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Tax breaks ready for close-up

Audio engineer Don Caron edits the audio for
Audio engineer Don Caron edits the audio for "Max Rules," a movie being produced at North by Northwest in Spokane. (Christopher Anderson / The Spokesman-Review)

OLYMPIA – The Spokane-based film and TV production company North by Northwest is now bidding to work on a movie. The script, originally in an Anytown, USA, locale, was rewritten to set the story in Spokane.

“But we’re probably going to lose it to Winnipeg,” North by Northwest CEO Rich Cowan said.

Washington-based film and production crews are stuck in the financial equivalent of an arms race. Government incentives in Canada and surrounding states, Cowan and others say, make it cheaper to film movies and TV shows there.

“I lost a movie that would have come to Spokane last year to Poland,” Cowan said. ” ‘Brokeback Mountain’ takes place in Wyoming, but it was shot in Canada to save money. Nobody knows the difference.”

Trying to help, several Washington lawmakers are now proposing a tax break and other changes.

“The goal of these bills is not really to create a new industry in Washington state, but really to retain it in the face of growing competitive pressures all around us,” said Senate Majority Leader Lisa Brown, sponsor of Senate Bill 6558. Washington’s film and video work, she said, has shrunk from $50 million in 2001 to $13 million in 2005.

Neighboring states are also ramping up incentives. In August, Oregon Gov. Ted Kulongoski signed the “Greenlight Oregon” law, which gives filmmakers a 6 percent state rebate on local wages and other perks. And Idaho lawmakers are considering a bill to reimburse all sales taxes for productions that spend more than $200,000 there. A state task force appointed by Idaho’s governor also expects that state income-tax breaks for the industry will be proposed in Idaho later this legislative session.

Among the changes Washington is considering:

Brown’s bill would use tax credits to encourage up to $5 million a year in donations to a “Motion Picture Competitiveness Program,” which could rebate up to 20 percent of production costs for certain films and shows.

Another bill, SB 6557, would give a tax break for film and video production. Under the state’s unique business-and-occupation tax, such work is now taxed as a service. The bill reclassifies it as manufacturing. The effect: cutting the industry’s B&O tax to less than one-third of what it is now.

“I get very bothered when I watch a film that’s supposed to be located in Seattle and I recognize Vancouver, British Columbia, or someplace else,” said Sen. Jeanne Kohl-Welles, prime sponsor of 6557. “We need to take advantage of all the talent we have, in front of the camera and behind it, in our state.”

When the TV program “Rose Red” shot in Seattle, the six-month production spent $18 million, including $10 million in salaries and $2 million on construction work, according to Don Jensen, a former Spokane resident who is president of Alpha Cine film labs in Seattle. He predicts that the state, by bringing in more business, will take in more new taxes than the incentives cost.

“Lots of tax incentive bills provide industry with benefits for things they were going to do anyway,” said Jeff Johnson, a lobbyist with the state Labor Council. “This is different.”

Washingtonians like to think that the state’s scenery – the Space Needle, the Palouse, the ferries, Mount Rainier – will bring film companies here, proponents told lawmakers, but that’s not necessarily the case.

“It is a beautiful place, but there are lots of beautiful places,” said David Robinson, business manager for a production workers’ union. “The truth is that most movies can be shot almost anywhere. The first thing (studios) look at is how a job is going to pencil out.”

Cowan echoed that sentiment. Even if the film he’s bidding on is shot in Canada, he said, the script might still say Spokane. It’s easy to send out a camera crew for a few hours and shoot Spokane scenes, he said, then paste them into the movie.

“And all of a sudden people think it’s Spokane,” he said.


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