Wisconsin Film Incentives
An Initial Look
We are familiar with the benefit of tax credits at this point. You get to read the name Johnny Depp in the news 2 or 3 times a week. You also might get a part of the millions of dollars that are spent by productions. Wisconsin offers a 25% tax credit on production expenditures if you film in Wisconsin. (If you spend $1 million on production in Wisconsin, the state will give you $250,000 in the combined form of refundable and non refundable tax credits.) Wisconsin is new in the incentives game and the delays in the effective date of this law put us even further behind other states. The "technical clean up" bill is being rewritten for the next legislative session. Now is a good time to take a close look at our current incentives.The rules from the Wisconsin Department of Commerce say:
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“Incurred in Wisconsin” does not mean that accredited productions must buy from Wisconsin vendors… Non-resident wages and salaries…paid by another entity (such as a payroll company) qualify... Read the entire rules update here |
Simply put, Wisconsin tax dollars can be gained by hiring non-resident workers and renting from vendors from other states.
The idea is that productions won’t come into a state that doesn’t have enough crew or equipment unless the state gives them an incentive and in turn the production will hire locals as part of the crew. This is partially true. Most productions will hire locals to save money on travel expenses.
But there is a difference between being a “local” and being a “resident.” Most of the film industry in Wisconsin is located in Milwaukee. Madison has a smaller industry and the rest is spread throughout the state. There are four IATSE stage locals in Wisconsin (Milwaukee, Madison, Oshkosh and LaCrosse). A production filming in a remote location like Eagle River or Manitowish Waters would have almost no local crew to draw from. They could hire crew from Milwaukee or Madison, but would have to pay for hotels and other travel expenses.
Let’s take a hypothetical film production in Hudson, Wisconsin. Since the bulk of crew and rental equipment is 5 hours away in Milwaukee the production company decides to hire a “local” crew that wouldn’t need hotel rooms that is only 30 minutes away in Minneapolis. They also rent all the camera, lighting and sound equipment from Minneapolis. All the money the company spends on crew and rentals from Minnesota can still be eligible for the 25% tax credit from Wisconsin since filming is taking place in Wisconsin.
Let’s look at one of the examples we have at this point of a production that gained accreditation, Public Enemies. The complete economic benefits won't be known for some time, but we do know that this film spent millions of dollars in Wisconsin. Let’s break down who actually worked on Public Enemies. According to Mark Hogan (BA of IATSE local 476, Chicago) about two-thirds of the crew was from Chicago. Film Wisconsin and the Wisconsin IATSE locals have said that 240 stagehands were hired to build sets as well as fill in spots in the first unit crew. IATSE Local #470 (Oshkosh) took in wages and benefits in the amount of over $400,000 which is 20% of their entire year. You can read the Local #470 economic impact statement here. (More information can be found in this Associated Press article July 16 - Star Tribune.)
This information is good news to the people involved and to the state in general, but an informal survey conducted by Badger Guide LLC showed that there were in fact very few phone calls at all placed to Wisconsin film technicians and rental houses. Of film industry specific jobs the production hired only a handful of people. Were it not for the amount of set construction on this film, it is arguable that there would have been only a few Wisconsin residents hired. There are many reasons for this: The film originally was to be shot primarily in Chicago, there are IATSE jurisdiction issues, Wisconsin has no studio mechanics local, and basic nepotism. Many of these issues will naturally work themselves out with time and are not uncommon in states with new film incentives.
The reason we are looking at here is that there is no incentive or requirement in this law to hire Wisconsin residents or rent equipment from Wisconsin’s rental houses. There is not much reason for a film of this nature to hire what few film technicians there are in Wisconsin when the ranks can be filled much easier from a larger market. While this is great for hotels and restaurants the idea behind bringing business into Wisconsin is to create jobs for Wisconsin residents. Building a crew base won't happen if our incentives are aimed at attracting large films that don't have to use Wisconsin residents in order to gain a tax credit.
Additionally, the State may think that large films are the only productions worth bringing into Wisconsin. It may not realize the steady stream of income that can be derived from commercials and smaller films. The smaller projects may not see as much press interest, but these are the type of productions that use local labor, talent and rental equipment.
Bringing in this kind of work is hampered on two levels. One is the requirement of $50,000 in wages and salaries for short productions and $100,000 for features. That requirement is not total budget, but salary and wages. The current size of the film industry in Wisconsin would benefit from attracting work of all sizes, building from the ground up. As a state attempting to grow an industry should we say "no" to business?
The other issue that hampers attracting more of the film business is the difficulty of the application process. Local producer Lisa Gildehaus has gone through the application process twice and has found that it is most discouraging. While the first application was denied for not meeting the budgetary minimums, the second was denied three weeks after production had taken place, stating that the project didn't qualify because it the application was not submitted during the bidding process. By requiring an application during the bidding process the Department of Commerce could receive multiple applications for the same project. Why would a production company want to fill out an application for a job it may not get and why would the Department of Commerce want 30-40 pages of paperwork that would simply be voided once the job is awarded? To say that this is discouraging to commercial work is an understatement. There are other states willing to hand out tax credits for commercial productions. Other states also have a simpler application form, one page where the Wisconsin application is 22 pages long.
Two weeks after the second rejection Gildehaus received a call from an out-of-state production company looking to film in Milwaukee if it could take advantage of the tax credits. Unfortunately, the company was calling with an awarded job, cash in hand, that no longer qualified for our tax credit process.
While we can clearly see how beneficial film industry work is to our state's economy our current law is saying "No thank you." to certain types of business. This problem is only made worse when you realize that the Department of Revenue has been auditing businesses in the film industry for "errors" in the way sales and use tax has been collected and paid to the state. This will be the subject of a future newsletter. We should realize, however, that this mixed message from the state can give Wisconsin a bad reputation. The press releases have been saying, "Open for business!" but behind the scenes it's a different story.
A Tip of the Hat
As a side note we would like to thank Johnny Depp for shutting down production until Michael Mann treated the crew decently.Send comments regarding this article here:
Comments:
| i'm curious for details about your mention of depp holding mann to decent treatment of the crew... can you elaborate on the event? thanks, e ~ Good read. What was the Johnny Depp shutting down the movie deal? I heard a little scuttlebuttle, but never the whole story. ~ How bout that Johnny Depp, huh? I heard some great things about him. He did the same thing in Chicago. Doubt he and Michael Mann will be working together again any time soon. Tim ~ Hello, Nice article. Just a point on the IATSE 470 statement. The $400,00.00 was for Oshkosh only. We also covered Manitowish Waters and Beaver Dam. Our total wages and benefits for the Public Enemies film was over $741,000.00. Under the IATSE Area Standards Agreement workers were still considered 'local' as long as they live within the jurisdiction of the IATSE local administering the agreement. IATSE 470 covers the Manitowish Waters area as well as Wausau, Stevens Point, Green Bay, Marinette, Rhinelander, Antigo, etc. Stephen Dedow Business Representative IATSE Local #470 ~ Wow! Thanks for your perspective. We tend to get the rosier version of what is going on. It is good to hear about the nuts and bolts of actually utilizing the incentives. Thanks, Maureen ~ I worked the Dep Film. I can personally vouch that there are qualified crew people all over the state that can be hired as local crew. IATSE 470 has been granted jurisdiction over the Area Standards Agreement in N. E. Wisconsin and we are proactively organizing to expand our ability to fulfill the needs of any production in the future. Rick Moore Member in Good Standing |
