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Senate approves $150 million tax credit plan to film movies in Arizona

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Arizona landscapes are said to have a better chance of making it to the big screen under a legislative proposal to lure production companies to the Grand Canyon state with $150 million in tax credits approved by the Senate.

Proponents say it will boost jobs, infrastructure and tourism. They say the benefits include building film locations and hotels to meet new demand, hiring locals, keeping production jobs in the state, and attracting tourists and industry professionals. industry out of state. Critics counter that the tax credits would be a waste of money that would not create permanent or well-paying jobs, and would amount to the government choosing Hollywood over Arizona’s small businesses.

Senate Bill 1708 would create the Arizona Motion Picture Production Program, which would award up to $150 million annually in tax credits to individuals and businesses for motion picture projects produced in Arizona or that use a local production facility. Films that include on-location filming would be required to film primarily in the state. A film project could receive a credit of up to 27.5% of production costs if the company spends more than $35 million in Arizona and meets a host of other requirements.

The bill is the latest attempt to revive a movie tax credit program that ended more than a decade ago. Arizona Motion Picture Production and Infrastructure Credit awarded $22.5 million between 2005 and 2010 for 56 projects. Just last year, a house proposal offering production companies tax refunds for everything from hotel rentals to catering services was killed in commission.

Opponents argue that spending money to attract film companies from areas with infrastructure developed and established over decades makes little economic sense and there is no return on investment for the film industry. State.

A Arizona Department of Commerce 2009 Report on Film Industry Tax Credits found that only $2.3 million was earned the previous year, compared to $8.6 million spent by the program. The massive loss to the state’s general fund of over $6.3 million, which was a big part of the reason the credit program was stopped. The same report estimated that 62% of film company budgets were spent out of state.

Some legislative supporters said filming in Arizona would serve as a magnet for tourists following the path of star-studded movie projects that would invariably stop at interesting Arizona sites. Sen. Christine Marsh, D-Paradise Valley, said her own family is not immune to seeing such sites while traveling.

Sahuarita Democratic Senator Rosanna Gabaldon agrees, saying Arizona has a lot to offer tourists. She recalled the success of Old Tucson studios in attracting tourists who would eventually visit other sites.

“(They) were visiting the state of Arizona and found even more wealth, in addition to the film industry. They were able to go to the Arizona trail or the Grand Canyon,” he said. she stated.

But such gains will not offset the costs, said Sen. Warren Petersen, who has vehemently opposed taxpayers footing the bill.

“It’s just a totally wrong thing. Let’s leave the money in the pockets of our taxpayers, because taxpayers know how best to use their money,” he said.

The Gilbert Republican wondered if the bill was the result of negotiations with Hollywood executives who were throwing their weight behind it. Petersen argued that stimulating powerful industries disadvantages smaller ones.

“It’s a shift from small business owners — people who work like crazy — to super rich people,” he said.

Trying to use financial bait to lure movie producers to Arizona is unnecessary, said Sen. Michelle Ugenti-Rita, R-Scottsdale. Arizona did nothing to stop the film industry from choosing to shoot in the state, and yet they didn’t happen, she said.

“The last thing we should be doing is doling out other people’s money to encourage a trillion dollar industry that has no barriers to entry in this state,” Ugenti-Rita said.

California and New Mexico are among the best filming locations because they have versatile landscapes, she claimed. In fact, both states offer their own tax credit programs. New Mexico has a refundable tax credit up to 35% production costs, while California is budgeting up to $330 million per year to support eligible projects.

Ugenti-Rita challenged the idea that film productions would contribute to job growth. The jobs they create are often short-term and low-paying, she said, not the jobs Arizona should be looking for. More well-paying jobs are imported: Experts travel from movie hubs like California or New York. A 2000 Michigan State University Analysis tax credit incentives in Michigan found that locals were usually hired for the duration of filming, which averaged 23 days.

The bill’s sponsor, Sen. David Gowan, R-Sierra Vista, faced Petersen’s accusation that he championed the bill at the behest of the film industry. He said he received several pleas from Arizonans employed in the film industry who were tired of leaving home to work. Still, film production companies passed the bill and showed up to support it when the Senate Appropriations Committee, chaired by Gowan, debated the proposal.

Job creation is guaranteed by this bill, Gowan said. Film projects hire hundreds of helping hands, and service and construction industry growth follows to meet their needs. He assured fellow lawmakers that taxpayers are protected by the bill’s many caveats. To qualify for funding, film projects must either use an Arizona studio or produce and film the project primarily in Arizona and edit at a studio in the state. In addition, full-time production labor positions – cameramen, technicians and sound and editing workers, among others – must be maintained.

“You have to get the infrastructure built here, have the jobs here, you have to produce the film here. They cannot go anywhere else out of this state and receive this aid,” he promised.

SB1708 passed the Senate on a 21-7 bipartisan vote. It then goes to the state House of Representatives for consideration.