By Corinne Murdock |
On Wednesday, the Arizona Senate Appropriations Committee passed budget legislation to offer tax credits to movie studios, after a previous effort on the matter failed. Legislators resurrected this effort by introducing it through a strike-everything amendment on HB2156 — its similar predecessor, SB1708, passed through the Senate but failed to make it to the House floor earlier this year. Analysis of the predecessor bill estimated that it would incur losses to the state averaging $150 million.
The legislation would establish a program to promote workforce development and expansion of the movie industry. Further, movie companies would receive credits up to 15 percent if they spend up to $10 million in production costs, 17.5 percent if they spend over $10 million up to $35 million, and 20 percent if they spend over $35 million.
According to the Nashville Film Institute (NFI), the average cost of making a feature film ranges between $100 and $150 million, though it noted that some comedy and animated feature films like those from DreamWorks average between $70 and $90 million.
AZ Free News reviewed the production costs for mainstream feature films in theaters currently; all are well over $35 million. The blockbuster hit “Top Gun: Maverick” had a production budget of $170 million (as of this report, the film has grossed over $900 million worldwide in under a month). Pixar’s latest animated film, “Lightyear,” cost about $200 million to produce. The biopic, “Elvis,” had a significantly lower cost at $85 million.
The legislation would also limit tax credits exceeding $150 million in any calendar year from being preapproved.
Nick Simonetta, a lobbyist, testified to the committee that leadership in both chambers wanted to move this bill at this time. Simonetta said that this version of the bill, HB2156, was an improvement on a predecessor tax credit bill passed by the committee in February, calling the updated bill the “Cadillac” of accountability.
“You cannot claim a credit in this state for the benefit of the program without paying taxes on the expenditures that you’re making,” said Simonetta.
Simonetta testified that HB2156 was ultimately an infrastructure bill that would create a nonexistent industry in Arizona. He referenced two different movie filming complexes being built in the Scottsdale and Buckeye areas.
“The folks investing in these facilities to build movie sound stage complexes and all the things that go with them — the buildings, the office space, the commissary, the mill space, the back lots, everything — this will be investments of hundreds and hundreds of millions of dollars, even just for the first phases of these complexes,” said Simonetta.
State Senator Sonny Borrelli (R-Lake Havasu City) joked that he was only voting for the bill with the contingency that State Senator David Livingston (R-Peoria) didn’t get a movie role.
State Senator Kelly Townsend (R-Mesa) flipped her vote this time around, having voted against the legislation’s predecessor previously. Townsend didn’t offer an in-depth explanation on her change of heart. She joked that Simonetta’s “little extra explanation” past the cut-off time for his testimony was enough to change her mind.
The Arizona Free Enterprise Club criticized the tax credit bill, arguing that it would cost Arizonans hundreds of millions in taxpayer dollars to subsidize Hollywood liberals.
Arizona Republican Party Political Director Jeremiah Cota commented that the tax credits only sweetened the deal for Democrats, and played into “woke” agendas contrary to Arizonan interests.
The state’s previous tax credit program for movie companies that began in 2005 bled the state of millions of dollars. At the time, Canada introduced tax incentives that pulled movie companies away from Arizona and all other states. Incentives like Arizona’s tax credit program were launched in response to Canada as a means of enticing movie companies to return to the states.
Arizona’s tax credit program lapsed officially in 2010, though it was shut down by the 2008 recession.