Arizona's Film Future

Will the Legislature ever give the state's movie industry a break?

It was late September, and in the 10th-floor offices of Mayor Jonathan Rothschild, officials were salivating over the notion of reviving Arizona's once-lucrative but now-moribund film industry.

There was Mike Varney, president of the Tucson Metropolitan Chamber of Commerce, and Brent DeRaad, chief of the Metropolitan Tucson Convention and Visitors Bureau. Shelli Hall, head of the bureau's Tucson Film Office, was chatting with Ward 6 Councilman Steve Kozachik. Pete Mangelsdorf, CEO of Old Tucson Studios, wore the aerie enclave's only bona fide denim.

After a few minutes, Mayor Rothschild brought the press conference to life. "We need the film industry back in our state," he told the small, hungry crowd. "It creates jobs beyond cast and crew."

From restaurants and hotels to transportation and insurance, said the mayor, "It takes a lot of real-world inputs to create the illusions you see on the screen."

Ideological illusions hobbling our film industry apparently beg for a reality check, too: Thanks to right-wing opposition, Arizona is one of only two Western states that offer no tax incentives to lure film companies. As a result, those companies go elsewhere.

In response, film-industry boosters have spent the last several years laboring to pass an incentive bill in the Arizona Legislature, to no avail. The 2011 session was particularly heartbreaking, as a measure sponsored by Republican Sen. John Nelson of Glendale was killed by fellow Republican Jack Harper, chairman of the House Ways and Means Committee. The bill would have provided a 20 percent rebate on taxable Arizona expenditures for film companies, and given them another 5 percent if they used locally based studios and hired Arizonans for their crews.

The $70 million cap would have included rebates for those who built soundstages and other facilities. Reaching that limit, says Hall, "would mean that they've spent $300 million in the state."

The formula is similar to those in other states that now lasso millions annually in film proceeds. Among them is New Mexico; according to Hall, our eastern neighbor has leveraged its 25 percent rebate into more than $200 million in annual spending by film companies.

This concept of sweetening the pot was first embraced by Canada in the late 1980s, and it was terrifically successful; within a few years, the United States was losing an estimated $10 billion in annual film revenues to that country.

As various states responded with their own incentives, Arizona found itself left further and further behind. While the state did institute a tax-credit plan from 2006 to 2011, its effectiveness was hindered by several factors, including the requirement that 50 percent of film-crew members be local hires. If the percentage dropped below that threshold for any reason, the companies could lose their tax advantage. As a result, many projects "wouldn't take the risk," Hall says.

While some conservatives claim disgust with the idea of offering any breaks to film companies, Hall says those companies know they're a valuable commodity "that are spending millions and millions of dollars in a short period of time. One television series can spend $26 million in a six-to-nine-month period of time. And they can do it year after year after year."

At the same time, Hall and other film proponents see smoother legislative sailing this coming year. For one thing, a primary foe—former House Speaker Kirk Adams—stepped down to run unsuccessfully for Congress. Boosters are also taking their message on the road, says Barry M. Aarons, a lobbyist for the MTCVB. "We've been doing forums all over the state, in Tucson and Phoenix and in Flagstaff. Those are designed to develop some grassroots."

As November elections loom, Aarons says he's also prodding film-industry folks "to write to the candidates, and talk to their legislators, and remind them that they need to tell their leadership that this is an important jobs bill."

He also suggests that frivolous incentives are in the eye of the beholder. "Some of the folks who are opposed to our refundable credit didn't have the same objection to another bill last year that had a refundable credit for manufacturers moving their research headquarters here."

Aarons says he hopes Gov. Jan Brewer—who supported that measure—will be equally generous to the film industry. "There have been no commitments made from the governor's office, though we did meet with her legislative director. We said to him that if there are certain things that the governor might like to see adjusted to make her more comfortable with it, we would certainly be wide open to considering those."

Back in the mayor's office, the gathering pushed for a full-court press. "Just sit through the credits the next time you go to the movies," Rothschild was saying. "Every one of those credits is jobs. High-paying jobs."

Kozachik spearheaded the press conference, and he followed the mayor at the mic. "There aren't a whole lot of ways to spin this," Kozachik said. "This is a jobs bill."

Of course, so far, it still isn't a bill at all. But the councilman says he has approached State Rep. Bruce Wheeler as a potential sponsor. Wheeler didn't return a phone call seeking comment.

Meanwhile, time may be running out. After several years of falling behind other states, Arizona's once-thriving soundstages and other facilities have either been shut down or moved elsewhere.

All of which exasperates people like Roy Zarow, business agent for the Motion Picture and Studio Mechanics Local 485. He told the group that he regularly confabs with big film companies. "And they say to me, 'What's with this state?' And I say, 'Well, it's the politics.'

"I'm careful when I talk to them, because I don't know if I'm talking to a Republican or an independent or a Democrat," he said. "But it always turns out that I don't have to be, because film in Arizona is understood by everybody as the last popular cause we may have going for us here."

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