Minnesota may boost film tax credit 400% in hope of attracting production

Minnesota wants to be in the movie business.

The state created a roughly $5 million a year tax credit two years ago to attract TV and film productions, which is set to sunset at the end of 2024. Now legislators are looking to increase the credit by 400% and continue it in perpetuity.

The move comes as many other states have also boosted film incentives.

Minnesota should devote $25 million a year to film tax credits to bring jobs and spending to the state, said Rep. Dave Lislegard, DFL-Aurora.

Lislegard played a union member in the 2005 film "North Country," about women working at Eveleth Mines who filed the nation's first class-action sexual harassment lawsuit. The film came to the Iron Range on the heels of devastating mine closures, he told legislators during a recent bill hearing.

"I saw an industry come in, hire local people, stimulate our economy like I've never seen before in such a short burst. They came into it at a time when we needed it most. And then all of a sudden they packed up," he said, and finished shooting in New Mexico, where they received an incentive.

"We lost a large portion of that story, those jobs, those opportunities for our communities, because we didn't have [an] incentive," Lislegard said.

But some incentives in other states have had questionable results. A National Conference of State Legislatures report notes state evaluations of such programs commonly found they do not provide a substantial return on investment.

The conservative-leaning nonprofit Tax Foundation is among the organizations dubious of such spending. Timothy Vermeer, a senior state tax policy analyst for the foundation, said there is not convincing evidence that film incentives have benefited state economies.

"It's a bit of a gamble when you could do things like lowering the income tax or sales taxes or something else that has a more direct, easily measurable impact on Minnesota residents," Vermeer said.

Nonetheless, the bill moving through the Legislature has drawn bipartisan support and labor groups' backing. Unions representing workers ranging from actors to sound mixers to mechanics are advocating for the spending increase, which they said will create new jobs and spur entrepreneurship.

Of the states that offer film incentives, Minnesota's current $5 million annual limit is among the nation's lowest, said Melodie Bahan, executive director of the nonprofit MN Film & TV. Nonetheless, she said it has drawn 10 projects that have spent or plan to spend a combined $20 million in Minnesota.

The credit comes with strings. Production companies applying for the transferable 25% income tax credit must plan to spend at least $1 million over a year and employ Minnesotans "to the extent practicable," among other requirements.

"If the state invests in attracting businesses that offsets, by far, the credit," Bahan said. "That spending would never happen in the state if not for the tax credit."