$150M plan to lure film industry to Arizona advances

PHOENIX — State lawmakers are moving to give away up to $150 million a year in hopes of luring the film industry to Arizona.

Senate Bill 1708, approved Thursday by the Senate on a 21-7 vote, would provide tax credits to those who agree to produce and film productions in the state. Those credits would offset any taxes that the production company would pay while here.

What is causing some heartburn, though, is that these would be refundable tax credits. That means producers actually could recoup more than they actually paid.

Retro Tucson

Photos: Moviemaking at Old Tucson Studios

Rick Wiley / Arizona Daily Star

“What you’re really doing is cutting a government check for Hollywood, people who are certainly out of touch with the average citizen,” said Sen. Warren Petersen, R-Gilbert.

But Sen. David Gowan, R-Sierra Vista, said the credits are necessary to ensure that producers do not ignore Arizona when looking for locations.

Sen. Stephanie Stahl Hamilton, D-Tucson, said that’s already happening.

Consider, she said, “Only the Brave,” the 2017 movie about the deaths of the 19 Granite Mountain Hotshots who died while fighting the 2013 Yarnell Hill Fire. As it turns out, she said, the movie, which had a budget of $38 million, was not shot here.

“That is our story and that is our history,” she said. “It had to be filmed in New Mexico because it’s not economically feasible for them to shoot that film in our own state.”

Only thing is, the record on such credits in Arizona is not good.

A 2009 report by state commerce officials said the 2008 tax credits designed to lure Hollywood producers to Arizona actually lost the state $6.3 million that year.

According to that study, the productions given credits generated 317 full-time jobs in the industry. Another 413 jobs were created indirectly by Arizona spending by filmmakers.

All totaled, the report said, that generated about $2.3 million in additional state and local taxes. But Arizona gave out more than $8.6 million in credits to get that benefit.

The state got rid of tax credits a decade ago.

Sen. Michelle Ugenti-Rita, R-Scottsdale, called it “bad tax policy.” She told colleagues that nothing precludes movie producers from coming to the state now.

“What they’re doing is leveraging you, leveraging the taxpayer,” Ugenti-Rita said. “They’re seeing what they can milk out of the taxpayer.”

Gowan, however, said sometimes states like Arizona need to put a little money on the table to generate economic development. He said that’s how the state managed to land investments by Apple, Intel and Amazon.

“We needed to help those businesses think about Arizona,” Gowan said. He said without the incentives and tax credits “they would have flown right over us, gone into Texas or some other state.’’

And Gowan said these credits are different than what the state has provided in the past.

But Petersen wasn’t buying the claim that the $150 million investment each year in the movie industry would be more than made up with the revenues from jobs that industry would create.

“This is a totally bogus thing,” he said. Petersen said it ignores the fact that most jobs are created by small businesses, the people who he said will end up paying more to provide those tax incentives.

“This is a shift from small business owners, people working their butts off, to super-wealthy people,” Petersen said.

Gowan, however, said that ignores the fact that when major producers come to town they spend money — money that he said ends up in the pockets of those small businesses.

Sen. Rosanna Gabaldon, D-Green Valley, said the investment makes sense, recalling when she came to Southern Arizona in 1973

“I remember them filming in Old Tucson,” she said.

Much of what was there was destroyed in a fire in 1995. And the setting for more than 400 feature films and TV shows closed in August 2020 when the pandemic cut into visitors.

Pima County currently is hoping to find a new operator for the land.

“I believe this bill will be able to help with that,” Gabaldon said, saying the studio brought not just jobs but also tourism.

Sen. Christine Marsh, D-Phoenix, said she’s proof that films and TV shows generate tourism.

For example, Marsh said she took her kids to New Orleans after seeing “Double Jeopardy,” the 1999 movie filmed in and around New Orleans “because it looked like such a cool city.

And then there was a trip to San Francisco “because we used to like to watch the show ‘Charmed,’” she said, the city where certain exterior shots were filmed.

“We were always just looking for little adventures to go on,” Marsh said. “And we’d find something cool and go.”

And Sen. Lela Alston, D-Phoenix, told colleagues about watching the TV series “Yellowstone.”

“On every episode it says, ‘Thanks to the Film Commission of Utah,’” she said. And while it’s supposed to be about Montana, “it could have been filmed here in Arizona.”

The measure now goes to the House.