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Film incentives redux: Upping the ante for Maine

Once again, Maine legislators are revisiting film incentives—the financial catnip designed to lure movie producers to the state and lift local economies.
 
As the arms race for incentives in the movie industry has heated up, film pros have bemoaned Maine’s flaccid perks, with the state receiving low marks for its level of financial friendliness toward film. In fact, Eric Matheson, a longtime Maine film veteran and owner of Fore River Sound Stage, cites the lack of incentives for the recent closure of his sound stage in South Portland.
 
Eric Matheson at his former soundstage in South Portland. Photo by Rich Obrey. Courtesy of Current Publishing.Now, he’s working to develop a sound stage on Presumpscot Street in Portland and sees the proposed increase in film incentives as vital to the industry here: “The new incentives would put Maine in the mix. I have had a number of conversations with productions that want to come to Maine, but the incentives just haven’t been there.
 
“Right now we have Maine film production people going to work in Massachusetts (which has more aggressiveincentives). We have good crews in Maine, and we can compete. We just need better incentives.”
 
On the other side of the issue, are critics who question the return on investment (ROI) for film incentives.
 

In Augusta

 
Under current consideration in the Maine Legislature is a bill (HP 1338) that would increase, the reimbursement of film production wages paid to Maine citizens from 12 to 25 percent. The bill also increases the cap on wage reimbursement from $50,000 to $100,000 and allows 20 percent of other expenses to be reimbursed.
 
With both Republican and Democratic support, this legislation attempts to close the large gap between Maine and states that are aggressively courting the film industry.
 

The job promise

 
MovieMaker Magazine's Tim RhysTim Rhys, the publisher of MovieMaker Magazine, who has deep ties to the Maine film industry, echoes Matheson’s comments, pointing out the impact of competitive incentives: “The fact is that when the industry sees that an area is serious, then production companies start relocating to that area, and dollars start flowing and jobs start appearing. Good jobs. High-wage jobs. Permanent jobs.”
 
And Rhys posits the question: Why not Portland? Pointing to the explosion of film production in Louisiana following aggressive incentives, he says, “Look at what’s gone on in Louisiana in the past decade. It started in New Orleans but now Shreveport is also seen as one of the nation’s biggest production hubs. Fucking Shreveport! Are you telling me that Portland, Maine couldn’t do likewise?”
 
(For the sake of disclosure, I am a MovieMaker editor at large.)
 

The current state of Maine incentives

 
The general consensus in the film world is that Maine just isn’t competitive and can’t compete with aggressive offers from other states and Canadian provinces. For example, Massachusetts currently offers a “25 percent production credit, a 25 percent payroll credit, and a sales tax exemption.” Compare that deal to Maine’s current 12 percent payroll credit.  
 
For years, Rhys has been enthusiastically calling for more aggressive support in Maine. He is quick to point out that the topic gets his dander up: “Maine’s incentive program is beyond feeble. It’s almost insulting to the state’s small, but hardworking and highly skilled film community. It’s a token gesture that simply says, ‘See, we have incentives in Maine!’ But it does absolutely nothing to bring out-of-state productions to the state. Incentives need to be at 25 percent just to be in the conversation, and 30-40 percent if the state wants to make a serious effort to seed the industry.”
 
(An article in the spring issue of MovieMaker looks at the positive impact of incentives on Pittsburgh and Detroit.)
 

The question of ROI

 
However, while impassioned arguments for expansion thrive, a growing national backlash is challenging the “bang for the buck,” resulting in some incentive rollbacks.
 
At issue is ROI, that pesky, oft-mercurial, oft-abused number. Not surprisingly both sides of the question are armed with data that supports divergent positions.
 
There’s no doubt that filming a big picture brings plenty dollars. Even a mid-level film brings in a small army of filmmakers. Witness the appearance of Kevin Costner and his team to film interiors for a “Message in a Bottle” in Portland in 1999. An encampment of trailers appeared overnight, and just as quickly was gone. 
 
