Arkansas is one of only two states not offering
incentives for filmmakers (Delaware is the other), but legislation to
change that is being prepared for the upcoming General Assembly.

The Arkansas Economic Development
Commission (AEDC), governor’s office staff and state lawmakers are
looking at ways to lure movie makers to the state. The General Assembly
goes into session Jan. 12.

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Arkansas’s “nickel rebate” — a 5
percent tax credit on expenditures for filmmakers — was one of the
first in the nation when it was enacted in the 1980s. But the rebate
expired in 2007. New incentive legislation failed to pass that year.

AEDC Film Commissioner Chris Crane said
he hopes to get approval on the wording of an incentive package from
the governor’s office soon. The AEDC’s legislative policy staff has
been working on the bill for more than a year, studying programs in
other states and speaking with film commissioners across the country.
Crane said they have also worked closely with the Department of Finance
and Administration.

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“We want as many knowledgeable people
to weigh in as possible so we can do what’s best for the taxpayers of
Arkansas,” Crane said. 

Crane said it’s now an “arms race” to see which state can offer the best package and Arkansas is falling behind its neighbors.

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Reps. Rick Saunders, D-Hot Springs, and
Kathy Webb, D-Little Rock, support tax incentives for filmmakers. Webb
said the film industry has been a boon for neighboring states like
Louisiana and Arkansas is missing out.

“We’ve seen our neighbors doing pretty
well,” Webb said. “When they pay the salaries in-state and they spend
the money in-state you’ve got the payroll taxes and the sales taxes,
plus, they’re promoting and supporting local businesses in the
communities where they’re filming.”

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Proponents of the legislation expect it won’t be easy to get it passed, given the current economic downturn.
“At this point I would say that almost every bill that’s going to deal
with tax issues — whether it’s an incentive or a credit, or whatever —
is going to be scrutinized with a fine-tooth comb just because of the
economic situation we’re facing,” Webb said.

According to AEDC’s research, each dollar spent by the film industry would produce a $1.90 return. 

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“That is true economic development,”
Crane said. “When a production company comes to town, they set up
offices and hire local personnel, which brings jobs to the community.
They spend several thousands of dollars, and oftentimes they go through
a beautification process. So it’s a good industry. They throw
unforecasted, unbudgeted funds at a community.”

Some don’t see it that way. In early
December, Josh Barro of the Tax Foundation, a non-partisan think tank
based in Washington, D.C., gave a presentation to legislators on
Arkansas’s tax policy. He said some states like Michigan, a state that
offers a 42 percent tax credit, are hurting themselves by offering such
lucrative bait for the film industry.

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“It’s so heavily subsidized in other
states that I think it’s not a good time for states to try to get
involved in trying to attract the film industry,” Barro said. “So I
would just encourage you to sit back and enjoy the subsidized movies
you’re watching at the expense of taxpayers in other states.”

Other critics argue that the film
industry is too temporary — here today, gone tomorrow. But Crane said
while film crews may come and go, the money they spend stays in the
local economies and multiplies. Movies are being made in Arkansas
already, but they’re just not getting the support they need, Crane
said.

“We’ve got some amazing content
developers here. The problem is that we’re educating these people and
instead of following the basic economic model of exporting the content,
we’re exporting the content-makers. So all of these students that are
in school right now learning about film, if we’re not going to support
the industry then they’re going to go out of state. We really want to
make sure we keep Arkansans in Arkansas,” Crane said.

Graham Gordy is one of those
content-makers. After graduating from the University of Central
Arkansas, he began his screenwriting career in New York. Gordy decided
to move back to Arkansas shortly after shooting his first film in the
northwestern part of the state.

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“In my situation, incentives would help
tremendously because everything I write is set here. But when you talk
to producers who are interested in your work, the first thing they say
is, ‘Can we shoot it in Louisiana?’ And my response is always, ‘No, we
can’t,’ ” Gordy said.

Gordy and others in favor of incentives
say one unmeasurable benefit is the effect that movies made in Arkansas
could have on tourism.

“Most people in this country haven’t
been to Arkansas,” Gordy said. “Nobody cared anything about Montana
until they saw ‘A River Runs Through It,’ and then everybody wanted to
go there and go fly-fishing. So there’s a benefit there, not just in
terms of tourism, but in terms of our reputation and showing people
what this state is like.”

Crane said he’s guardedly optimistic
that Gov. Mike Beebe will sign off on the package. Spokesman Matt
DeCample said the office will base its final decision on solid economic
analysis. 

“We’ve got some great folks involved in
the industry who would love to see more incentives and so would the
governor,” DeCample said. “Having said that, you have to have some
relative certainty that your investment as a state is going to have a
return on it, so that’s our focus.”

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