Is Oklahoma the new

Hollywood?

Not yet, but state film office says maybe someday

Lindsey Morehead

Fresh out of film school at the University of Oklahoma, Jill Simpson packed her bags and headed to Los Angeles.

“I had to leave at 22,” Simpson says. “There was really nothing I could do to pursue a career in the film industry here.”

Nearly 30 years after leaving, Simpson is back in Oklahoma.

As director of the Oklahoma Film & Music Office, a state agency, Simpson is using a cash incentive program to build Oklahoma's film industry – and it seems to be working.

In 2009, Oklahoma landed “The Killer Inside Me,” an A-list film starring Casey Affleck, Kate Hudson and Jessica Alba. Production also started in July on a new film, “Bringing Up Bobby,” starring Milla Jovovich, Marcia Cross and Bill Pullman.

With top films coming into Oklahoma, it appears the state's film industry is finally booming, but some insiders are worried a new moratorium on tax credits may cause the industry to bust.

“We're a tiny office of five people and a tiny budget,” Simpson says. “The cool thing is we're 0.8 percent [$534,600 in 2010] of the [state] tourism budget and our numbers that we generate, they go up every year. We were projected to hit $42 million in impact this year, but they did away with some of the tax credits at the legislature, so a couple of projects are questionable whether they are actually going to film.”

The mission of the state film office is to promote Oklahoma as a location for producing motion pictures, television programs and commercial productions. To do so, the agency offers up to a 37 percent film enhancement rebate on qualified Oklahoma expenditures to companies filming in the state. The rebate is capped at $5 million per year.

The office also connects filmmakers to local production contacts, maintains an online database of almost 1,000 possible filming locations and provides productions with support.

 “It's become a game of incentives,” Simpson explains. “The film productions will go wherever they get the best cash incentives and they'll often make their story fit wherever that is.”

“An example of that is Clint Eastwood in 'Gran Torino.' This one sticks out in my mind,” she says. “That [script] was set in Minnesota. The Hmong community that it's centered on is primarily located in Minnesota, but they ended up shooting in Michigan because Michigan had a better rebate.”

To attract more filmmakers to Oklahoma, the state film office and finance companies learned to couple the film enhancement cash rebate with state tax credits.

“...That's how we got the films that have been here so far is by using the tax credits to help attract in-state investors into these projects,” says Chad Burris, president of the Tulsa-based Indion Entertainment Group, a film finance company. “It helps subsidize some of the costs of the projects to filmmakers that otherwise might not have looked at Oklahoma as a realistic, viable location.”

Those credits are now gone.

To help cope with an expected revenue shortfall, the state legislature approved a two-year moratorium on the Rural Small Business Capital Credit, which filmmakers often used to help finance productions. The credit offered a 30 percent tax credit for investments in qualifying projects. A moratorium was also placed on the Small Business Capital Credit.

“Our decrease in certified revenues was $1.2 billion, so we had a big gap to fill,” State Treasurer Scott Meacham explains. “The governor ultimately decided to do a package of pretty significant spending cuts, but also to put a moratorium on some tax credits. With those particular credits, there had been a lot of questions and controversies about whether the state was getting as much revenue [in] as it was giving out.”

Meacham says several documented cases of abuse – none of which related to the film industry – also prompted the governor and legislature to take a closer look at whether the tax credits were working.

“We've been working for five years now and have some limited success,” Burris says, “but finally last year we sort of felt like we got out legs under us with “The Killer Inside Me.” The momentum was there with us sort of pushing this on both coasts. We had people in the industry paying attention and really taking Oklahoma seriously and we had a number of films that were slotted.”

Now Burris says many of those films will likely not come to Oklahoma.

“It's horribly frustrating,” he says. “One, because we've been working on it for so long and these are high profile films. [Two], they would have meant a lot to Oklahoma.”

Simpson and Burris both say they're concerned about a possible public relations fallout from the tax credit moratorium. Burris says some filmmakers were put in a bind after the moratorium eliminated a significant portion of their production budget.

“The film industry is so small,” Burris explains, “...and most of us from Oklahoma can appreciate being from that ‘small town’ sort of dynamic, which is when something happens to someone, it typically doesn't take a long time to spread around. So, Hollywood, [with] this happening, people are going to talk.”

But Meacham says the credit was never really intended to be used for film production.

“The Rural and Small Business [Capital] Credit was more of a job creation credit created a few years ago,” he says. “They figured out how to stack these credits.”

Both credits were scheduled to expire Jan. 1, 2012, which means the moratorium effectively sunsets the credits now. Meacham said there is no way to know whether the legislature will choose to reinstate or eliminate the credits in 2012.

Without a significant part of its financing package, Simpson acknowledges Oklahoma may lose films – and its footing -- to other states.

