COLUMBIA -- South Carolina and other states have been pouring millions more into incentives to lure Hollywood films to their states to create jobs even as film-production jobs have dwindled outside California.
Now, South Carolina is backing down a notch after finding that the films it won hired too many out-of-state residents.
California's dominance of television and film production trade has grown in this decade, even as other states have upped the ante from tax exemptions to tax credits to up-front cash and -- in the case of New Mexico -- even state-paid land and buildings.
South Carolina spent about $15 million last year on its biggest film-incentive program, which offered an up-front cash subsidy at 20 percent of wages and 30 percent of purchases.
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The changes that went into effect July 1 lower incentives for out-of-state hiring and spending by films. Rebates for out-of-state hires are now limited to 10 percent and rebates were eliminated for out-of-state spending.
Television productions were exempted after "Army Wives" threatened to abandon its set in North Charleston.
Economists said out-of-state spending creates no economic benefit to justify the incentives.
"For the state, you want the fiscal benefits to outweigh the costs," said Doug Woodward, a research economist at the University of South Carolina.
"You don't want to give away more than it costs."
The state landed seven films and a TV series in the past year.
Much of the subsidy went to workers and suppliers from outside South Carolina, leading the Commerce Department to tighten the rules in June so that films get lower rebates for out-of-state employees and purchases.
The rules remain the same for television productions, such as the cable series "Army Wives," which threatened to pull out of Charleston if its incentives were lowered.
S.C. production pool tiny
South Carolina has poured millions into film incentives to increase the base of production workers -- those who operate the cameras, set up lighting, build sets and run errands.
South Carolina won "The Patriot," starring Mel Gibson, in 2000. More recently, "Death Sentence," starring Kevin Bacon, was shot in Columbia last fall and opens Aug. 31. "Army Wives" shot its first season in Charleston this year. Scenes for the movies "Asylum" and "Gospel Hill" were filmed in Rock Hill, and scenes from "Patriotville" were filmed in Chester.
Yet, South Carolina's pool of production workers is less than 300 -- tiny even for a small state. South Carolina's share of film jobs nationwide ranked 36th among states.
And the number of people employed in television and film production in the state has actually declined from 365 jobs in 2000 to 239 jobs in the first nine months of 2006, according to the latest counts from the U.S. Bureau of Labor Statistics.
Rhode Island, Louisiana and New Mexico have been gaining film jobs fastest, but the number of jobs is small compared to their overall economies.
California dominates the industry, accounting for about 60 percent of the nation's 192,531 TV and film production workers in 2006, according to the Bureau of Labor Statistics.
Other states lost about 12,000 film jobs from 2000 through 2006, while California gained 23,000 film jobs, meaning South Carolina and other states have been competing for a small share of work with no long-term growth trend.
In recent years, productions have increasingly traveled for lower costs. Canadian incentives and a weak Canadian dollar drew many productions north in the 1990s. In more recent years, Romania and the Czech Republic have become popular low-cost havens for moviemaking.
Barry Jossen, executive vice president of ABC Studios in Los Angeles, said South Carolina's main shortcoming is its sparse pool of specialized suppliers, studios and talent -- workers trained to build sets, erect lighting and handle other tasks that require experience in film production.
Outside Hollywood and New York, those facilities and talents have grown in Toronto, Vancouver, Salt Lake City and, most recently, the New Mexico cities of Albuquerque and Santa Fe, Jossen said. And they have done so "because of significant and reliable tax credits," he said, emphasizing "reliable."
While incentives are costly to South Carolina and other states, from the point of view of producers, they are merely helping close the resource gap.
South Carolina, like many states, has long exempted film productions from paying sales or hotel taxes, a considerable savings for projects that spend millions by the week.
But Jossen said producers considered Charleston at its site for "Army Wives" only after the Legislature enriched its incentives with cash rebates for up to 20 percent of labor costs and 30 percent of spending for goods and services. The rebates carried extra value because they are paid soon after production. Other states might have higher tax credits, but they pay later and are more complex to handle.
Without the new rebates, "We would not have looked," said Audrey Gelb, vice president of production for the series.
The producers erected a set and assembled a crew of about 125 full-time employees and hundreds of extras and occasional workers in January. Many of the full-time production workers were hired from Wilmington, N.C., and Charlotte.
Over six months the show spent $9.3 million on pay, goods and services, according to S.C. Commerce Department reports. S.C. suppliers collected almost all the $2.9 million the show spent on goods and services, and S.C. residents were paid a third of the $6.4 million payroll.
Films hired few from state
By contrast, reports released by the department for four of the eight films shot in South Carolina in the past year show South Carolinians were hired far less often on those projects.
S.C. companies captured only 26 percent of the $15.4 million spent on goods and services, and S.C. residents received only 10 percent of the $16.8 million in payroll on four of the films -- "Death Sentence," "Asylum," "Who's Your Caddy?" and "Patriotville."
Wage and supplier rebates last year included $2.1 million for "Army Wives" and $5.9 million for the four films.
The "Army Wives" crew was ending the first season of filming last spring when the S.C. Commerce Department proposed shaving the rebate for out-of-state workers and suppliers.
The producers decided "we were moving" if the cut was made, Jossen said. In June, the Commerce Department amended the restrictions to apply only to "transient" productions -- films, not television series.
Commerce Department spokeswoman Kara Borie said the changes were minor fixes needed to establish in-state hiring and spending incentives -- a repair supported by the high levels of out-of-state spending by films shown by the reports.
Woodward, a USC economist who frequently measures economic impacts, said the Commerce Department's caution with film incentives is understandable. The governor's goal is to raise per-capita income "not of people in California or New York, but of people in South Carolina."
But film advocates warned that the change would repel feature films from the state, forcing the state's few film workers to move to find work.
"When there are more than a couple of major productions in the state, there are not enough local crew to go around. So companies have to bring in additional employees to complete the job," wrote USC film instructor Matthew Sefick in an e-mail last month.
Hiring outsiders benefits the state because they spend here and share their experience, helping build the state's cadre of film workers, he said.
Geoff Herbert, a 46-year-old grip from Greenville who helps set up lighting on sets, got to drive home from work each night for the first time in 14 years after he was hired to work on "Leatherheads," a George Clooney film shot in the Upstate last year.
"The future of productions coming into South Carolina is rather bleak," he said, "which means I will have to go out of state to find work, which frustrates me to no end."