Revised W.Va. Film Tax Credit Has Hollywood Calling

As part of our ongoing, occasional series “Effective from Passage,” we take a closer look at a bill that reinstates West Virginia’s film tax credit. House Bill 2096 creates a filmmaking incentive that is expected to put thousands to work and bring millions into the state economy.

Del. Dianna Graves, R-Kanawha, sponsored House Bill 2096 that reinstated a film tax credit that was repealed back in 2018. Graves said as the revised legislation was moving through the West Virginia Senate, she was getting calls and emails from Hollywood.

“Paramount, Comcast, Netflix, Amazon, their lobbyists were reaching out to me to say, do we think the governor’s gonna sign this,” Graves said. “Is this going to actually happen in West Virginia? And the fact is, those big giants were following this closely and were worried the Governor might veto it.”

Gov. Jim Justice signed the bill on March 28, 2022. Department of Economic Development Director Mike Graney will lead the Film Development Office. Graney said revisions highlighting no cap on the 27 to 31 percent tax credit will give the Mountain State an advantage over other surrounding states that already offer film tax credits.

”We certainly want to compete with other states for this economic activity,” Graney said. “And because the credit has no cap, we’ll be able to compete for really big projects, and not just some small documentary, but Paramount, or you name it, some filmmaker doing a major motion picture.”

Graves said the changes in the revised law on qualifying for the film tax credits also offer a competitive advantage.

“Our threshold for qualifying, in terms of the initial expenditure, is the lowest in the nation,” Graves said. “So you can come here and you can almost immediately qualify. But the fact that it’s an unlimited cap means that people can spend tons of money in West Virginia, and that money goes directly into the pockets of West Virginia people.”

Diana Sole is the CEO of Motionmasters, a West Virginia film production company with more than 30 years in the business. Sole said the reinstated film tax credit will bring in national and global producers along with benefits to companies like her own that are already in the state.

“It’s an incentive to attract television production, theatrical production movies, to the state of West Virginia,” Sole said. “Our industry is small, but it was growing here in years past and the fact that we’ve now reinstated that tax credit, it’s very exciting.”

Sole said independent filmmaking has its financial risks. Often, filming has to start even before there’s guaranteed funding.

“We have to go out and raise money to produce those documentaries, to get enough of a budget to put my staff to work on it,” Sole said. “For us it’s always a multiple year project to produce those titles. This allows us to utilize the tax credit, which we would fund about a portion of each production. So that’s going to mean that documentaries become more financially possible again.”

From 2016 to 2018, Sole said more than 5,900 West Virginia businesses were utilized in state film productions and more than 2,100 residents were hired to work on those films. Graves believes the economic benefits with the new film tax credit system will increase several fold.

”You’re purchasing lumber from West Virginia foresters, you’re purchasing fabric from West Virginia fabric stores, you’re buying groceries at West Virginia grocery stores, patronizing local restaurants, and sleeping in local hotels,” Graves said. “You have to do all of these things here. And all of that is money going into the pockets of West Virginians.”

Sole points to an example of a filmmaker’s spending volume and the financial benefits gained by the state.

“At one point the Convention and Visitors Bureau in the Eastern Panhandle was estimating up to 10,000 heads in beds,” Sole said. “This was a direct result of the film industry shooting there. That’s a lot of hotel rooms, right? And that’s a lot of tax revenue going back into those communities.”

The reinstated law prohibits using tax credits for films containing obscene matter or sexually explicit conduct and any content that negatively portrays the state of West Virginia. Graves thinks these apparent negatives will turn into positives.

“West Virginia is full of really bright, intelligent, caring people,” Graves said. “And we’d like to break that stereotype that may have been accurate in the past to some degree, but is no longer in West Virginia today. So you have to portray us accurately or you won’t get our money.”

Lawmakers constantly look to keep people from leaving the state. Sole said this film tax credit does just that.

“I’m hopeful that it will also bring back to West Virginia some of our indigenous filmmakers who left the state because there wasn’t enough of a volume of work here to keep them home,” Sole said. “This is going to change that.”

The law has a sunset provision to give lawmakers the opportunity to review its performance again. Many believe those reviews will only fine tune these incentives to produce films in West Virginia.

“Effective from Passage” is West Virginia Public Broadcasting’s ongoing, occasional series that explores the greater impact of bills passed by the West Virginia Legislature and signed by the governor. Check out more of these stories here.