Moviemakers reach for tax credit revival

Two years after Missouri’s Film Tax Credit expired, filmmakers and some state lawmakers are pushing for its return.

In its 15-year history, over $20 million in credits were approved and film producers spent some $77 million in Missouri – a roughly $3.77 return for every dollar credited, according to data from the Missouri Film Office and Missouri Department of Economic Development. “Gone Girl,” starring Ben Affleck, was the last participant, and movie industry professionals say gone are the projects for film production in Missouri.

“If we’re not offering an incentive, we’re not getting a piece of that entertainment industry,” said Joni Tackette, a film casting director and president of the Missouri Motion Media Association. “It’s a business, and it’s all about what they have to spend to create their product.”

Enacted in 1999 to incentivize filmmaking in the Show-Me State, the program in its final incarnation was capped at $4.5 million annually and allowed for feature film productions with a minimum $100,000 budget to receive up to 35 percent of in-state expenditures as a credit that could be sold, transferred or applied to taxes. The Missouri Tax Credit Review Commission, formed by Gov. Jay Nixon in 2010, initially recommended elimination of the credit, which occurred on Nov. 28, 2013.

According to the commission’s report, the credit failed to provide a positive return on investment for Missouri, defined as a fiscal benefit to the state General Revenue fund net of the cost of the incentive. The commission further specified the credit served a niche industry with no long-term opportunities for film-related production facilities.

Tackette, owner of Webster Groves-based Joni Tackette Casting, said House Bill 803 filed by Rep. Kathryn Swan, R-Cape Girardeau, to re-establish the credits made headway during this year’s legislative session, receiving approval in two House committees. A similar proposal, Senate Bill 541 filed by Sen. David Pearce, R-Warrensburg, couldn’t gain traction.

Sen. Jay Wasson, R-Nixa, who serves on the Jobs, Economic Development and Local Government Committee, said his vote in favor of the tax credit would depend on solid proof of favorable returns for the state.

“If you take the Quality Jobs tax credit, I think most of the studies that have been done on that show anywhere from a $4 to $7 return on the tax credits,” Wasson said. “It’s the same kind of investment I think an individual would make on their own – if you’re not getting a good return on your money, you probably shouldn’t be doing it.”

Stumbling through the Midwest
In recent years, Midwestern states have meted out their film tax credit programs. Currently, nine of the 15 states, including Missouri neighbors Iowa, Kansas and Nebraska, do not offer the incentives.

Kansas Film Commission Director Peter Jasso said the state’s short-lived tax credit program – 30 percent and annually capped at $2 million, with minimum spending amounts the same as Missouri’s – ultimately fizzled out due to a lack of utilization. Unlike programs in other states that come in the form of rebates, reimbursement or credits that can be sold or transferred, Jasso said the Kansas credits only could be used for in-state tax returns.

Between 2006 and 2012, only $250,000 in credits were issued for less than 35 projects that filed, according to the Kansas Department of Revenue.

“The minimum spend made it hard for locals to access, and the nontransferrable aspect made it hard for outside productions,” said Jeannine Koranda, a spokeswoman for the department. “It was kind of squeezed from both ends.”

On the other side of the coin are markets in the southern United States bolstered by continual film and television production.

A Georgia Department of Economic Development 2014 annual report estimated total economic impact of $5.1 billion that year, with 100 film-related companies moving into the state since 2008. The industry is large in Louisiana, too, where a 2015 economic impact study by the state’s Office of Entertainment Industry Development showed dollars spent in-state peaked at $851.2 million in 2013. Last year, both spending and tax credits issued were on the decline but still represent hundreds of millions of dollars.

Building an industry
Twentieth Century Fox’s “Gone Girl,” filmed in 2013 in Cape Girardeau, isn’t Missouri’s only tax-credit success story. Proponents cite “Up in the Air” filmed around St. Louis and “Winter’s Bone” in southwest Missouri as proof the program works.

“You just need one of those successes, and Missouri was on the cusp,” said Mark Biggs, associate dean of Missouri State University’s department of media, journalism and film and the 2005-09 chairman of Missouri’s Film Commission. “We had two films that were Academy Award nominees, and it’s hard to do better than that.”

According to Missouri Department of Economic Development records, New York-based Winter’s Bone Productions received $259,737 in tax credits and spent $796,946 in the state. DW Studios Productions LLC, the Los Angeles-based company that produced “Up in the Air,” was issued a little more than $4.13 million and spent roughly $11.8 million.

Biggs said although the money spent by productions within local communities may not go directly to state coffers, it increases sales tax revenue from those communities, as well as pays the salaries of workers who then pay taxes in the state.

“It doesn’t fit the Department of Economic Development’s standard, brick-and-mortar model,” he said. “It is mobile, it is transitory, but if you have the right incentive package in place, it is going to be consistent.”

Biggs said Missouri needs to offer an incentive and increase its cap in order to build a sustainable film industry.

“What we’re suggesting now is to get it reinstated for six years – and that we can find a percentage of the incentive that is palatable for legislators,” said casting director Tackette.

Acknowledging the industry is transitory in nature, tax credit advocates say without incentives to draw projects in that there’s no opportunity for the state to grow brick-and-mortar facilities for studios and post-production editing suites or retain homegrown talent that might otherwise transplant for more gainful employment.

“We understand we’re not competing with Georgia and Louisiana, but we’re increasing business in our state,” Tackette said.

Aspiring Springfield filmmaker Moncho Marquez, who investigated applying for tax credits in 2012, said he doesn’t want to relocate in order to develop his film project, dubbed “Magic Soccer.” Marquez estimates credits could have offset up to $700,000 of his film’s projected $2 million budget and helped attract investors. Without it, his project is cash-strapped. Still, he’s exploring corporate sponsorships for product placement, and despite an unsuccessful crowdfunding campaign on Kickstarter earlier this year, he’s considering another attempt through Indiegogo.com.

“I don’t want to go that road yet, but we haven’t closed that door,” he said. “Whether I get a tax credit or not, I’m going to do my best to make my movie.”