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End of tax credit in North Carolina could send filmmakers packing

MoviesTaxationCredit and DebtMovie IndustryLobbyingMotion Picture Association of America

By Marti Maguire

RALEIGH, N.C., Aug 15 (Reuters) - The looming end of tax
breaks that helped lure major film and television productions
such as the Hunger Games and Sleepy Hollow to North Carolina has
supporters fearing Hollywood will take its bright lights to
states with more generous incentives.

State legislators were expected to finish their session on
Friday without renewing a tax credit for the film industry that
expires at the end of the year and was decried by critics as a
"Hollywood handout."

The state budget signed last week by Republican Governor Pat
McCrory instead allots $10 million for the first half of 2015
toward a grant program for the industry, a fraction of the more
than $60 million in tax credits received by production companies
last year.

Under the new program, the grant money will be shared among
productions, though how it will be allocated has not been
determined. Currently, film companies receive a 25 percent
refundable tax credit on qualified expenses, with a cap of $20
million in savings per project.

The issue sparked heated debate this summer and split the
state's Republican majority. Supporters of the incentive program
said it had helped create thousands of jobs and led to more than
$254 million in spending in the state by productions in 2013.

Without that enticement, they argue, film projects will be
likely to head to states such as Georgia, which offers a tax
credit of up to 30 percent with no cap.

"I honestly feel like this is a murder trial, and I'm
representing the film business in North Carolina," said
Republican state Representative Ted Davis, whose coastal
district is a hub for film-making. "And I'm fighting against the
death penalty."

Opponents say the tax money would be better spent hiring
teachers or creating jobs by giving tax breaks to small

"I just can't ask the hardworking people in my district to
fund a Hollywood production with their hard-earned tax dollars,"
said Representative Jeff Collins, also a Republican.

As of March, 39 states had some sort of film tax incentive
in place, according to the National Conference of State
Legislatures, creating fierce competition for the jobs and
prestige that come with landing major films and TV series.

North Carolina's varied terrain of mountains, coastline,
cities and farms make it an attractive location for productions,
said Vans Stevenson, the Motion Picture Association of America's
senior vice president for government affairs.

But cost is also a major factor for an industry in which
success is unpredictable.

"The cost of production is the main determinant about where
they're going to locate," Stevenson said. "For North Carolina to
continue to create and sustain the kind of job base and
investment it has had, it would have to remain competitive with
other states."

Katy Feinberg, a spokeswoman for the North Carolina
Production Alliance, which lobbied for the tax credit to be
extended, said the "Hollywood handout" label distorted the

Many of the 4,000 full-time film jobs in North Carolina
belong to set designers, film crews and other workers who rely
on a constant supply of film projects to make a living, she

"We've had a steady stream of people coming here and setting
up shop because of the work that's been here," Feinberg said.
"There's been no red carpet for them."

(Reporting by Marti Maquire; Editing by Colleen Jenkins and
Andrea Ricci)

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