Film

HOLLYWOOD EAST

How your tax dollars are subsidizing a film industry that doesn’t need the help.

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Thursday, August 21, 2008

 A blond actress in red plastic sunglasses is doing her best to look natural behind the wheel of a Mustang that's just a prop.

The bearded guy in the bandana peers at her through the lens of a Panavision 35 mm camera. He yells "Grip!" like a pro but then admits, "I feel weird saying that."

A half dozen people crowd onto a truck that's hitched to a trailer with the Mustang on it. The director yells "Action!"

The cameras roll. The truck does lazy circles around a parking lot in Hamden as a merciless summer sun beats down. They stop. Fiddle with some gear. Drive a few more circles towing the "camera car" and the "process trailer," which is apparently how they simulate driving scenes in movies.

This is what "Hollywood East" looks like. When Indiana Jones and his caravan of trailers and poodle-skirted extras leave town, Connecticut's film industry is an awkward blonde sitting motionless in a parked Mustang getting dragged around a lot at Quinnipiac University.

The state is betting a small fortune on Connecticut becoming a viable home to the film industry, offering production companies the most generous tax breaks in the country and paying film union members upwards of half a million dollars to train a hundred or so people to do film jobs they may never get.

The practice shoot in progress at Quinnipiac this day is part of the Connecticut Film Industry Training Program, a four-week crash course in movie-making that prepared a select few to do freelance work. Today's lesson amounts to "How to shoot a driving scene without actually driving anywhere."

The state's film industry drama is still playing out, but if the boosters were writing Connecticut's E! True Hollywood Story, the script might go like this:

Prescient politicians create a film industry tax credit that in its first two years attracts the likes of Steven Spielberg and Al Pacino to shoot major Hollywood blockbusters. Cast and crews pump millions of dollars into the local economy, booking hotel rooms, buying lunches and spending money in local stores.

To meet a growing demand for local workers, the state pays for a training program. Hundreds, maybe thousands, of new jobs are eventually created. New sound stages and digital animation studios get built. Cottage industries, like prop houses, crop up to support the growing needs of our year-round film industry. More new jobs. More new tax revenues. More glitz and glamour.

That's the Hollywood East ending, anyway. The reality is far less certain. Research on the effectiveness of movie tax credits casts doubt on whether they "pay for themselves" by boosting local economies, as supporters say, or whether they're a fruitless exercise in corporate welfare.

 

 Mel Brooks once famously said, "It will make millions. Unfortunately, it will cost millions."

He was referencing one of his own films, but he could have been talking about film tax credits like the ones Connecticut offers production companies. To bring in money (film crews buying local hotel rooms and meals) you must spend money (taxpayer money, in the form of state-sanctioned tax relief).

This is Connecticut's gamble: that movies will add more to the local economy in the form of cast and crew spending, than they take away in the form of corporate taxes and insurance premium taxes the movie makers don't pay. Connecticut offers tax credits on up to 30 percent of eligible production expenses, meaning a $10 million movie could get $3 million in tax relief, and would be taxed on the other $7 million. In effect, state government ends up writing off a third of what film companies would pay in state taxes.

But will it work? Will tax breaks worth millions of dollars prove just the boost Hollywood East needs to grow into a sustainable industry, or a taxpayer-funded giveaway? A-list celebrities are indeed popping up all over the state—Leonardo DiCaprio in Bridgeport, Al Pacino in Milford, Robert De Niro and Steven Spielberg in New Haven. And the amount being spent on films here has increased dramatically: from $23 million in the six years between 1997 and 2003, to $411 million this year alone.

The official state report on the tax credit program's first year, by the state Department of Economic and  Community Development, found "modest" signs that it's making business boom. Film spending in year one, $55 million, added $20 million in real gross state product (the state equivalent of GDP), 395 full-time jobs and generated $6.5 million in new disposable personal income through multiplier effects (the theory that cast and crew spend money locally). The final analysis: The tax credit does (or did in its first year) add more to the economy than it takes away.

Other studies are far more cautionary, suggesting film tax credits aren't all they're cracked up to be. A 2006 study by the New England Public Policy Center at the Federal Reserve Bank of Boston concludes we don't really know whether films shooting in New England will boost business long-term. A few reasons: Calculating a production's true multiplier effect is difficult in complex economies like that of the U.S.

Then there's the "They get more than needed to entice them to come" theory, which says tax credits can be overly generous. Connecticut permits film companies to sell unused tax credits to other investors. If the tax credit is worth more than the film company would pay in state taxes, they can sell the unused portion for a windfall. And while the cash from that sale might go back into the economy, there's no guarantee it will be Connecticut's economy.

"Film production companies could fund a film in another location or increase the salaries of employees headquartered out of state," the study says.

