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Say Goodbye To Hollywood? Why Lawmakers Are Considering Putting MN's Film Board Out of Business

Once home to one of the country’s leading film incentive programs, Minnesota’s Film and TV Board is facing the prospect of not existing at all.

Say Goodbye To Hollywood? Why Lawmakers Are Considering Putting MN's Film Board Out of Business
In the 2014 FX series “Fargo,” police officer Molly Solverson tries to solve a series of grisly murders that start in her hometown of Bemidji, Minnesota. After a panning shot takes in the Bemidji water tower and storefronts on Main Street, viewers first meet their heroine standing on the side of the road in a desolate, snow-covered field examining a car accident. In a thick Minnesotan accent, Solverson makes small talk with the city’s police chief about the weather.
 
“Cold enough for ya, chief?” she asks.
 
“It’s supposed to get down to negative 10 later,” he says.
 
“I heard that,” she replies. “Don’t much like the sound of negative.”
 
The setting, and the dialogue, sure look and sound like typical small-town Minnesota, but it’s not. The scene was actually filmed in Calgary, a city of about 1 million people nestled in the foothills of the Canadian Rockies. Unlike the 1996 Coen brothers’ film by the same name, which was shot in locations across Minnesota, the TV version of “Fargo” is almost exclusively filmed out of state, in part because of generous tax incentives in Canada.
 
It’s not uncommon these days for Minnesota-set films to be shot somewhere else. Once home to one of the country’s leading film incentive programs, Minnesota’s rebate program for film and TV productions eventually became one of the smallest, the victim of persistent budget deficits of the 2000s. Now, the Minnesota Film and TV Board, which doles out incentives through the state’s “Snowbate” program, is facing the prospect of not existing at all.
 
House Republicans have proposed to not only strip out funding for the organization in the next two-year budget, they want to eliminate the state’s incentive program altogether. On the other end of the spectrum, Democrats in control of the Senate have proposed to fund the program at $13 million over the next two years — the most the board has received in its history. But even that proposal has received a rocky reception this session: It was nearly stripped out of a Senate jobs package on a 30-31 vote in order to put more money into rural broadband.
 
“I’m very pragmatic about it … but I would say I’m distressed,” said Lucinda Winter, the Minnesota Film and TV Board’s executive director. “The film board has been around for more than 30 years, and if they get rid of it we will be the only state other than North Dakota without one.”
 
Three decades of wooing Hollywood
In 1983, it was DFL Gov. Rudy Perpich who first pushed to put state grant money toward the Minnesota Film and TV Board (then it was called the Minnesota Motion Picture and Television Board). The idea was to try to attract film and television jobs to Minnesota — most states had film offices, but only a few states like New York and California had systems in place to entice the film industry.
 
Minnesota had (and has) a few natural advantages: A strong arts and theater community in a mid-sized metropolitan area, easy access to rural landscapes, and lots of snow, often needed in productions but not exactly abundant in places like California.
 
The nonprofit film board — a rarity; most programs are run by the state  — was given grants to facilitate relationships with productions and help them navigate what Minnesota had to offer. It had some of its biggest successes under Republican Gov. Arne Carlson in the 1990s, when films like “The Mighty Ducks,” “Fargo,” “Jingle All the Way” and “Grumpy Old Men” were filmed here, creating hundreds of jobs in the area and boosting spending at nearby businesses and on things like hotels and restaurants.
 
Based off those successes, the 1997 Legislature created a film jobs program, which provided partial reimbursement to film producers for wages paid to Minnesotans working on productions in state. That eventually morphed into the current rebate program, which the Legislature funds through a grant to the Department of Employment and Economic Development (DEED). DEED, in turn, gives that money to the film board to run the Snowbate program. If productions can prove they are generating economic activity in the state, they can receive between 20 to 25 percent reimbursements on production-related costs.
 
For a few years, Minnesota was ahead of the game in offering incentives, but it didn’t take long for other states to catch on. Today, 37 states and Washington, D.C., offer a production tax credit or rebates to producers of feature films, TV shows, documentaries and commercials.
 
