Tax incentives seen as next step to snag movies for Montana

The project had advanced to the point where the two men put together a 650-page report detailing how they would go about making a four-hour movie based on "Bury My Heart at Wounded Knee."

They delivered it about four weeks ago.

By VINCE DEVLIN of the Missoulian

http://missoulian.com/articles/2004/11/13/news/mtregional/news02.txt

"It took several small boys and large dogs to haul it in to HBO," said Tom Mickel.

"The story covers a geographical area from Minnesota to western Montana," added Patrick Markey. The report, "almost arcane in detail," he said, covered every question the two producers thought HBO executives might have about filming the project.

From crews to caterers, horses to rental cars, Mickel and Markey laid out their plan to film the entire story of the American Indian West within a 100-mile radius of Livingston. Within that area, a camera pointed east and north will capture the vastness of the Great Plains; one pointed west and south finds some of North America’s most magnificent mountains.

"That 650-page presentation answered every question we thought might come up," Markey says. "And when they were done reading it, they only had one question."

"Why don’t you shoot it in Canada?" the HBO executives asked.

"It all became an economic decision," Mickel said. "We know we have the skill, the resources, the scenery, the people, to make it in Montana."

"But if they can save 30 percent by shooting in Canada, that’s where they’ll go," Markey said.

Right now, anyone looking to make a movie (or TV show or music video or commercial) can cut 30 percent from their budget just by moving production across the border. Canada is one of several countries that actively court the Hollywood dollar with tax breaks and other incentives.

Eighteen made-for-TV movies filmed in Alberta during the last fiscal year provided Albertans with the equivalent of a year of work for 1,800 people, according to Alberta Film Commissioner Dan Chugg.

Losing production to other states and foreign countries costs Montana communities millions of dollars that would have landed in local economies. It forces hundreds of Montanans who work behind the scenes in the entertainment industry to go out of state for work. And it causes hundreds more, many graduates of Montana university film schools, to leave the state permanently to pursue their careers.

For four years, the Montana Film Center has lobbied to reverse the trend. Members say tax breaks and other incentives would level the playing field and bring Hollywood back. And, according to them, the state would quickly make up and eventually surpass, revenue-wise, what it gave away to get a viable movie industry back.

"We’ve been talking about it for four years, but nothing ever gets done," said one man at last weekend’s Montana Film Rendezvous, which annually devotes some (and sometimes, nearly all) of its time to the topic. "It seems like it makes perfect sense. My question is, why doesn’t anything ever happen?"

One reason is that government doesn’t move any faster than Hollywood.

And Hollywood – at least when it comes to the movie industry – is about as fast as a turtle on life support.

Mickel and Markey, partners in Crazy Mountain Ink, which they formed to develop regional material for the screen working with local writers, explained it during a breakout session that delved into producing.

Markey has been pitching, a la "The Sopranos" and "Six Feet Under," a cable television series based on the books by Livingston author Jamie Harrison, whose novels center on a man who returns to the small Montana town where he grew up and, almost reluctantly, finds himself elected sheriff.

Markey has the resume to get in the doors of HBO and Showtime, as well as major studios and production companies. The producer’s credits include two Montana-set films, "A River Runs Through It" and "The Horse Whisperer," as well as "The Joy Luck Club," "Joy Ride," "White Oleander," "The Quick and the Dead," "The Dark Wind," "The Tie That Binds" and "The Associate."

"We’ve been working on the Jamie Harrison project for eight years," Markey said. "It’s gone through many permutations with several directors attached to it. It’s been eight years and we haven’t made a dime off it. The process, to put it briefly, takes forever."

"You’d better have a passion for the material," Mickel said. "Because you’ll be living with it for 10 years."

Government grinds along at about the same speed sometimes, and the notion of tax breaks for the film and television industry were never popular within the administration of Republican Gov. Judy Martz.

"We’re kind of preaching to the choir here," Sten Iversen, director of the Montana Film Office, told the man who asked why something that seemed to make so much sense never got done.

Many of the people who attend the film rendezvous are Montana residents who work behind the camera – as casting directors, location scouts, cinematographers, sound and lighting technicians. They often work 12 or more hours a day, six days a week, during weeks or even months of filming.

"It’s not all limousines and cocaine," said producer Chris Cronyn of Missoula. "It’s a lot of hard work."

Cronyn hit on one problem proponents of incentives must overcome: perception.

Hollywood is seen by many as a place of excess, of out-of-control budgets, $20 million salaries and sometimes astronomical box office returns.

To this, you give tax breaks?

The reality is that those are the exception. No one, Markey said, expects movies with $100 million budgets to flood into Montana to shoot if the state enacts incentives.

"It’s really a jobs bill for working-class, blue-collar Montanans," the producer said.

