Will Florida try again for state tax incentives to attract the film industry?

dolphin
The rescued dolphin "Hope" at Clearwater Aquarium featured in the movie Dolphin Tale 2

Eight years ago, Florida kicked off a program to try to attract the film industry – and the jobs and publicity that come with it – to the Sunshine State.

But the state program had problems, and by 2016 it had fizzled.

Pinellas County-based actor Ricky Wayne says he’s constantly working these days, but rarely in Florida.

“Everything is in Atlanta,” he says. “And everything else from the Mason-Dixon line over to the Texas/Louisiana border is regionalized into one gigantic market, with Atlanta being the main hub where everybody shoots.”

In Florida, he says, “our film infrastructure has been decimated.”

Now, there’s a small movement in Tallahassee to try to revive the tax incentives that could lure film and TV shows back to Florida, in part because Governor-elect Ron DeSantis has been ambiguous on the issue, not dismissing it outright. And that’s enough to inspire some legislators to try again in the spring 2019 legislative session.

“I think that the residual value that we get from some of these films and television shows that are produced in our state last long after the productions come and go,” says Sarasota County Republican state Senator Joe Gruters. “If it’s done right, it’s a major winner for local communities with jobs, and continues to drive tourists here.”

Gruters sponsored a bill in last spring’s legislative session that would have established a new motion picture organization to set specific criteria for evaluating incentive applications. The state’s past film industry incentive programs were on a first-come, first-serve basis that didn’t properly rank which projects were likely to produce the greatest economic impact or the largest number of jobs.

Though it died in committee, Gruters – who will chair the Commerce and Tourism Committee in the House next year – is working with officials from the trade group Film Florida to introduce something similar for the 2019 legislative session.

Georgia benefitted tremendously in recent years when neighboring states like Florida and Louisiana reduced film-industry tax incentive programs. The Peach State’s entertainment industry has grown from $240 million in 2007 to $9.5 billion, according to UGAToday.com.

Georgia provides a 20 percent tax credit for companies that spend $500,000 or more on production and post-production in Georgia, either on a single production or on multiple projects. The state grants an additional 10 percent tax credit if the finished project includes the state’s promotional logo, Variety reports. Georgia doesn’t cap the tax credits offered to individual projects and doesn’t have an annual cap on total credits for all approved projects –  the sort of generous tax breaks that advocates say won’t work in Florida.

Gruter, the Sarasota state senator hoping to revive the film industry  program, points to a recently released report by the nonprofit research group Florida TaxWatch that says state incentives for the entertainment industry are “both necessary and important.”

Even though the state incentive program is gone, there are still more than 4,400 established businesses in Florida’s film and entertainment industry, the third largest in the country following California and New York, TaxWatch reports.

“If the tax credit incentive program can be revised to ensure the state makes back its investment, to create jobs for Florida residents, to promote Florida tourism, and to pump additional revenue into local businesses, then TaxWatch believes it would be in the best interest of the state for the Legislature to consider such revisions,” the report says.

Incoming Florida House Speaker Jose Oliva is no fan, and his spokesman Fred Piccolo said Oliva “opposes corporate welfare.”

That killer phrase has been successfully branded by Americans for Prosperity – a libertarian Koch Industries group – over the past four years in rallying Florida opposition to economic incentive proposals, including sports stadiums, film and TV productions, or state agencies like Enterprise Florida which have offered tax breaks for corporations to relocate to the Sunshine State.

“Corporate welfare is wrong and Florida’s film incentive handouts have produced a measly 18 cents of the dollar return-on-investment for taxpayers,” Americans for Prosperity’s Andres Malves says, adding that his group would favor deregulation rather than enlisting taxpayers.

Malves is citing a study performed by the Florida Legislature’s Office of Economic and Demographic Research on the entertainment tax incentive program that lawmakers passed in 2010 and ended in 2016. The original return-on-investment for the program was calculated at bringing in 46 cents to the state for every dollar expended. A 2015 update to that report reduced it to just 25 cents, and a 2018 update reduced that rate to just 18 cents.

And that’s not all: A 2016 analysis of film incentive programs conducted by University of Southern California accounting professor Charles Swenson from 1998-2011 concluded that other than California and New York, other state programs resulted in “moderate growth, no growth, and even negative post-incentive growth.”

Numbers don’t lie. Case closed, right? Not necessarily. Swenson’s study didn’t consider indirect employment in industries associated with movie production.

“There’s production houses, there’s hotels, there’s food…and so many resources that are required to make a film, it’s a no-brainer,” says Michael Brown of Digital Caviar, which is producing a marine-themed family picture, Bernie the Dolphin 2.  It’s a sequel to Bernie the Dolphin, which was shot earlier this year in Pinellas County and at Marineland in St. Augustine and was released theatrically and on demand in early December.

“If you incentivize a production to come to the area,” Brown says, “I mean, everybody is going to benefit from it, and it’s not just specifically the film community.”

Advocates acknowledge that the tax incentive plan approved in 2010 was wrongheaded in many ways and needs to be reshaped. The original law approved projects on a first-come, first-serve basis that didn’t discriminate on which would produce the greatest economic impact or the largest number of jobs.

Tampa-based talent agent Kelly Paige (Ozark, the Walking Dead) says Florida should start offering a targeted grant program, which would include metrics such as how “Florida-centric” the project is, with an emphasis on its potential to bring tourists to the region.

One of the favorite talking points for advocates for reviving an incentive program for the film industry is the success of Dolphin Tale, a 2011 picture filmed at the Clearwater Marine Aquarium that led to a 2014 sequel.

The durable popularity of Winter and Hope (the two dolphins featured in the movies) has dramatically increased attendance at the aquarium from less than 100,000 annually before the first film was released to a high of over 800,000 in 2015. Clearwater Aquarium CEO David Yates says today’s annual attendance is now about 600,000.

Across the country, 32 states offer some sort of subsidies to reimburse producers for money spent filming movies or TV shows.

During the campaign for governor, Democratic candidates Andrew Gillum, Gwen Graham and Philip Levine advocated for state programs to attract the film industry. Levine says while Florida leaders continue to talk about diversifying the economy, the state should invest in its number-one proven asset – tourism, and Florida-based TV shows and movies would help.

If he were governor, he says, “I think I would be doing everything in my power to incentivize a clean industry that serves multiple purposes for the state’s economy – which is film and TV production.”

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