BY BOB FISCHBACH WORLD-HERALD STAFF WRITER
An Oscar-nominated director and an Oscar-winning star. Omaha got them for two days. Even though “Up in the Air” director Jason Reitman loved Omaha, where the movie is set, he took star George Clooney and the rest of the cast and crew elsewhere for the 48 other days of filming this spring.

The big reason Omaha lost out, not only on the glitz, but on the local spending and jobs that filming creates?

Nebraska is among nine states that offer no tax breaks or rebates to those shooting movies, television shows and advertising. A spate of laws passed in recent years to attract filmmakers has pitted neighboring states against one another in a tax-break bidding war.
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Though experts differ on whether film tax-incentive laws pay for themselves in the tax dollars, jobs and spending they generate, there’s little doubt moviemakers go where the tax breaks are.

Just ask Tom Wheeler of the Iowa Film Office in Des Moines. Iowa passed film tax incentives in 2007 and enhanced them in 2008. Before 2007, the state was the primary location for a movie about once every two years, he said.

“In 2007, we had four features,” Wheeler said. “In 2008, we had four more, and in 2009, we have had three features so far, and two more are under way.”

One of the movies filmed in Iowa, “Peacock,” is set in Nebraska.

“How can we compete with these states that have incentives?” asked Kathy Rocco, who works part time in the Omaha Film Office — its only employee. “I wish I knew the answer.” Her office is funded by the city’s lodging tax.

Tax incentives in other states make it tough to compete, said Laurie Richards of the Nebraska Film Office, because incentives are the first thing filmmakers ask about when scouting locations. Richards, whose job in the Department of Economic Development was cut back in 2003, works part time out of her home.

Nebraska lawmakers have introduced film tax-incentive bills in the past two legislative sessions, but neither got farther than first-round passage. State senators are gathering information in an interim study before another try is expected in 2010.

Supporters haven’t won over Gov. Dave Heineman, who has been opposed to tax incentives for filmmakers.

“My focus is on tax relief for hard-working middle-class Nebraskans, not Hollywood producers,” Heineman said by phone recently.

He’s not alone in opposing the incentives. Wisconsin Gov. Jim Doyle wants to eliminate incentives he signed into law a year ago. In North Carolina, an anti-incentives group is headed by Bob Orr, a former justice on that state’s Supreme Court.

“The industry has been able to play North Carolina off against South Carolina against Louisiana against Georgia,” Orr told the Associated Press. One state raising its incentives puts pressure on neighbors to do likewise, he said.

Nebraska State Sen. Danielle Nantkes of Lincoln said Heineman is out of step with what most hard-working Nebraskans want.

“This legislation enjoys such broad support,” Nantkes said last week. She included the Lincoln and Omaha Chambers of Commerce, the Teamsters and AFL-CIO labor unions, environmentalists, arts and humanities groups and a mix of urban and rural lawmakers on her list of those who back film tax incentives.

Nantkes’ 2008 bill was modeled on Oklahoma’s law. Oklahoma offers rebates of 5 percent to 15 percent of money spent locally and on salaries, depending on how many crew members are state residents. If, for example, a movie spends $5 million and half the crew members are Oklahoma residents, producers could get back $750,000.

Iowa offers a 25 percent tax credit on qualified spending and a 25 percent tax credit to movie investors — up to 50 cents on every dollar spent that meets state criteria. That’s a hefty boost to a filmmaking budget.

“Nebraska is living in the dinosaur age as far as trying to attract film production to the state,” said director Alexander Payne, the Omaha native who has won an Oscar for screenwriting. “When it gets to the point that I have to explain in Hollywood why I have to shoot in Omaha, it’s not good.”

Payne shot three movies in Nebraska (“Citizen Ruth,” “Election” and “About Schmidt”) before many states had film tax incentives, and he would like to shoot part of his next one here.

Payne said film producers, regardless of budget size, will steer clear of Nebraska “unless they put something in place. Nebraska is going to keep getting 100 percent of zero.”

Heineman said he prefers having tax relief go to businesses that locate in Nebraska “on a permanent basis,” not movie companies that come and go.

But that’s a chicken-and-egg scenario, say those who work in the film industry. Film production facilities are unlikely to be built before more filming is done here, they said, citing Saddle Creek Records as an example of how building an industry (indie-rock recording, in the case of Saddle Creek) can lead to bricks and mortar.

“We have five Fortune 500 companies, and they all do big national advertising,” said filmmaker Mark Hoeger of Oberon Productions in Omaha. But their commercials are shot out of state. A film tax incentive law could lead to construction of filming facilities in Omaha, he said.

That’s how it happened in New Mexico, which adopted film tax incentives in 2002. Since then, more than 115 movies have filmed there, including 30 in 2007 alone. Film production jobs in New Mexico grew from 362 in 2003 to 2,288 in 2007. The $100 million-plus Albuquerque Studios, with eight sound stages, was built as a result.

New Mexico’s economy benefited to the tune of $253 million, according to an analysis prepared for the New Mexico Film Office and State Investment Council by the Ernst & Young auditing firm. Local governments gained 56 cents in added tax revenue for each dollar of tax incentives granted, and state coffers gained 94 cents per dollar, the report said. Filming in 2007 qualified for $49.4 million in state credits.

A study of New York’s film tax incentives, also by Ernst & Young, estimated the benefit there at $1.90 per dollar spent.

But laws differ from one state to another. Connecticut’s revenue department found that in 2007, every dollar in film tax credits resulted in only 20 cents in new tax revenue.

Even if Nebraska doesn’t have a sound stage, said Mele Mason of Mason Video in Omaha, filming here generates big bucks. Film crews get per diem allowances to spend at restaurants, motels and car rental agencies as well as for entertainment and more. And filming can lead to tourism dollars, as Payne’s “Sideways” did for California wine country.

“Look at the College World Series,” Mason said. “It’s here two weeks and it generates millions for the city.”

“And look at the millions we’re spending to keep it,” said Jamie Vesay of Omaha, a film production coordinator whose Production Services worked on “Up in the Air” this year.

Vesay said events such as the CWS and the U.S. Olympic Swim Trials change perceptions of Omaha and Nebraska, especially by young people. He calls it the cool factor, and movies could be part of that.

John Latenser, an Omaha native based in Washington, D.C., who has done freelance location management for Payne’s movies and for “Up in the Air,” said tax incentives would have landed Reitman’s movie in Omaha for at least six weeks.

Many Nebraskans who work in the film industry long to return home, he said.

“I wouldn’t mind living there, if I could do this full time there,” he said. “Some of the best people I know in the industry come from Nebraska. It’s a shame we couldn’t stay there and do what we do.”

Contact the writer:

444-1269, bob.fischbach@owh.com
Copyright ©2009 Omaha World-Herald®.

Published Sunday June 21, 2009
Running in place

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http://www.omaha.com/article/20090621/ENTERTAINMENT/706219920