers a better incentive, the production easily flees there. 

--The money pot is not bottomless.  New York's hugely popular program ran out of money in 2009 after luring shows like Ugly Betty from Los Angeles.  Film makers who planned to film there had to re-group and move to other states in order to keep within their budget.  California's new program was already "sold out" as of May 2010.               

--Ethical issues abound.  North Carolina's film office was criticized in 2007 when Dakota Fanning's controversial film "Hound Dog" was filmed there, using a government subsidy.   Many felt that the state should not be encouraging child exploitation in the name of art, and that the filming incentive created a conflict of interest when it came to investigating complaints.  Iowa's film program was suspended last year under allegations of mis-management.  And lastly, in a recession economy where teachers and fire fighters are being laid off, should the government be financing the private entertainment industry? As an example, M. Night Shyamalan's 2010 film, The Last Airbender, garnered $25 Million in tax credits from Pennsylvania. Many people felt that cash payment was just contributing to the profits of Paramount Studios when the tax payer money could have been used for a more worthy cause.

--Independent film makers are frustrated at the endless sea of paperwork, waiting lists (because funding has run out), and local officials who don't really understand how the industry works.  

  Why Should I Care?

Three reasons:  location, safety and legislation.
Film Incentives may be creating job opportunities in your neighborhood.  Yes, it is true that the big leads may be cast from Hollywood, but the career building roles, the co-stars and supporting characters, will be cast in smaller markets.    Opportunities for kids to succeed locally abound.  Advertising yourself as a "local hire" can be a big selling point to producers who are desperate to fill their quota of locals.  Get a local agent.  You may want to forego the trip to Los Angeles and  research the states around you instead.  

Parents need to be aware that child labor problems typically follow filming incentives.   The state's "investment" in a film may color their willingness to investigate labor violations or safety issues as politicians want to make it appear that the economic impact of the tax program is working.  States lure filming, but very few have any guidelines specific to the entertainment industry for work hours, education or child safety on set, and often the crew members aren't aware of child needs.  You aren't in an area with much historical child actor experiences anymore.   Look for union sets if you can, as SAG regulations are at least close to California's tight safety regulations.   And know that YOU will have to be your child's best advocate;  negotiate for everything you need, and speak up for industry standards.       

Trust account  legislation typically follows a couple of years after a filming incentive.  We've seen it in New Mexico, Louisiana, Florida and several other states.   Example:  Florida attempted two bills in 2010:  HB697, a $225M incentive plan, and HB499, a new child performer law.     

When production moves in, states with no child labor guidelines for the entertainment industry quickly figure out that they should create some structure to deal with the problems they encounter.   This is often problematic, because legislators don't understand how to structure those kinds of laws. They don't have the practical first hand experience, and often 'piece meal' legislation together from existing laws in other states.  These laws affect our children's money, education, and work hours.   Eventually, we'll end up with a  patchwork of mis-matched laws that we must all abide by, a different set in every state.  There isn't much we can do about this pattern of behavior, except be aware that it is happening and we encourage you to get involved when legislation is proposed in your state. Voice the concerns you have based on your own experience.  With 44 states sponsoring tax incentives, the new laws will be close behind.   

It is often easy to forget that the entertainment biz really IS an industry.  That means profits, losses and budgets are critical to the growth and survival of the entities in it.  We may be so focused on our teeny little corner of the world (getting an audition) that we forget how many other things are at play, and the affect filming incentives have on our employers, the producers.  It's just good business to watch the trends, and wisely increase your opportunities.

  Resources  

A State By State Listing of Tax Credits for Film Makers (make sure to research individual state links as this is likely to become outdated quickly) 

SAG Listing: http://www.sag.org/state-film-incentives

California
's new program, as of May 2010:
http://www.film.ca.gov/Incentives.htm  Fully subscribed -- waiting list.

Political Hot Button--Governor Candidates in Wisconsin:
http://www.chicagotribune.com/news/chi-ap-wi-wisconsinfilmince,0,4746491.story

Article: Film Incentives by Showbiz Management Advisors
http://showbizmanagementadvisors.com/Film%20Tax%20Incentives.htm

CNN:  States Use Tax Incentives to Draw Film From Hollywood
http://www.cnn.com/2010/SHOWBIZ/Movies/02/24/tax.incentives/index.html

Lights, Camera, State Tax Credits
http://dontmesswithtaxes.typepad.com/dont_mess_with_taxes/2010/07/light-camera-state-tax-credit.html

North Carolina
Debates the Value of Film Incentives
http://www.news-record.com/content/2010/06/20/article/state_debates_value_of_film_incentives

Los Angeles
Times:  Filmmakers Flock to Forum on State Tax Credits
http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/05/filmmakers-flock-to-forum-on-state-tax-credits.html