It is the “gone” part of the equation that worries naysayers, who say that film employment, by its very nature, is temporary. On the other hand, supporters believe an influx of projects would lead to permanent infrastructure and long-term jobs to support the industry.
 
Making a film is risky business. Understandably, producers seek savings to mitigate that risk, hence the attraction of rebates. The challenge for states is to offer incentives attractive enough to lure production, but also not to give away the store.
 
Hence, the importance of measuring what a state gets back, but measuring ROI borders on the black arts. A Pew Center on the States’ study of calculating ROI explores the complexity of the issue. Suffice it to say, there is often room for interpretation.
 
The Maine Film Office takes a direct approach, comparing rebates to total production cost.
 
Using 2013 as an example, Karen Carberry Warhola, director of the film office, explained via email that in 2013, 16 productions qualified for the Maine Attraction Film Incentive Plan.  Those 16 productions had an anticipated direct spend in Maine of $4,746,350.83. Tax rebates for certified production wages paid out to those sixteen productions totaled $142,845. The result, the film office figures an ROI of $33.23 for every dollar spent on the program. (Carberry Warhola notes that ROI will increase once taxes paid are entered into the equation.)
 
However, as the Pew report shows, calculating ROI may not be that simple.
 
The current bill would require a preliminary analysis of financial implications via the Department of Economic and Community Development. The University of Maine would perform the evaluation.
 
If the bill passes, it will be interesting to look under the hood of that financial evaluation to see how Maine plans to measure the program. Implementation of the revised incentives is contingent upon a positive-income finding in the report.
 

The value of intangibles

 
Of course, there are paybacks beyond dollars. A popular film provides valuable exposure to film locations for years after a production leaves.
 
Think tours of Savannah after “Midnight in the Garden of Good and Evil,” pilgrimages to an Iowa baseball diamond cut from a cornfield for “Field of Dreams,” or guided tours to the bridges of Madison County. In Maine, visitors (of a certain age) still talk about the filming of the so-scandalous Peyton Place in Camden in the 50s. There is clearly value in video exposure.
 
We’ll let Rhys eloquently explain the value of putting Maine on screen: “The other reason that film tax incentives make so much sense is because there are intangibles that make the film industry more important to a state’s national profile than almost any other. This is not even debatable. There’s a sense of pride that the people of a state get when a movie is filmed there, and it lasts a very long time. It can put an area on the map, sometimes permanently. What do Americans think about when they think of Austria? I’m guessing it’s a scene from The Sound of Music. People still talk about Peyton Place being shot in Camden 57 years ago. How many dollars in additional revenue has the state seen just because of that one film? Who knows? Nobody can quantify this, but it’s inarguably huge. Almost certainly in the 10s of millions of dollars over the decades. What about Empire Falls? You can visit Skowhegan and still read about that production in businesses all over town. Think it made a difference to the pride of citizens of that town? What other industry has this kind of positive, lasting influence?”
 

A final word

 
Often lost in the discussion of film incentives is the fact that the state and municipalities are already doling out corporate welfare checks, plenty of them. When looking at some of the aggressive leveraging of “pay up or we’ll leave,” the word “extortion” oozes to mind.
 
Consider handouts to behemoths like WalMart in Lewiston; or Cabela’s threat to nix a megastore in Scarborough while trying to get a better tax break. And then there are the subsidies for Big Agriculture, Big Aerospace, etc.
 
In comparison, supporting the art and business of film, while building a local, production infrastructure sounds more rational than contributing to the bottom line of multi-national corporations.
 
All things considered, investing in Maine film makes good sense if the numbers add up. A stream of new productions would go hand in hand with an increase in film infrastructure, with the addition of good jobs. And, as Rhys points out, there are the intangibles.
 
The trick is finding a way to evaluate success while staying competitive. The devil is in the details.
 
Let’s hope Maine figures out the equation.
 
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