'Colossal win' for Arizona's film industry: Moviemaking might make a comeback next year
Movie and TV show filming could soon make a major comeback in Arizona.
Beginning next year, the recently enacted Arizona Motion Picture Production Program will offer tax credits to qualified film, television and commercial productions that primarily film in the state.
House Bill 2156, which proposed amending the Arizona Revised Statutes to institute the program, passed the legislature in June and became law on July 6 without Gov. Doug Ducey’s signature.
The news, which the film office for Tucson and Pima County called a "colossal win for Arizona," comes after years of studios and production companies choosing to film in neighboring states such as New Mexico, Nevada, Utah and California, which subsidize productions that take place there.
Most states offer incentives to attract productions. Arizona had such a program in place between 2006 and 2010, which cost the state more money than it generated in 2007 and 2008, according to a 2008 report by the Arizona Department of Commerce.
Through the Arizona Motion Picture Production Program, the state will offer $75 million in tax credits in 2023, and that amount will increase to $125 million by 2025.
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Arizona has been a filming destination regardless of financial incentives
Not all productions have been scared away from Arizona, however.
The Disney+ movie “Noelle,” which stars Anna Kendrick and Bill Hader, and the Academy Award-winning film “Nomadland” — which earned Oscars for director Chloe Zhao and actor Frances McDormand — filmed in Arizona in recent years. In late 2021, the TV cooking competition show "Top Chef" filmed its finale in Tucson, incentivized by Visit Tucson's offer to cover $750,000 in production costs.
Arizona has been the backdrop for scenes in dozens of well-known movies over the decades, including “Bill and Ted's Excellent Adventure” (1989), “Little Miss Sunshine” (2006), “Jerry Maguire” (1996) and “Psycho” (1960).
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How much will Arizona give in tax credits for filming?
The Arizona Motion Picture Production Program’s aim is to “promote the workforce development and expansion of the commercial motion picture industry in this state,” according to the bill’s text.
An approved production can receive credit for a percentage of its taxable, qualified costs paid in Arizona. The tax credit amounts vary:
For up to $10 million spent, the tax credit is 15%.
For $10 million-$35 million spent, the credit is 17.5%.
For more than $35 million spent, the credit is 20%.
Additional 2.5% tax credits are available as well.
In 2023, the state will set aside $75 million for qualified tax credits. That amount will increase to $100 million in 2024, then $125 million in 2025 and every year thereafter. The maximum amount a production can receive in tax credits is $25 million.
Five years after the first preapproval letter is sent and every five years thereafter, the program will be audited. Ten years after the first audit, the Arizona Commerce Authority will make a recommendation as to whether to continue the program.
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How productions can be eligible for tax credits
Motion pictures, by the law's definition, include feature films, episodic series and commercial advertisements. Productions that violate obscenity laws and involve sexual exploitation of a minor, as detailed in the Arizona Revised Statutes, are among the applications that would be denied.
Filming should primarily take place in Arizona, either in a studio or on location. "All preproduction, postproduction and editing" should also take place in the state if filmed "primarily at a practical location" as opposed to a production facility. Production companies would also bring money to the state by hiring laborers, obtaining services and renting facilities and equipment, among other expenditures.
One more stipulation is that the production's credits must note that filming took place in Arizona.
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It's Arizona's 2nd effort to attract film and TV projects
The Arizona Motion Picture Production Program's predecessor was the Motion Picture Production Tax Incentive Program, which was enacted in 2005 and became effective on Jan. 1, 2006. It was overseen by the Arizona Department of Commerce and was "created to promote and stimulate the production of commercial motion pictures in Arizona," according to the commerce department.
The program offered $30 million to $70 million, with the total rising each year between 2006 and 2010, but ended when it was not reauthorized by the Arizona Legislature. Eligibility requirements were not as extensive as the Arizona Motion Picture Production Program's, and the program ended up costing the state millions of dollars.
In the first year of the tax incentive program, Arizona saw 48% more projects filmed in 2006 compared to 2005.
However, the commerce department found the program to be costly. According an annual report, production companies spent $44 million and created 730 jobs, which generated state and local taxes collected totaling $2.3 million in 2008.
They received $8.6 million in tax credits that year, “resulting in a net cost to the state general fund of $6,324,023.” That was drastically more than the $1.7 million net cost to the general fund in 2007.
The Motion Picture Production Program will lose money for several years before starting to generate profit for the state, according to an economic analysis by the Tempe-based Rounds Consulting Group.
Reach Entertainment Reporter KiMi Robinson at kimi.robinson@gannett.com. Follow her on Twitter @kimirobin and Instagram @ReporterKiMi.
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This article originally appeared on Arizona Republic: Why movie, TV filming is set to make a comeback in Arizona
