Film Tax Incentives

“A Plumm Summer” A Flickering Ray of Hope for Montana’s Film Industry

Montana joins the tax rebate battle for Hollywood's dollars as Canada becomes a stand-in for Western-set films.

By Seonaid Campbell, 8-25-06

	ABOVE: Cinematographer Mark Vargo (lives in Montana) and director Caroline Zelder. BELOW: April Kelley puts in the slate as Animal Trainer Betty Vargo gets Sport ready for a chase scene with a bunch of local kids from Livingston and Bozeman. Photos courtesy of Fairplay Pictures.

A Plumm Summer, the independently-financed feature film currently being shot in Livingston and Bozeman, is heralded by its producers as the start of a new era of filmmaking in Montana.

Governor Brian Schweitzer made Fairplay Pictures feel as much, enticing them to the state with extra incentives, like office space and surplus state furniture -- on top of the 12 percent tax rebate on Montana labor and 8 percent rebate on in-state expenditures offered by the governor-championed Big Sky on the Big Screen Act.

Schweitzer is promoting A Plumm Summer as the first success of the act. Look a little closer, however, and you see that what appears to be a ray of hope is little more than a flicker.

Talk to crew members like 1st assistant camera Jamie Stephens or screenwriter T.J. Lynch, and they will express their dedication to making films in Montana.

The same goes for Mark Vargo, ASC director of photography. "To be a part of the first decent-sized movie in awhile is a neat thing," Vargo says.

Producer Frank Antonelli and director Caroline Zelder list Montana's advantages:

"It's one of the prettiest states in the country."

"You can't beat the summer weather in Montana."

"There's a good crew base here."

"But," says Zelder -- employing the dreaded conjunction that qualifies every positive statement -- "financially it definitely is a sacrifice."

Antonelli is more candid: "Montana will have to do a lot more if they want another film here."

A Plumm Summer, whose budget is $3.5 million, is small potatoes compared to films Montana has hosted in the past, such as The Horse Whisperer, which cost an estimated $85 million and brought significant revenue to the state. That was before 1996, when Canada enacted powerful, aggressive film incentives that revitalized the entire Canadian economy and turned Hollywood into a ghost town. The enticements offered under the Big Sky on the Big Screen Act certainly are an improvement but they still don't compare with those Canada offers. Consequently, Montana continues to lose hundreds of millions of dollars to its northern neighbor. Even producer Patrick Markey (The Horse Whisperer and A River Runs Through It), who fought tooth and claw to get the legislation enacted, shot his latest independent feature in Canada in order to make the bottom line.

	How Does Montana Stack Up? The Calgary Economic Development website says, "Welcome to The Heart of the New West." This new west features not only extractive industry but the exploitation of an even more lucrative -- and also renewable -- resource: entertainment. Canada's revolutionary tax incentive program, combined with a favorable exchange rate, sucked the life out of the American film industry in 1998. Montana was particularly hard hit because stand-ins for the state's scenery can easily be found in Canada. However, 35 U.S. states, including Montana, are now giving the Canadian provinces a run for their money by offering competitive incentives. According to the publication P3 Production Update, of the top ten states (excluding California) in which to film, Louisiana is ranked highest. Louisiana generated $640 million of film-based revenue in 2005. The state's program offers nearly irresistible rates: a 25 percent investor tax credit, a 20 percent tax credit on Louisiana labor, and a 15 percent infrastructure credit. How does Montana's Big Sky on the Big Screen Act compare? The Act has already boosted Montana's film industry by enticing A Plumm Summer, the $3.5 million independent film, to the state. Fairplay Pictures, producers of the film, is taking advantage of the Act's 12 percent tax credit on Montana labor, and 8 percent tax credit on in-state expenditures, saving an estimated $200,000. Had they chosen to shoot in South Carolina, however, their savings would have reached $750,000. South Carolina's governor, Mark Sanford, just upped the ante. Last year his state passed greater incentives: a 20 percent cash rebate on South Carolina labor, and up to a 30 percent cash rebate on expenditures. New Mexico has gone so far as to offer a 25 percent tax rebate on all production expenditures and labor. Officials there make a point of saying that this is a refund, not a credit. In addition, the state offers loans of up to $15 million in lieu of interest. How much money is at stake? In the fiscal year ending March 2006, the Province of British Columbia alone approved approximately $73.5 million in tax credits to 94 foreign productions. The total value of those production budgets was over $973 million. In other words, American and other foreign film studios paid $470 million in wages to British Columbia residents. In British Columbia, tax credits can total more than 30 percent of a film production's budget. For a film that costs $50 million, that represents $15 million worth of savings. Tax incentives and beautiful scenery alone are not enough to sustain a thriving film industry. Films require infrastructure and support services: an A-list crew base, experienced craft service providers, honey wagons (dressing rooms), large grip/lighting trucks, and cranes. Also vital are such services as hardware stores; office space and supplies; vendors of telephones, fax machines, copy machines, and cell phones; clothing stores, antique stores, restaurants, and hotels. Most importantly, a willing film office and state government are needed. Governor Brian Schweitzer pushed for bigger incentives to begin with, proposing a 15 percent rebate on in-state expenditures during his campaign, but by the time the deal was passed and signed into law, the rebate on in-state expenditures was 8 percent. The governor's senior counsel, Eric Stern says it will come up in the 2007 session. "There's another legislature coming up and these things are going to be discussed," Stern said. "Nobody's giving anything away." Stern explained, "These early productions are the most important and so you go out of your way to make sure they're successful." A Plumm Summer's director Caroline Zelder hopes to benefit from that attitude. "The next film we have is called Watch the Sky," she says. "I'd love to shoot it in Montana. It's the perfect setting for it." Her partner, producer Frank Antonelli adds, "The state of Montana did a really good job, so I don't want to slam them, but I do think they need incentives to do better."