According to a 2010 special report by the Tax Foundation, 44 states, the District of Columbia and Puerto Rico presently offer movie production incentives, 28 states offer incentives in the form of a tax credit and every state at least has a government film office.

So, why are states competing for films? It's simple: money.

In 2005, the state film office commissioned an economic impact study by the University of Oklahoma's Price College of Business that determined for every dollar spent on the film industry in Oklahoma, $1.72 came back.

For “The Killer Inside Me,” Simpson estimates the state payout, after the production paid its state taxes, was about $70,000. She values its economic impact at more than $5 million.

“To me, a $70,000 payout [isn't bad] when you consider the impact to the state in jobs and money spent,” she says. “They get per diem when they're here... to spend and that's if they want to go to Cattlemen's [Steakhouse in Oklahoma City] for dinner, if they want to go to a movie, if they want to buy a pair of cowboy boots. That's money spent primarily in Oklahoma.”

But a 2010 special report by the Tax Foundation, a nonpartisan tax research group based in Washington, D.C., determined movie production actually “offers little economic bang for the taxpayer's buck when compared to other industries.”

“Film production has an economic impact multiplier of 1.92,” the report states. “This is only slightly larger than a new hotel, 1.91, and much less than automotive manufacturing, 2.25, and nuclear power plants, 2.51.”

But Guthrie Chamber of Commerce President and CEO Mary Coffin says while the film industry's economic impact may be hard to quantify, it is undeniable.

Guthrie has played host to a number of films, including “The Killer Inside Me,” “Twister” and “Rain Man.” The new film “Bringing Up Bobby” will also be partially shot in Guthrie, as well as in Oklahoma City, Edmond and Luther.

“A lot of the bigger movies that film here stay for a while,” she says. “They rent buildings from us, they buy gas and food, a lot of them even shop here for things for their set. So that impacts our sales tax. And we also have the tourist end of it.”

In July, Guthrie's tourism department received inquiries from 36 states and Puerto Rico, many from individuals who say they saw Guthrie's name roll by on a film's credits.

“This past quarter, the sales tax revenues were down 6.5 percent,” Coffin says. “The tourism dollars that came in from the bed and breakfasts, hotels, motels and inns, they weren't down. In fact, we had an increase. So, that shows me we're doing something right.”

The Chickasaw Nation is also realizing the importance of film.

David Rennke, director of the tribe’s multimedia department and producer of the film “Pearl,” says the nation is investing in film as a way to preserve its culture and create quality jobs.

“[Chickasaw Nation] Gov. [Bill] Anoatubby has always had this vision of preserving the culture,” Rennke says, “bringing it to newer generations and sharing it with the rest of the world.”

And, film is a business, he says.
“It’s a great way to bring tourists and attention to south central Oklahoma. With good locations, it’s great for period pieces like ‘Pearl’ where you have to recreate areas from other times.”

“Pearl” tells the true story of Pearl Carter-Scott, a Chickasaw youth from Marlow, who in 1928 became the youngest licensed pilot in the U.S. Filmed in Guthrie, it was the tribe’s first feature film, created with help from the state film office.

“We kind of demonstrated with ‘Pearl’ [that] you can make an absolutely top-notch Hollywood film all in Oklahoma,” Rennke says. “We’ve shown the film at almost 30 film festivals and screenings all across the U.S. and the world and we have had a tremendous response. People are amazed it’s not a big-bucks Hollywood film.”

Burris, also a Chickasaw, has independently produced five films, two of which were selected to air at the Sundance Film Festival, “Barking Water” in 2009 and “Four Sheets to the Wind” in 2007.

“What I think is interesting is the parallel between their vision for the future of their tribe and my vision for the future of the film industry here,” Simpson says. “We’re trying to keep young people here… We work really hard to try and build something so that if people want to stay here, they can.”

As the industry grows, Simpson says she expects quality, high-paying jobs to follow, but only if the state backs the program.

“I kind of bristle a little bit when people talk about film or music as ‘the arts,’” she says. “They’re industry. They’re economic drivers and the states that have gotten behind those programs, they’re doing nice business. And Oklahoma needs to diversify its economic base; we just do. We can’t rely on oil and gas for everything.”

Simpson looks to New Mexico, one of Oklahoma’s chief competitors for films, as inspiration.

“The State of New Mexico got behind their program,” she says. “They went from doing roughly $20 million a year in impact, which is about what we were doing the past few years, and with steady support of the state, they have been able to turn that into a program that does about a half a billion [dollars] a year and have gone from 100 crew members to about 3,000.”

For now, Simpson says the current state film enhancement rebate is a good one, even without the tax credits. Eventually, she plans to ask the legislature for either incremental increases to the $5 million a year limit or to lift the cap.

“Honestly,” she says, “with the economy the way it is, we’re just trying to hang on.”

But Simpson plans to keep working. After all, she’s got an industry to build.

More and more film students graduate every year and someday she’d like for them to work right here in Oklahoma.