When Minnesota faced near-constant budget deficits in the 2000s, however, funding for the board and the Snowbate program dried up. During that period, funding was never more than $2 million for every two years. And though big productions like “North Country” and the Coen brothers’ “A Serious Man” were filmed in the state during that period, film projects tended to be few and far between.
 
At the same time, incentives in other states like Michigan skyrocketed. The state offers up to a 35 percent rebate on production-related costs, capped at $50 million over two years. Some states have no cap at all on their rebates.
 
In 2013, though, with the economy on the mend and the DFL at the helm of state government, the film board was able to make the case that it could help generate jobs in the state again — if it got more funding. The board got $10 million for 2014-2015, the most it had received than all its previous years combined. 
 
Starting to ‘rebuild’
The board came to the Legislature this year expecting a very different reception from the one it received. With a nearly $2 billion budget surplus this session, the board originally hoped the Legislature would boost its rebate program to $20 million for 2016-2017. And they were ready to make their case: Since the program got new funding, the Minnesota Film and TV has committed $4.6 million to 72 certified projects. They say that has generated an estimated $25 million to $30 million of production dollars spent here, 48 full-time jobs and $3.5 million in wages.
 
The funding helped them snag independent productions like “Dear White People,” which was filmed all across the metro and was a hit at the Sundance Film Festival. And later this summer, Netflix will swoop into Duluth to do filming on a new series about comedian Maria Bamford. These were all thanks to the new funding in the Snowbate program, said the Film and TV Board’s Winter.
 
If funding goes away or gets cut back, Winter fears other projects could be in jeopardy. Take the HBO series “Stillwater,” a one-hour drama that will follow a New York City who relocates his family to a small town in Minnesota. The actual city of Stillwater — with its iconic lift bridge over the St. Croix River and historic Main Street — is in the running to film the pilot of the series. But if the Film and TV Board can’t prove it can provide incentives long-term, there’s almost no chance the show would consider shooting here, Winter said.
 
“This is a worldwide business, we are competing with everyone,” she said. “What worries me most [about the House proposal] is the signal it sends beyond our borders to the industry we’ve tried so hard to get back. We just re-invested this money in our program and it’s really starting to work now. It’s really distressing to me that we would abandon it.”
 
A lack of legislative direction
Part of the reason the board has been forced to fight for its survival is a recent report from the Office of the Legislative Auditor [PDF]. In 2014, the report found, the film and TV board brought 30 productions to Minnesota, which received $1.2 million in incentives, and spent more than $5.5 million in the state, providing work for nearly 500 residents. “Dear White People” reported over 1,300 workdays for staff, the report found.
 
But the audit also noted that many of those film industry jobs are temporary. The 496 Minnesotans who worked on rebate-backed projects in 2014 worked a combined 7,225 days. In terms of full-time equivalencies, this amounts to 28 to 35 jobs. “It’s hard to find that there were new, permanent full-time jobs created,” said Legislative Auditor James Nobles.
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Yet Nobles reserved his biggest criticism for the Legislature. He said lawmakers have funded the program at inconsistent levels over the years and had little debate over what it wants out of the group. Does the Legislature want to attract big Hollywood films, or does it want to create a smaller, local industry here, he asked.
 
“That’s a big decision to make, you have to decide first what you want to do and then how you want to fund it. It takes a significant amount of money to attract big films,” Nobles said. “I think legislators need to understand that what we are accomplishing right now is not necessarily creating new jobs. We are providing enough funding to really give some extra hours and some days of work to people that are doing various functions in that industry, and maybe that’s enough? The big issue for us is we just don't believe this has been adequately discussed and debated.”
 
That part doesn’t look likely to change. Republican Rep. Pat Garofalo, who’s omnibus jobs and energy bill carries the language that eliminates the rebate program, didn’t want to comment on his reasons for doing so. “I understand [the House and the Senate] have our differences,” Garofalo, a Republican from Farmington, said. “I would just say that I look forward to working with the governor’s office and the Senate” to resolve the issue.
 
Sen. Dick Cohen, DFL-St. Paul, helped fund the board as a member of the House back in 1983. He said the House action marks the first time the board has been a “partisan” issue, and could hit the program at a time when it’s starting to rebound. “You can’t be out of the game as long as Minnesota was and expect it to come back overnight,” he said. 
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