Gov. McCrory late yesterday signaled his approval to continue North Carolina’s Hollywood cronyism in the form of targeted tax credits for film production.
Gov. Pat McCrory has proposed changes to North Carolina’s film tax credit program that his administration says would cost the state much less than the one set to expire at year’s end. … The budget “revises the state’s film strategy in order to encourage long-term capital investments versus short-term projects with short-term returns,” McCrory spokesman Josh Ellis said in a statement, and by “implementing a more cost-effective approach to encourage investment in the film industry in North Carolina.”….Films made in North Carolina during the last fiscal year qualified for $61 million in rebates, according to state government figures. The proposed state tax rebate program would cost about $10 million annually, Ellis said.
Directing the film industry toward “long-term capital investments” is more central planning of the economy. So not only is McCrory giving his approval to granting unfair political privileges to politically-favored industries, he is attempting to micro-manage the industry’s structure of production by favoring long-term vs. short-term projects. If such tax treatment of the film industry is supposed to create jobs in that industry, why not grant all businesses the same tax credits? Why play favorites? And perhaps the McCrory administration should check out this BusinessWeek article about the town of Allen Park, MI to learn more about incentivized “long-term capital investments” in the film industry.
In August 2009, Allen Park’s city council unanimously voted to sell $31 million in bonds to buy and improve 104 acres so Lifton could develop a $146 million studio as a tenant of the city. At the event announcing the partnership, then-Mayor Gary Burtka declared Allen Park “Hollywood 48101” (a reference to the city’s Zip Code), and Lifton spoke of cranking out movies the way Henry Ford mass-produced cars. Lifton promised 3,000 jobs, which would have made the venture, known as Unity Studios, the biggest employer in town. …. That script didn’t pan out. Lifton has vacated the property and returned to California, leaving Allen Park with a bad case of buyer’s remorse…..Allen Park is hurting as a result. The bond sale—now under investigation by the U.S. Securities and Exchange Commission—doubled the city’s long-term debt, and the annual bond payments of $2.6 million are draining its $20 million general fund. The city officials who approved the deal have all stepped down or been voted out of office.