By offering competitive tax incentives, states like New Mexico, South Carolina, and even Oregon are now reaping the benefits of what Markey calls the "low hanging fruit" of film production money.

So why is A Plumm Summer here? Certainly the tax credit tipped the producers' decision in favor of Montana, but the other reasons are more simplistic. Montana is home to Doug Metzger, the film's executive producer and 1st assistant director. "Doug lobbied us very heavily to come to Montana," Antonelli explains, "and he lobbied the Film Office."

Antonelli adds, "Doug feels that it's a Montana story and that it should be told in Montana." Not only is A Plumm Summer a Montana story, but its screenwriter, T.J. Lynch, is from Billings, and the main character, Herb McAllister, played by Henry Winkler, lives in Kalispell. (McAllister has a cameo in the film). In addition, Vargo and other key crew call Montana home. "I liked the idea of going home at night," says Vargo, "because living in Montana every movie I do is on location. I haven't been home in Montana during the summertime in about four years."

Of the ninety people working on the film, the majority are Montanans. Many, like Lynch and Metzger, are MSU film school alumni. "All the incentives in the world would not have been sufficient to bring us here without a crew base," says Antonelli. For crew members, A Plumm Summer is an opportunity to gain much-needed experience, sometimes in positions they're filling for the first time. "But," Vargo says, "they have to take a cut in pay."

And there again is the "but," -- the trade off. Even the owner of Filmlites Montana, a grip, lighting and production support company, who lobbied for the Big Sky on the Big Screen Act, compromised. "I gave them a very competitive bid…and sacrificed some money to try to get the job," says J.P. Gabriel. "Our incentive wasn't as big as South Carolina but our labor was willing to sacrifice."

Markey, who chaired the now disbanded Governor's Film and Television Advisory Council, says, "We should pay a living wage. It's not about Montana giving away the services of their workers." He believes that with incentives as low as they are, the only films Montana will attract are small budget independent productions like A Plumm Summer.

The producers of A Plumm Summer know this. They know they are the exception. But they are exceptional in another way as well, because they view their film as part of a larger effort to create a film industry in the state. Antonelli, Metzger, and Lynch each have film projects they want to shoot in Montana. "I have six other Montana scripts," Lynch says. "It would be heartbreaking for those films to be made in Alberta."

But -- and here we turn the camera on the state -- Antonelli and his colleagues believe Montana has to do its part. "The incentives need to grow in accordance with the other states and provinces," Antonelli says.

Antonelli points out that filmmaking is a clean industry that asks for little in return. "We don't require new traffic lights or any new zoning," he explains, "We simply come and spend 3 to 30 million dollars and then we leave."

Schweitzer fulfilled his campaign promise to promote filmmaking in Montana. The Big Sky on the Big Screen Act is a step in the right direction, a step toward developing a billion dollar, sustainable industry. While grateful, the filmmaking community now says that the state needs to take the next step. "There is huge economic development potential for Montana," Markey says, "but we need greater incentives aggressively marketed, and an infrastructure and support system."

Schweitzer is so committed to making an example of A Plumm Summer that he will play a cameo role in the film -- as a sheriff.

Perhaps the promise of similar appearances -- a la Hitchcock -- and maybe a few spots for legislators, would help persuade both to make Montana an even more hospitable place for filmmaking and filmmakers.



New West contributing writer Seonaid B. Campbell made the commitment to herself, at age ten, to have a different career every four years. How else, she reasoned, could she make documentary films, curate museum exhibits, write magazine articles, and have enough time to ski, bike, fish, hunt etc.? She has worked in documentary film and TV, and for the Sundance Film Festival. She lives in Livingston.

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