Arizona lawmakers weigh revival of film tax incentive

Arizona’s deserts, forests and mountains have long made the state an ideal location for westerns, including John Wayne’s 1959 movie “Rio Bravo,” Clint Eastwood’s “The Outlaw Josey Wales” and the 1957 Glenn Ford drama “3:10 to Yuma.”

But one notable western that was intended to shoot in the state, Disney’s upcoming movie “The Lone Ranger,” filmed mainly in neighboring New Mexico, with only a few scenes shot in Arizona.

The reason: Arizona is among only about a dozen states nationwide that don’t offer a film tax credit, making it tougher to attract film crews as other states such as Louisiana, Georgia and North Carolina grab a large share of the Hollywood pie.

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Now lawmakers in Arizona are debating whether to revive a film incentive that expired in 2010.

In the hopes of enticing entertainment companies to the state, Sen. Al Melvin (R-Tucson) has introduced a bill that would offer a 20% production rebate to companies that spend at least $250,000 producing entertainment in Arizona.

The credit would be capped at $70 million annually and would include television programs, video games and music videos, as well as feature films.

An incentive program was created in 2006 but ended in 2010, during the recession, when many cash-strapped states began to rethink giving subsidies to the film industry.

Supporters argue that the loss of the program has hurt the state’s ability to attract film crews and jobs, putting it at a competitive disadvantage with nearby New Mexico and Utah. They cite a 2010 Arizona Department of Commerce report that 56 projects were filmed in the state from 2006 to 2010. Spending on those projects totaled $110 million in Arizona.

“To be competitive we have to have it,” Mike Kucharo, president of the Arizona Film and Media Coalition, said of the proposed tax rebate.

Spectacular desert landscapes, the Grand Canyon, and old mining and western towns have long made Arizona a popular film location, not only for westerns but also major Hollywood movies, including “Star Wars VI: Return of the Jedi,” “Planet of the Apes” and “The Kingdom.” But the state has been losing ground in recent years, especially to its next-door neighbor.

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More than $200 million was spent in New Mexico for entertainment production last fiscal year. If $60 million were spent in Arizona, the economic impact would be an estimated $300 million, said Shelli Hall, director of the Tucson Film Office.

“This will have an impact on revenues,” Hall said. “We used to be a prime spot for filming.”

The film tax rebate bill was approved by the Senate Commerce, Energy and Military Committee, but it hasn’t passed the Senate Finance Committee. It faces an uncertain outcome in the House.

Similar bills have been introduced for the last three years but died in the face of strong political opposition from groups such as the Arizona Free Enterprise Club that argue the proposed subsidies are a misuse of government funds.

“There’s no way this will be able to create a sustainable industry for the long term, and in the meantime, it is a poor use of taxpayers’ dollars,” said Joe Henchman, vice president of state projects for the Tax Foundation, a Washington research group opposed to film tax breaks.

“States like New York, California, Louisiana are throwing hundreds of millions a year at this industry. Go compete over something that you don’t have everybody fighting over,” he said.

But Kucharo remains optimistic the legislation will pass while acknowledging the strong opposition from critics.

“They’re very organized and passionate about their beliefs,” Kucharo said.

business@latimes.com

Where the cameras roll: Sample of neighborhoods with permitted TV, film and commercial shoots scheduled this week. Permits are subject to last-minute changes. Sources: FilmL.A. Inc., cities of Beverly Hills, Pasadena and Santa Clarita. Thomas Suh Lauder / Los Angeles Times