Closing credits: CT sours on movie incentives
Published 1:29 pm, Friday, June 21, 2013
He will be the first to admit that he is no economist. But he does have a gold statuette at home named Oscar.
So when his home state of Connecticut decided to follow a national trend and suspend tax credits for the motion picture industry for the next two years, former child star-turned-director Ron Howard was not whistling the theme from "The Andy Griffith Show."
"Obviously, I think that's a horrible mistake," Howard told Hearst Connecticut Newspapers. "It's a deciding factor in just about every conversation you have with major studios or independent film production entities when discussing where and how you're going to make a movie. When tax credits come and go, these financiers that do rely on them as sort of the tie-breaker lose trust and faith in an area."
Architects of the state's two-year $44 billion budget have seen enough to conclude that Connecticut taxpayers should not be subsidizing big-budget movie productions whose economic benefits are difficult at best to quantify, or independent film projects for that matter. The moratorium is expected to save $6 million.
The big screen's loss is the little screen's gain.
The state is preserving tax credits for television and digital animation companies, such as ESPN, WWE and Blue Sky Studios that are based in Connecticut. Recipients of the credits can recoup 30 percent of their in-state production costs.
Politicians on both sides of the aisle support the shift, saying that the economic benefits of the TV and digital-first strategy are much more easily demonstrated. All one has to do is look at the hundreds of jobs created here and the infrastructure investments by media conglomerates, they say.
"I think there's long been a suspicion that a lot of the location shooting of motion pictures probably had less downstream economic impacts because of the large number of out-of-state firms involved in film production," said Ben Barnes, budget chief for Democratic Gov. Dannel P. Malloy.
"I would argue that in the best-case scenario, that making the local businesses whole, using local caterers, I don't think that's a net positive," said McKinney, who is considering a run for governor.
Others warned that the state's decision could backfire because the digital, TV and movie talent pools are intertwined. That could stop the momentum of recent media progress in Connecticut, they say, and scare away entertainment investors to other states.
"It will be an ongoing saga, and I'm not sure where it will finally end," said Professor Sam Craig, who directs the entertainment, media and technology program at New York University's Stern School of Business.
"How important is a robust film industry to support TV, because they're not necessarily independent."
Across America, the Connecticut debate is being mirrored as other cash-strapped states rethink how effective film and TV incentives can be in stimulating growth. Taken together, it amounts to something of a backlash against last decade's eager courting of Hollywood.
The bonanza kicked into gear in 2001, when four states offered such tax credits for a total of $1 million. By 2010, the number of states had swelled to 40 and the tax credits up for grabs had ballooned to $1.4 billion, according to the Tax Foundation.
In this latest chapter, though, several states -- one of the most recent is Michigan -- have eliminated the incentives. Others are putting tighter limits on how much money is available.
Yet at the same time, states like New Mexico have sweetened the incentive for specific sectors like TV. There, the so-called "Breaking Bad" bill, named after the smash-hit AMC show filmed in Albuquerque -- upped TV tax credits from 25 percent of in-state production costs to 30 percent, the same as Connecticut.
Connecticut, for its part, has swiftly retreated from the big screen.
Between 2008 and 2012, the state reduced tax credits given to motion picture companies from $79 million to $19 million. Meanwhile, it increased tax credits to TV and digital media firms from a combined $1 million in 2008 to $39 million for TV and $18 million for digital media in 2012. By last December, the state had handed out a total of $297 million in such tax credits since 2006.
"We've sort of found that our bread and butter has been TV," said George Norfleet, director of the state's Office of Film, Television & Digital Media. "We want them all, including film, but when resources are limited, we have to make sure we put them behind the longterm benefit."
Kevin Segalla embodies the transition. In 2006, when he opened the Connecticut Film Center in Stamford, he quickly landed big-name actors like Uma Thurman and Robin Williams to his studios for films. More recently, his biggest grabs have been luring TV entities such as NBC Sports and the YES networks, along with programs like "The Jerry Springer Show," "People's Court," Showtime's "The Big C" and online soap operas "All My Children" and "One Life to Live."
"It's beyond anything we could have imagined," Segalla said. "We want to see digital media, video games, web creators based in Connecticut. We'd like to ratchet it up and it's starting to happen."
Among state officials, there is some disagreement about whether the transition is smart.
"My gut tells me (the film tax credit) was break-even at best," said State Sen. L. Scott Frantz, R-Greenwich. "The reason for (my hunch) is these film crews come and go. Do they use local catering companies and service support companies? Yes, they do. But they leave as quickly as they come."
Former House Speaker James Amann, the godfather of the tax-incentive program, bemoaned the shift. Citing figures from the state Department of Economic and Community Development, he said the Connecticut media hub is a $1 billion industry that has created 15,500 jobs since 2006. He warned that movie production companies will bypass Connecticut.
"Once you take the carrot away, they're going to start using the studios in other areas such as New York, Massachusetts, Vancouver and New Mexico," he said. "I think it's a mistake not bringing the high-profile movies here."
"While we are always happy to showcase our city, we have not yet seen a measurable impact on our local economy," he said.
The moratorium is certain to make life harder for the state's independent filmmakers.
Because their movies so rarely turn a profit, these filmmakers have trouble enough cobbling together financing for projects. The tax credits were a godsend of sorts. They provided investors with the security that they would at least get something close to 30 percent of their money back.
That alone helped develop the cottage business to the point where several two- to three-month projects employing a few dozen people could operate simultaneously across Connecticut, said A. D. Calvo, 45, who has produced four such features in the last few years. He was in the process of trying to greenlight two more -- but now he has his work cut out for him.
"I finally started to climb that ladder and have access to people I hadn't had access to, but this has really thrown a monkey wrench in it," he said.
Last year, Calvo's friend Greg Friedle directed "The Word," a 90-minute, $350,000 thriller that premieres this weekend at the Manhattan Film Festival.
The movie is about a single dad who suspects his son has been kidnapped and murdered by a Satanic cult. It was written by a Fairfield native and features an actor from Weston. It was filmed primarily in Bridgeport. But Friedle can't imagine making another such film soon.
"This is my home state. It's where I want to film," he said. "But without the film tax credits, there's no way I'm going to do an indie film here."
Notable among those predicting Connecticut to fall out of favor with filmmakers is Howard, whose own post-production facility in his hometown of Greenwich has received tax credits.
"It's not a lot of money, but it's meaningful," he said.
Howard, who won an Academy Award for "A Beautiful Mind," said there is a lot of crossover in entertainment industry.
"The line between theatrical and digital is blurring," he said. "I think it's short-sighted to take that kind of position."
The pressures of churning out films on time and on budget, he said, sometimes make it difficult for producers to rely solely on Connecticut vendors and contractors when filming here.
"No one wants catering from New York, but they need the catering to be there on time, for example," he said.
Connecticut's proximity to New York and Boston is a major selling point, but not the only one in this era of competition among states, said Howard, who is now giving a different kind of direction.
"Connecticut has a unique advantage, an opportunity to build a lasting industry out of it," Howard said.
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