It’s staggering that you would start your argument with the false premise that the primary role of state film incentives should be to serve the needs of film producers. State film incentives serve two primary functions: Job creation for state residents, and economic activity that is going to return an investment for the state that’s putting up the cash. Unless incentive programs demand those two goals from producers, they aren’t serving the state, and they aren’t a good use of tax payer resources.

As we’ve seen throughout the two decade history of state film incentives, states engaging in a battle of give-aways has resulted in a race to the bottom for both the states putting up the cash, and for our nation’s film crews. This failed system of incentives that you continue to champion has resulted in a hugely inefficient system with a massive amount of taxpayer waste. The average return on investment is currently a 30% loss. This is not sustainable for the states. Something needs to change.

Unfocused giveaways return little of lasting value to the states. Producers such as yourself make out like bandits, because the resultant bidding war between states results in a buyer’s market, while the film workers and the states see their bargaining power and their incomes reduced. The only way for long-standing film communities such as Chicago to stay economically competitive is to enter into a bidding war with newcomers that have far less of value to offer to offer film makers, but who buy their way into the film job marketplace anyway with cash bribes.

Talent level and efficiency of crews used to be big marketing tools for the states, but with the spread of film incentives, talent pools have largely ceased to be much of a consideration for many producers. They bring in a few of their own people as department heads (as they did with Divergent), and hold them accountable to get the job done. As a result, many producers would literally hire trained monkeys for most positions on their films if it would save them 2% of their budgets.
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Let’s use Louisiana and Michigan as examples of how film incentives work:

Louisiana’s program isn’t succeeding for the reasons you claim, it’s succeeding because it caught on early to the false promises of the trickle-down economics, and sought to limit the potential for greed and waste with the film projects that they fund. Louisiana’s film program demands that their funding considers the goals of the state on par with the goals of producers. You are arguing for a wide-open, no-holds-barred model that fosters inefficiencies.

Lousiana’s model does exactly the opposite, requiring up-front that producers return something of lasting value to the community. If they want to maximize their incentives, projects filming in Louisiana have to either put down permanent roots, or agree to multiple projects, or use local labor, or act in other ways that demonstrate that they are returning permanent value to the state, and not just taking the money and running.

The goal of any state film incentive program should be consistency and permanence of jobs. The system you argue for accomplishes exactly the opposite, turning film workers across the nation into permanent nomads, as we follow the work from state to state as the flow of incentive dollars shifts to whichever state is offering the most incentives that year.

We can’t judge incentive success by the number of films being made in a given state. All that proves is that greed will find a way. Instead, we need to gauge efficiency and sustainability for the money being spent: What long term goals of the state are being achieved?

Comparing incentive size to number of jobs created, Illinois’ incentive program is currently over seven times as efficient as Michigan’s. During the height of Michigan’s film incentive give-aways, it was over twelve times as efficient. While this math may not matter to you, it damn well matters to the states and to their local film workers, whose bottom lines are being negatively impacted by other states buying their jobs out from underneath them.

At the height of Michigan’s incentive give-aways, the unlimited pool of cash attracted far more work than Michigan’s crews could staff, pulling that work away from other established film centers such as LA and Chicago. That reality kills those of us trying to help you get your films made. If you do that to us for long enough, there won’t be any of us left to service your projects. After a certain point, it just stops being worth it.

Over 90% of all department heads for those Michigan projects needed to be brought in from out of state because Michigan simply didn’t have the talent level to support their level of giveaways. By contrast, during the height of Illinois’ incentives, the majority of our film workers are employed at home, rather than having to be on the road. There is no worker shortfall, there is no waste in the level of incentives being offered. Every dollar spent serves the needs of the local film workers, and returns value to the state.

While Illinois’ model could use some tweaking to help attract a steadier stream of work, to its credit it is one of the most efficient film incentive programs in the US, dollar for dollar. As a result, Chicago has been able to maintain its world-class talent base, despite the model of film incentives that you prefer decimating other film communities across our nation.

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The moral of the story is that states and film producers need to stop playing these self-serving financial games with each other, because it destroys, instead of fosters, film communities. We need to sit down at the table to define what we can, and should, be doing for each other in return for the hundreds of millions of dollars that are passing hands. Producers such as yourself need to step away from your spreadsheets for a moment and consider experience and efficiency of local crews as tools to help you make a quality product while bringing your projects in on time and on budget. We need to work together to find the formula that will allow you to bring work to our communities, and allow us to help you make the best product possible.

