Tax Credits Aren’t Enough: How States Are Wooing Film Productions

London is the new Atlanta, which was already the new L.A.

Los Angeles is seeing a big dip in production, but the problem is actually nationwide. Film production across the U.S. is down 26 percent compared to 2021, according to data from ProdPro. Though the overall market has cut back, the U.S. continues to be hit the hardest while our closest allies, Canada and the UK, have increased their spending and incentives.

Producers need tax credits, and a lot of the states in the states don’t have enough to go around. California’s annual incentive is $330 million, though Gov. Gavin Newsom wants to raise that to $750 million. New Jersey, New Mexico, and Nevada have ramped up their incentives. But even the most-welcoming places like Georgia, which has no cap on tax credits, is feeling the pinch to productions moving to London.

For indies, a tax credit is just a start. As one producer told IndieWire, if a location doesn’t have available crews and the cost of doing business there is high, the amount offered in a rebate or credit could be a wash. But when the value of the U.S. dollar in another country is strong, it can be “really advantageous” to go overseas.

“The foreign exchange rate is unbelievable at the moment,” Jason Waggenspack, president of Film Louisiana, told IndieWire. “I don’t want to say it’s free money, but there is quite a bit of money that is being able to be utilized over there.”

Katie Pryor, the film commissioner of Baton Rouge, said her biggest competition often isn’t Atlanta, but Bulgaria.

“The U.S. was the home of all film production, and now it’s a global industry,” Pryor said. “We are no longer focused on box office numbers as much as we are streaming numbers, and that changes what content gets made, and where it gets made.”

Pryor’s home state isn’t giving up without a fight — and some infighting. Louisiana nearly voted to eliminate its tax credit but the film industry there convinced lawmakers to reduce it instead. There are other ways the Bayou State is opening its borders to film production, be it maintaining a strong crew base, prioritizing indies, and even looking beyond state lines. Other states could benefit to do the same.

‘Killers of the Flower Moon’ set in Tulsa, OKApple Studios

Build Up Crews and Infrastructure

Once a robust production hub in the south, North Carolina lawmakers gutted the state’s tax incentive in 2014. The crews moved out and moved on.

That tide is starting to shift, but even with an increased incentive and new facilities from Dark Horse Studios, the demand for local crews is a concern. Deborah LaVine, the dean of UNC’s School of the Arts, says “there isn’t a week that goes by” where she’s not getting calls about what students or talent are available should a producer want to film there.

“The calls I get are both for what might be viable to help them produce at a reasonable cost, but I’m also getting a lot of calls about people who are looking for a home base, understanding that they might travel to God knows where to work,” LaVine said.

It’s a chicken-and-the-egg scenario. Film and TV projects won’t come if crews aren’t available, and crews and soundstages won’t be built there unless they know there’s a tax credit or rebate to support production.

“Locally, we have several different independent contractors that are interested in building a stage. But then they want to make sure that we have a very competitive incentive and that the state will be filled before they really put shovels in the ground,” said Meg Gould, executive director with Tulsa FMAC.

Heading west, Nevada offers a credit not for production but for infrastructure. Shani Coleman, Director of the Clark County Office of Community & Economic Development, says Nevada’s entertainment incentive is given to those who build permanent soundstage facilities. Warner Bros. recently struck a deal with the state to do just that, and Sony has its own facility in the region.

“There’s this opportunity around creating and developing a strong workforce pipeline. But also it provides the production studios with a bit of security,” Coleman said.

Steve Zahn and Rick Gomez in an ad for Film LexingtonFilm Lexington

Make Things Easy for Indies

In California, awards for tax credits are announced approximately every quarter. It can be a waiting game to find out if you’ve been approved, and for indies with specific shooting windows, time is highly of the essence. What’s more, California has separate pools of money for independent projects and studio films, so it can be unclear exactly how much is available for your film.

In Louisiana, things are more predictable, simple, and uniform.

“If you walk in with $100 or you walk in with $100 million, you’re gonna get the same treatment from the film office,” Pryor said.

Oklahoma and Kentucky offer tax rebates, not credits, so filmmakers get cash in hand and there’s no need to sell back credits via a broker. FilmLEX lead Lisa Brin said her Lexington office offers “concierge hospitality” to indies and has eliminated any red tape, including streamlining the collaboration of police, fire, parks, or hotels.

“Productions have asked to shut down main arteries running through downtown Lexington. I’m sure you can imagine in some of these larger hubs, it’s very difficult to do that, or very costly,” Brin said. “We received feedback from filmmakers that this is unheard of, and Lexington really showed up.”

Kentucky passed a $75 million incentive in 2022, but the awareness and crews weren’t there, and the state ended 2023 with a surplus. Brin sees Kentucky as a growing crew base, currently leaning on neighboring Louisville to support their efforts. But as they grow, FilmLEX is targeting indie productions in the $1 million to $10 million-range rather than studio films such that the city “can truly deliver what we’re promising,” Brin said.

Senator Adam SchiffGetty Images

Take It National

What does Bulgaria have to offer that we don’t? A federal film office.

“That limits us in some of the things we do as a country,” said Pryor, who is the co-founder of Film USA, a non-profit trade organization of regional film commissioners. “We don’t have co-productions, we don’t have a federal incentive, we don’t have one force in our government that’s planning for market forecasting and economic studies. We’re kind of on our own.”

So Pryor is proposing the formation of the National Film and Television Office (NFTO). A white paper produced by Film USA paper says that in 2020, $114.7 billion of film production originated in the United States, but $64.3 billion of that U.S. investment was spent in foreign markets (though Covid could have something to do with the disparity).

To win that investment back, the NFTO would be responsible for data collection and analysis, conducting market research, and doing market promotion and international engagement. California Senator Adam Schiff in October signaled his support for such a plan, but other film commissioners need to do their part to keep the pressure on Washington.

“Any government support would be amazing, because it makes a huge difference,” Gould said. “I actually added it to our government affairs agenda to ask them to be on the lookout for anything and seeing how we can help with this initiative as well.”