The Uma Thurman film The Life Before Her Eyes (In Bloom), which shot scenes in New Haven, for example, claimed $3.5 million in tax credits but ended up selling, or "transferring," $2 million of it to Kohl's Department Stores Inc. (see sidebar). Similarly, The Bronx is Burning, a TV series about the 1977 Yankees filmed in Norwich and New London, claimed $6.2 million in tax credits, then turned around and sold them to Wachovia Bank.

 That could be partly due to the fact that many production companies register with the state as limited liability companies, or LLCs, which pay only a $250 annual business entity tax—and pay no corporate tax. Such was the case with The Life Before Her Eyes, produced by In Bloom, LLC.

The best study to date comes from Louisiana's Legislative Fiscal Office, and may hold important clues for Connecticut. Like us, Louisiana saw an explosion of film production after enacting a tax credit in 2002—from around $20 million a year spent there to the present $350 million. But Louisiana saw a flaw: Most of the $59 million in tax credits claimed in 2004, for example, were unused tax credits purchased by buyers who had nothing to do with film production.

As for jobs, the report guessed Louisiana's tax credit would generate, at most, around 3,000 jobs and said the economic impact outside the film industry was "likely to be modest." For every dollar of revenue lost to the tax credit, 15 to 20 cents was recovered in associated business. Some multiplier effect.

More troubling still, a report by the New Haven-based think tank Connecticut Voices for Children projects the tax credits will result in $118 million in lost revenue to the state in fiscal year 2009, which film companies would otherwise pay in corporate and insurance premium taxes.

The debate over Hollywood East comes down to priorities. Shelley Geballe, the founder of Connecticut Voices for Children and author of the study, fears ours might be out of whack. "Any company would move to Connecticut if you paid a third of its expenses," she says in a phone interview. Film tax credits account for a full third of all business tax credits awarded in Connecticut. Does it make sense to put so many eggs in a single basket?, Geballe wonders. Would nanotechnology or alternative energy be more worthy of tax relief, create more long-term jobs and pump more money back into the economy?

Geballe doesn't claim to have the answers, but suggests a close, critical look is needed to study whether film tax credits are worth the expense. Otherwise, she says, "you'll always be at the whim of newspaper headlines for the next great idea, which might not always be a great new idea."

 

 Working on movie sets alongside your favorite stars sounds sexy, but how do you actually land the job? Film work is notoriously spotty. It's a who-you-know industry. Joining unions isn't always as easy as simply paying the fees, if you can even cobble together the thousands of dollars that ordinarily requires.

Enter the Connecticut Film Industry Training Program, the crash course that wrapped up last month. More than a hundred students were put through four weeks of movie boot camp and are supposed to now enter mentorships working on movie sets. They were promised "up to 10 weeks of on-set mentorship, working alongside department heads and crew members on a feature film or episodic television project."

That might not happen. For one thing, the Screen Actors Guild is threatening to strike, meaning many productions are in a holding pattern and not committing to shoots in Connecticut or elsewhere. Finding slots for students depends on productions' willingness to take them on. So far, no one has stepped forward. There's no guarantee every student will end up getting a slot and it's unclear how those who do will be selected.

"I doubt we could get all the folks" in a mentorship, says Rob Keating of the state Office of Workforce Competitiveness, which administered the training program. "It will take several years to get everyone, unless we are deluged with production companies."

In the meantime, Keating suggests film grads get work by building up a big Rolodex of names. Start from  the bottom and work their way up, he says.

"We can't hold the hands of these folks forever," Keating says. "All we can do is give them a leg up. At the end of the day it will be their responsibility to see who is coming and find work. Many of the students in training will become production assistants."

That's how most people break into the film biz. So why create training programs and pay union professionals hundreds of thousands of dollars if our film school grads might have to travel the same path as the un-schooled?

It improves the odds of eventually getting the students better-paying work, says Marty Lang, a freelance film producer who designed the training program's curriculum. (Disclosure: Lang has freelanced articles for the Advocate). To sow good will with the unions, the state hired their members as course instructors, paying them anywhere from $363 to a whopping $4,000 a day, plus $232 a night for hotel rooms, $80 a day for food and a nickel a mile for travel. That sounds like a lot, but course organizers say hiring top-flight talent was key to preparing trainees to work on the big-budget films expected to come here.

"The goal was to present an opportunity to get into the unions and the only way to do that is to get the unions involved," Lang says. "Connecticut really wants to create a pool of people who are eligible to work on big films when they come here. If the state can present a pool of qualified people who are eventually in the union, that would make the state much more attractive."

Every union has its own membership requirements, but the basics are this: entry fees of $3,000 to $8,000, yearly dues in the range of $200, passing a test, and differing work hour requirements for maintaining membership and employer-matched health benefits. Once you're in the union, though, your pay can go up dramatically, more than making up for the dues and fees you pay.

 

 Lisa Boutillier is one of the lucky ones. She earned a union card during her prior career as a Hollywood set dresser working on films such as Livin' Large and the Hughes Brothers' Menace II Society. She moved back to Connecticut, her home state, to be with family but also because she heard about the growing film industry here. She enrolled in the film training program to refresh her skills and make connections that might land her movie work.

