Two tax credit programs proponents claim are beneficial could be sticking around, despite the state Legislature’s previous overtures to cut back on incentive deals.
There is no longer an appetite in the House or Senate to end the state’s Entertainment Industry Incentive Program, which helps entice production companies to film in Alabama, according to the original sponsor of the film credit, Sen. Gerald Dial (R-Lineville).
Dial said the incentives would continue to enjoy support in the Senate as long as he’s a member. He also acknowledged a bill to repeal the “quite successful” program had been introduced by State Rep. Phil Williams (R-Huntsville), but quickly disregarded it.
“I don’t know what he’s been drinking or smoking, but it won’t go anywhere in the House either,” Dial said of Williams’ attempt.
Williams couldn’t be reached for comment for this story.
Advocates have said the credits help both Mobile and Baldwin counties, where a number of films have been produced since the incentives began. Mobile has the only city-run film office in the state. There is also a state film office.
The incentives in question, enacted in 2009, give production companies a 25 percent rebate on all goods and services above a $500,000 spending threshold. That threshold is the same for television and movies, but decreases for a motion picture soundtrack or a music video. The incentives also allow a 35 percent rebate on Alabama labor. The spending threshold is $500,000 on Alabama resident crew and talent and $50,000 to $300,000 for a soundtrack. The incentives also include no state sales taxes and no state lodging taxes, but local taxes are paid.
Dial called a report by two University of Tennessee professors giving the program a “D” grade “so biased” and “not worth the paper it’s written on.” Although the report said the incentives are a bad return on investment, Dial disagrees. He said the state is not losing money because the incentives are treated like rebates, meaning a film must spend its money first before getting a percentage of tax back.
“We’re not losing money,” Dial said. “If they don’t come we wouldn’t have the money.”
Other states, including several in proximity to Alabama, have introduced similar programs to attract the production of movies, television shows, commercials and more.
Dial cited Georgia as an example of a state with a successful program. He said films and TV shows such as “The Walking Dead” have helped spur economic development in the neighboring state.
Georgia’s Entertainment Industry Investment Act offers an across-the-board flat, one-time transferrable, tax credit of 20 percent based on a minimum investment of $500,000 on qualified productions in Georgia. There is no cap on spending in Georgia. The state also offers a sales and use tax exemption.
In Georgia, qualified companies can get an immediate point-of-purchase sales tax exemption that will save productions up to 8 percent on most below-the-line materials and service purchases or rentals. There is no per-project or annual program cap for film incentives, according to information obtained from the National Conference of State Legislatures.
Tennessee also has a film incentive program. Alabama’s neighbor to the north offers a 25 percent cash rebate in the form of a grant for qualifying Tennessee labor and vendor expenditures, which includes music, according to the NCSL. The minimum qualified spend to become eligible for this rebate is $200,000. An audit of all in-state production activities must be performed before tax incentives are awarded. There is no project cap. There is no state income tax on wages. State-owned buildings and land are also available for free use.
In a statement, Tennessee Entertainment Commission Executive Director Bob Raines said the program has been very successful.
“We are proud that Tennessee ranks in the top 10 of all states in the nation for employment in the motion picture industry, and has experienced 12 percent growth over the last five years,” he said. “The state’s production incentives have generated an estimated $228.3 million in new incomes for Tennessee workers, while creating $370.8 million in economic output for goods and services which benefit our local businesses. Tennessee’s ongoing production incentives help our state remain competitive with surrounding states and provide opportunities for our talented workforce and productive services.”
Another popular incentive program appears to be well on its way to being renewed. The state’s Historic Rehabilitation Tax Credit is currently in a Senate committee, after the version that passed the House was tweaked.
State Rep. Victor Gaston (R-Mobile) said all indications are that the proposal will pass both chambers during this session.
Gaston said the bill, which would once again allow developers a tax credit to rehabilitate and renovate historic structures, was changed in the Senate. Gaston said the Senate bill would make the credits refundable, meaning developers would have to spend the money upfront. The new bill would limit the sale of credits to one-time only and would provide credits be sold at 85 cents on the dollar, Gaston said.
The bill would also create an oversight committee to review proposed projects before credits are awarded. In the past credits were awarded on a first-come, first-served basis, Gaston said. The committee members would include the director of the Alabama Historic Commission, the Secretary of Commerce, the Alabama Department of Economic and Community Affairs director, the director of Finance and the director of the office of Minority Affairs.
The Senate and House would also get two appointments each to the oversight committee, Gaston said. The appointees would consist of one Republican and one Democrat from each chamber.
Carol Hunter, spokeswoman for the Downtown Mobile Alliance, said the organization already has projects in mind it hopes can be started once the legislation is approved.
“We’re very hopeful Rep. Gaston will be able to get something out of committee and signed into law this session,” she said. “We don’t need to lose anymore time on these buildings.”