A paltry increase to the cap placed on tax credits offered to film productions in Montana this legislative session has left businesses and elected officials scratching their heads, asking how the measure “went south” during the closing days of the Legislature.
House Bill 340 sought to expand the state’s tax incentives to entice further growth of the film industry in Montana. The state had capped the credits at just $10 million before the 2021 session, though it looked poised to boost that cap to around $250 million.
But in the end, the Legislature settled on a cap of $12 million – a boost of just $2 million for an industry poised for growth and job creation.
“It went from $10 million to $12 million, though the proposal was to increase it to $250 million,” said Dori Brownlow, director of Missoula County’s development district. “The $12 million was a compromise to satisfy the governor.”
The outcome of the bill, which hasn’t been signed, likely ends an effort by Shadowcast Partners to develop a $20 million film and television studio in a technology park west of Missoula.
Last November, the county accepted the company’s $1.5 million offer on the property, where the media company planned to construct and operate the Montana Media Hub. But the outcome of Montana Media Act has Shadowcast Partners now looking at other states.
“We can’t build what we anticipated building. It’s too difficult to raise capital and build infrastructure at that scale without the confidence of knowing that the state supports this and a higher cap,” said Adam Graham of Shadowcast Partners. “A $12 million cap just cannot accommodate the number of productions you’d need to keep a facility like that busy all year long.”
Shadowcast Partners was part of a larger statewide lobby comprised of Montana producers and film suppliers who supported the higher cap. The initial bill, which sought a cap of $250 million, easily passed the House and looked promising in the Senate, “until it didn’t,” Graham said.
Graham and other advocates of the bill, including Missoula County, said the lower cap was “heavily influenced by the governor’s office.”
“I can’t pretend to know what the motivations were. We didn’t anticipate there would be a prejudice against it, and it seems that there was,” Graham said. “We felt it supported the governor’s strategic pillars. It would – and has – produced tremendous economic growth and jobs where those productions occur.”
In March, Shadowcast Partners asked for and received more time from Missoula County to close on the property deal, giving the company time to conduct what was described as “significant negotiations.”
Missoula County this week expressed disappointment with the outcome of the Montana Media Act and the likely loss of a jobs-producing industry moving to Missoula.
“I’m shocked at how badly it went,” Commissioner Josh Slotnick said of the bill. “Last week, I sat through a talk where the governor was going to do everything he could to make us more competitive with our neighboring states. I don’t see how this action fits in with that sentiment.”
On Thursday, the governor’s office told the Missoula Current that Gianforte was still considering the bill and hadn’t yet signed it.
“The governor received the bill yesterday (Wednesday), and is in the process of carefully reviewing it,” said Press Secretary Brooke Stroyke. “That said, the Legislature exercised its constitutional prerogative and chose to boost the film tax credit by 20% to attract more filmmakers to the state.”
The state’s film act came to be in 2019 and quickly attracted new jobs and film productions to the state. The initial $10 million cap on tax incentives was easily met in 2020 and is expected to hit that mark again this year.
According to the “Economic Impact of Montana Film Production” report commissioned last year by the state, film production in Montana had an economic impact of nearly $50 million and supported the equivalent of 280 full-time jobs in 2019.
It also found that productions spent nearly $24 million at local hotels, restaurants and retail shops. The Montana Media Hub would have attracted more opportunities to the region and was widely supported by industry advocates.
“It was certainly disappointing from the standpoint of our real estate development plan, and also disappointing for the state,” said Graham. “That’s the nature of the industry. There’s so many states offering incentives to film development. It’s kind of the price to pay in that space for a state.”
Graham said the outcome of the bill has prompted Shadowcast Partners to look to other states that support the film industry, such as New Mexico and Georgia. A cap of $12 million keeps Montana’s film industry little more than an import economy, Graham added.
“You can’t sustain full time jobs at $12 million,” he said. “It will force productions to bring people in and pay people from out of state to come for a couple months and leave. A higher cap would allow a pipeline throughout the year and allow people in the industry to live full time in Montana, or come back to Montana.”