Still, she's not sure her union card—from Nevada when she built stages at the MGM Grand Garden Arena in Las Vegas—will transfer to the New York-based union local that covers Connecticut. It wasn't discussed in the film classes, she says.

"I'm hoping it's not a difficult process to transfer," she says, sitting under a shady tree while her classmates are inside the Quinnipiac University mess hall. "At least I have the membership. I've had it since 2000. I never let it lapse."

Boutillier's a teacher in Hartford public schools, so she's after film work mostly for her off-season. But will she find any? "I don't know," she says. "All you can do is try."

 

 

Production: The Life Before Her Eyes (In Bloom)
Director/Star: Vadim Perelman/Uma Thurman
Shot in: New Haven
Tax Credits Awarded: $3.5 million
Unused credits sold: $2 million
Buyer: Kohl's Department Stores, Inc.

 

Production: The Bronx is Burning
Stars: Oliver Platt, Kevin Conway, Daniel Sunjata
Shot in
: Norwich, Waterford, New London, New Haven
Tax Credits Awarded: $6.2 million
Unused credits sold: $6.2 million
Buyer: Wachovia Bank, N.A.

 

 

Production: Callaway 2007 Product Line Commercial
Tax Credits Awarded: $22,352
Unused credits sold: $22,352
Buyer: Pilot Corp. of America

 

 

Production: Pilot Pen (GM=Get Mini) Commercial
Tax Credits Awarded: $19,326
Unused credits sold: $19,326
Buyer: Pilot Corp. of AmericaUma Thurman shot scenes for The Life Before Her Eyes in
New Haven, which sold $2 million in unused tax credits to Kohl's Department Store.

Comments (5)
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The tax credits cost the state nothing and produce millions.

Only liberals could turn this upside down and come to the idiotic conclusions of this article. LOL.

Posted by Wake up on 8.21.08 at 13.45
I just want to let everyone who reads this article know that I went through this program, finished two weeks ago, and tomorrow I am working on a Rascal Flatts music video and next month on a film shooting in Madison. There's more work available here than you realize. It's not all Indiana Jones and Uma Thurman, but its work nonetheless.
Posted by Film Program Trainee on 8.21.08 at 18.45
What a tired, tired way to drum up "controversy" about "corporate welfare." Give us a break. This is so low on the totem pole, so tiny a target, that you have to wonder what the reporter would do if he had to really tackle corporate welfare. Look in any town in Connecticut. Look at the zoning laws, and the tax abatments given to corporations, and the extortion that corporations commit against towns to get these breaks.
Good god. A few films get made, some people get union cards, and the state gets more back in return than they "pay" in tax credits. How about doing an investigative piece on Mr. Nader, the million-dollar investor in oil companies.
Naah, can't do that. He's a saint.
Posted by morris on 8.21.08 at 20.17
I have friends in NY and CA that are all buzzing about the new CT hotspot. Actors, directors and producers alike. This is a golden opportunity for CT and Jodi Rell is commended for her quick response to push CT to the forefront and score some film, tv and commercial dollars. I'm sad this article tries to negatively sway the reader. This is a "big picture" undertaking and the writer only captured the tip of the iceberg, and nothing good in the process. He doesn't mention the fierce competition we've become for NY or BOS, like never before. In addition, can you mention any other state that has forged ahead with such an innovative training program? Folks that can hit the ground running for camera, lighting, grip, location, set construction, sound, wardrobe, production office, etc. ? Nope, and neither can any of the the well respected trainers that were involved with the program. All they wish is that they had a similar program when they started out in the business. CT is making it happen, with Andy's blessing or not. Even if the film industry was less than lackluster in CT for the next 5 years, they still anticipate 1 billion dollars coming into the state - 1 billion dollars that would have gone elsewhere. I know a few schools and social services that could use the extra money, and CT is giving it all it's got to help out its citizens. Well done Governor Rell, keep up the good work. As for Andy, I hope he keeps writing for the Advocate, just long enough to write a retraction.
Posted by withheld on 8.22.08 at 20.29
<>

Think about it - lost tax income to CT translates directly to less money available in the CT budget, which means some other state projects lose some of their funding - this money does not come from nowhere. Something else has to be cut.
Which civil expenses should we cut in order to bribe a producer to shoot in CT, or buy some producer a new beach house in Malibu?
New fire engines/ police cars/ ambulances/ school buses?
Bridge and highway repairs?
School lunch programs?
Additional teachers, cops, firefighters?
Unemployment Insurance?
There's no such thing as a free lunch. That money has to come from somewhere.
At the very least, CT should prevent the sale of unused tax credits to companies not otherwise entitled to them.
The way that is being abused is obscene.

Posted by filmmaker on 9.22.08 at 18.10
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