The PERMANENCE and QUALITY of work brought into a state needs to be given far more credence than QUANTITY. Michigan is a case in point. For three years it offered the largest film giveaways in the nation, yet the state is no further down the road toward having a sustainable film community today than they were before they threw away half a billion dollars trying. Their incentive program was an unfocused greed fest that utterly failed to fulfill its promises. Despite the massive amount of temporary work that the giveaways created, nothing good came of it for those that were providing the cash and the talent pool.

Producers, on the other hand, had an endless pot of 42% rebates available to them, and would often choose the “savings” that Michigan was offering them, even though they were 4th or 5th in line to film in the state, and knew upfront that they would be working with local crews that had often never been on a film set before. The big losers were the state, who saw a huge negative return on their investment, local permanent film workers who saw their jobs disappear as soon as the incentive largesse was reduced, and national film workers who had to abandon their families and travel to Michigan to fill the glut of jobs that were stolen from their own states to begin with. To what end??

We don’t do that in Chicago. If you film on a union project here, you’re going to have crews who know what they are doing and who have been time tested. If we don’t have the crew to attract a 7th or 8th project, we’re not going to bullshit you into filming here. We’re going to tell you up front, because we want every project to get our best effort, so film makers will choose to come back again and again. That’s how film incentives should work, value returned for value.

Bottom line, the old-school model of “serve-the-producers” at all costs is on its way out because the math simply doesn’t add up for either the states or for film communities across the US. The new models that are evolving will need to quickly prove that they are both more efficient and more sustainable for the states than the old models. The days of free lunch for producers is over. If these partnerships are going to continue, we’re all going to have to ask ourselves what we can do to assure a fair return on each other’s investment. More and bigger giveaways is not the answer.

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A couple other brief notes:

- Funding workers from out-of-state serves nobody’s interests EXCEPT producers. The same is true of ATL talent. This is especially true in film communities that maintain a large, across-the-board base of world-class talent such as Chicago. Why should Illinois pay for the right to have a given actor working in our community? Where’s the return to the local talent base or to the state taxpayers for that senseless give-away? What you are proposing doubles or triples the cost of providing the same local jobs. When states agree to pay that bribery, film communities start falling apart.

- Your assertion that bond companies require department heads to be flown into Chicago from L.A. or NYC is grade-A bullshit. I cannot tell you the number of times that the talent level of department heads that were brought in from out of state failed to meet the standards we hold ourselves to in Chicago. The decision to hire out-of-state is made by producers alone, who consider using people whose talents are known to them to be a worthwhile investment when facing extremely tight budgets and time-lines. It’s a trust issue.

Chicago is not unique in this respect. It happens across the nation, regardless of available local talent. It even happens when projects developed in LA film in NY, and vice-versa. The ONLY people which require bonding is select above-the-line staff: high-cost actors, a director, and perhaps a DP or Designer who would endanger completion of the film if they became incapacitated. To claim that a production would be held up because one of 30 or 40 department heads became ill, shows just how far you will go to stretch the truth, and just how severely you underestimate Chicago’s world-class crews. Ask around, and you’ll find that there is no comparison to Chicago’s crew capabilities. Other cities may have larger overall bases of staff, but none with a staff depth 4 or 5 shows deep has an average training or skill level comparable to Chicago.

- Your claims that local film workers could improve their skill levels from the types of project you could bring to our city brought quite the smile to my colleagues in Chicago. The reality is that while working on the types of projects that you attach yourself to, we spend much of our time teaching the producers how to get their films made efficiently. I don’t say this condescendingly. A huge part of our role is to use our experience gained making films for decades at the top levels, to assist relatively green producers such as yourself in getting your films made far more efficiently than you possibly could hope to do with less experienced crews.

Give us a shot. We’ll do your film proud, and save you money in the process.

Jeff –

You state, “Allow wages for out-of-state department heads to qualify for the credit. This helps everybody.”

How so?

In Louisiana, we have a 5% bump to the overall production/tax incentive from 30% to 35% for hiring locally. The common thought process being productions have an incentive to hire locals over out-of-state crew talent.

I don’t believe the 5% bump is the correct approach. I believe allowing all wages with state income taxes being taken out to qualify.

“Allow wages for out-of-state above-line-talent talent (who are working in the state and paying state taxes) to qualify for the credit. If a wage cap on non-resident ATL is necessary, then cap it at $1-million.”

Currently, there are bills in the Louisiana legislature which want to cap ATL at $1M. And, there are following arguments stating if this ATL cap is put in-place, the entire Louisiana film industry – Hollywood South – will collapse.

I’m still on the fence with this one requirement. Your thoughts?

– Stan