"People tend to see it as a business full of flaky directors and stars making $20 million," said Mark Smith, director of the Louisiana Film and Television Office. "Those are the people who need to sit through the closing credits and watch all those names go by. Those are the people this film is supporting."

Were "Bury My Heart at Wounded Knee" to shoot in Montana, it would bring 125 to 150 jobs for Montanans for 100 days, Markey said.

The whole idea is that, once that project wrapped up, another seeking to take advantage of Montana’s incentives would be close behind it, making it possible for people who live in Montana to work in Montana, and for graduates of Montana film schools to stay in the state.

As more production work returned to take advantage of Montana’s incentives – and its scenery – more jobs would be created. And the revenue the state passed on to make it happen would not only be made up in volume, it would eventually increase.

Production has not dried up entirely. "Don’t Come Knocking," from filmmaker Wim Wenders and starring Sam Shepard, is in post-production after filming in Butte. Small independent films such as "The Slaughter Rule" and "Northfork" still get made in Montana.

But they are few and far between. Gone are the days like 1993, when "The River Wild," "Beethoven’s 2nd," "Holy Matrimony," "Iron Will" and "Return to Lonesome Dove" all filmed in the state, and even "Forrest Gump" dropped in briefly.

Today, Markey says, he could not get a studio to film "A River Runs Through It," a $20 million production, or "The Horse Whisperer," which had a budget of $80 million, in Montana.

They’d have been made in Alberta, or even New Zealand, before anyone OK’d Montana.

In some ways, the movie industry is nothing but a quick study in a boom-and-bust economy.

It shows up, the community changes dramatically, but briefly, then it goes away.

But proponents say from the time the first location scout shows up and rents a car, to the last lumber bought locally to construct sets, all the thousands – and sometimes millions – of dollars spent to make a movie are "supercharged" dollars. It’s outside money that never would have flowed into the local economy had the movie industry not showed up.

Even after production has shut down, all that money will recirculate through the local economy.

It’s also, they note, a non-extractive industry.

"We take pictures," Markey told the Bozeman Chronicle last month. "We leave money."

Mississippi lawmakers recently voted $350 million in tax incentives to lure a Nissan factory to the state, according to Ward Emling, director of the Mississippi Film Office.

"You give me $350 million in tax incentives, and I’ll give you a movie business for the next 3 1/2 centuries," Emling said at the film rendezvous.

But Mississippi is one of a handful of states that have also enacted incentives for the film industry.

"They don’t get a dime until we get the dollar," Emling said. "If they spend $40 million, they’ll get 10 percent back, and if they spend $400 million, they’ll get 10 percent back."

Sean Baker of ArtsMarket, a Bozeman research firm hired by the Montana Film Office to study the issue, said states that have enacted incentives have seen production growth of up to 300 percent in the first year.

"Millions of new dollars flow into the economy," he said. "You’re not extracting, not destroying. Montana jobs are created that would not exist, and you’ll increase state tax revenues. It’s a year-round creative industry with jobs for your university graduates."

Gov.-elect Brian Schweitzer was sold last year, when the Democratic candidate attended the film conference (no one from the Martz administration, which was also invited, was present).

"I came to find out what I need to do, whether it’s follow, lead or get out of the way," Schweitzer told them then. "But I want to know one, two, three, four, here’s what we need to do. If it’s tax policy, I want to know. If it’s promotion, I want to know. I want Montana to be No. 1 in the film industry, or we’re going to stay No. 50 in wages. You tell me how to turn it around, I’ll take notes."

During the campaign, Schweitzer proposed a 15 percent tax break on in-state production costs for those shooting full-length and short films, television programs or commercials in the state.

Production companies could get a 15 percent tax credit on all verifiable production costs in the state, including the cost of lodging and food, construction workers, sound, lights, extras, heavy equipment, and construction of props and expenditures for sound-stage construction.

Were a studio or production company to spend $10 million on verifiable movie-making costs in the state, it would receive a $1.5 million tax credit, which is a dollar-for-dollar reduction of taxes.

If the tax credit wasn’t needed, it could be sold to anyone else paying taxes in Montana.

Markey remembers attending a dinner at the Four Seasons in Los Angeles when Canadian officials announced they wanted Hollywood’s business.

"It was a fancy thing," he says. "Like, six forks. My first thought was, ‘Oh my God, they’re going to take all the business in a heartbeat.’ It was a shock. I figured the business would change forever."

Instead, they’ve fought back, and hope to join the likes of Illinois, Louisiana, Mississippi and New Mexico, states that have rejuvenated their film industries with tax incentives.

The question now is whether state legislators will see it as subsidizing an out-of-control and out-of-state industry, or as an aggressive economic plan designed to create jobs, keep Montana university graduates in the state, and bring new money to Montana’s economy.

Reporter Vince Devlin can be reached at 523-5260 or at [email protected]