Historic preservation credits, increased film incentives pass House budget


A pared-down film grant program and modified historic preservation tax credits are part of the N.C. House budget, but it is not a given that they will survive in the Senate. The $22.1 billion budget passed the House 93-23, with a number of Democrats joining the majority Republicans in supporting the spending measure. New Hanover County’s House delegation, including Democrat Susi Hamilton, voted in favor of the bill.

In a newsletter to constituents, Hamilton specifically mentioned the historic preservation credit, as well as other economic incentives as reasons she supported the House budget. The budget also would give state employees a pay raise and continue an effort to increase teacher pay.

The preservation credits approved strongly resemble a proposal by Gov. Pat McCrory, who has lobbied hard to restore the credits that were allowed to expire at the end of 2014. The program focuses on revenue-producing property, but local officials are relieved the modified credits are part of the House budget.

House leaders estimate the budget impact at $8 million per year in the form of lost tax revenue, as opposed to expenditures. But supporters say the credits have more than paid for themselves over the years.

“We’re very pleased to see that it hasn’t completely gone away,” said Kent Stephens, president of the Historic Wilmington Foundation, which focuses on preservation. The tax break has been credited with more than $1.6 billion in statewide investments since it began in 1998, including $18.5 million in Wilmington.

North Carolina was a leader in historic preservation, and other states have now adopted similar programs, he said. While cities such as Wilmington were early entries into the preservation effort, rural areas recently have taken advantage of the credits to encourage preservation projects that otherwise might be cost prohibitive for owners.

Likewise, supporters of the film incentives say they helped North Carolina build on an industry that began more than 30 years ago. The General Assembly allowed tax credits that kept locally based crewmembers steadily employed over the past several years to expire last year, resulting in a dramatic drop in activity.

The $10 million grant pool that replaced the tax credits is already used up. Rep. Ted Davis Jr. and Sen. Michael Lee, both New Hanover County Republicans, filed identical bills to increase the grant fund to $60 million for each of the next two fiscal years, but the final House budget cut that amount to $40 million per year.

Still, Davis said he is “tickled to death” that the budget includes a substantial increase in film funding.

“I was able to get $40 million for ’15-16 and $40 million for ’16-17, and I am ecstatic,” he said. The House’s action despite some opposition demonstrates the support in that chamber for the film industry, he said.

The $40 million is barely enough to remain competitive, Hamilton said, but the hope is that it may be enough to keep the industry going until a longer-term solution can be found.

The preservation credit and the film grant are both important to Wilmington and New Hanover County, Davis said. He admitted there are things in the budget he doesn’t like. What’s important, he said, is that overall it contains provisions that will benefit North Carolina and its residents.

He and Hamilton noted the budget passed with bipartisan support, which has not characterized previous legislative sessions. Moderates and business-oriented representatives in both parties voted to support the budget, Hamilton said.

But Hamilton warned the spending package may be “unrecognizable” when the Senate finishes with it.

“We are hearing that the preservation credits are dead on arrival,” she said.

The accuracy of that prediction will soon be evident. The Senate will pass its own version of the budget, which will then return to the House. If the two chambers cannot agree, differences will be ironed out in secret in the conference committee.

Senate leaders have voiced opposition to incentives of all kinds, and they have said the historic preservation credit will not make it through the budget process. But Lee has pledged to work hard to ensure that the film grants make it to McCrory’s desk.

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