‘Army Wives’ Gives Taxpayers $23m Tab

July 19, 2010

Investigative Reports

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The NerveThe television drama “Army Wives,” filmed in Charleston, might be popular with viewers nationwide, but it likely will have cost South Carolina taxpayers at least $23 million by the time its fourth season ends.

Taxpayers could shell out as much as $4.5 million more in rebates to the show just for the fiscal year that ended June 30 because of a state budget proviso that increases rebate percentages to motion picture companies, according to an analysis by The Nerve.

The projected $23.3 million in rebates for the show over the past four fiscal years is divided about evenly between rebates for wages paid to actors and other show personnel, and supplies and services purchased in South Carolina for the show, The Nerve’s review found.

The amount represents a sizeable chunk of the $32 million in rebates paid by the Palmetto State to all motion picture companies from 2005 through last year, according to figures provided by the S.C. Film Commission.

To put the $23 million taxpayer-funded gift in some perspective for this fiscal year, it would nearly cover the general fund budget of the State Law Enforcement Division, and more than cover the general fund budgets of the S.C. Department of Probation, Parole and Pardon Services, or the state’s higher education tuition grant program. The 2010-11 fiscal year started July 1.

Cast members and others involved with the Lifetime television cable show, which follows the fictional lives of a group of U.S. Army wives and an Army husband, contend it wouldn’t be produced in South Carolina if there were no incentives. They say the show has generated more than $120 million for the Charleston area since production started; the fourth season launched April 11.

It is unclear who exactly is receiving the rebates. Lifetime Television is owned by A&E Television Networks, which is jointly owned by the Disney-ABC Television Group, NBC Universal and the Hearst Corp.

“If it were not for the motion picture incentives there would be no film and television industry in South Carolina,” Richard Futch, “Army Wives” casting director and president of the Carolina Film Alliance, said in a written response last week to The Nerve.

“There is a global competition for the film industry, which pays an average of $21/hour as compared to a $14/hour average manufacturing wage in South Carolina,” Futch said. “Additionally, each recruited project creates thousands of business opportunities for (South Carolina) small businesses every day.”

Futch did not respond to a written question from The Nerve about who is receiving the rebates for “Army Wives.”

The show has given the Charleston area “a lot of good publicity,” said Perrin Lawson, deputy director of the Charleston Area Convention and Visitors Bureau.

“It’s one of the highest-rated shows on cable,” Lawson told The Nerve last week. “Certainly, it helps Charleston as a destination.”

But it might not necessarily increase the state’s tax coffers. In a 2008 study, College of Charleston economics professor Frank Hefner found that of nine film and television productions made in South Carolina in 2006 and 2007, the return to the state’s general fund for each rebated tax dollar was only 19 cents.

Based on the projected $23 million in rebates for “Army Wives,” the show would return about $4.4 million to the general fund.

The Nerve last week received data about the show’s rebates from the S.C. Film Commission, which openly advertises on its website (www.filmsc.com), “Cash Rebates in 30 Days – Reliable, Fast, Easy to Use.”

The following is a breakdown of claimed and committed rebates for “Army Wives” by fiscal year:

  • FY 07 – $627,834
  • FY 08 –  $3,072,701
  • FY 09 – $8,009,212
  • FY 10 – $11,593,593 (includes both claimed rebates and commitments)
  • Total – $23,303,340

It’s highly unlikely most state senators seriously considered the cost of the incentives when they reversed themselves on June 29, voting  28-13 to override Gov. Mark Sanford’s veto of a 2010-11 budget proviso (39.15) benefitting “Army Wives” and other productions.The proviso increases the percentage of rebates to motion picture companies from 15 percent each for wages paid and supplies purchased by the companies in the state, to 20 and 30 percent, respectively.  The House earlier voted overwhelmingly to override the veto of the proviso, which also was part of last fiscal year’s budget.

The Nerve’s analysis found that with the higher percentage rates, “Army Wives” could receive about $11.6 million in rebates for the 2010 fiscal year, compared to about $7.1 million had the lower percentage rates under state law applied, a difference of nearly $4.5 million.

In vetoing the proviso, Sanford in his written message said he didn’t believe it was “appropriate to change permanent law through proviso,” and that lawmakers should not be “increasing the incentives we give to Hollywood film companies in a year when we’re making such drastic cuts to core government services.”

The state’s general fund budget for 2010-11 is about $5.1 billion, down about $600 million, or 10.5 percent, from last fiscal year’s ratified budget. Lawmakers over the past several years have slashed about $2 billion from the general fund budget.

The Senate initially voted to sustain Sanford’s veto, but the 46-member chamber changed its collective mind on June 29 after a visit to the State House by “Army Wives” actors Catherine Bell and Kim Delaney, who told lawmakers the show couldn’t survive without taxpayer-funded incentives.

“The future of the show really rides on it,” Bell told The (Charleston) Post and Courier. “We would absolutely move.”

Most state senators were more than happy to oblige.

“Y’all are good now,” Sen. Joel Lourie, D-Richland, was quoted in The Post and Courier as telling Bell and Delaney after the vote to override Sanford’s veto. “Congratulations. Nice to meet you.  It’s good to see you on TV.”

To re-emphasize their support of the incentives, about a dozen cast members, including Bell, held a town hall meeting July 11 in Charleston, organized by the Carolina Film Alliance, to urge lawmakers to continue the incentives program, according to media reports.

On its web site(www.carolinafilm.com), the alliance, founded in 1998, said it has “worked so that state residents can have job creation and economic development created through SC film incentives.” The site lists 17 television programs or movies produced entirely or partly in South Carolina, including “Army Wives, “Forrest Gump,” “The Patriot,” “The Big Chill” and “The Prince of Tides.”

“Army Wives” cast members during the July 11 meeting contended that the economic benefits to the Charleston area far outweigh the cost of incentives provided to the show, according to media reports.

Over its production run, the show has accounted for, according to information provided to The Nerve by the S.C. Film Commission:

  • More than $30 million spent with S.C. vendors, most of which are small businesses;
  • More than $4 million in wages each season, hiring more than 350 S.C. residents as actors, extras, crew members and support staff (Show officials have said that with 355 actors and 1,101 extras for the fourth season, this year’s payroll is at least $19 million);
  • More than $1 million in utilities;
  • More than 55,000 lodging nights in Charleston-area apartments, condos or rental homes; and
  • About 28,000 hotel room nights from 2006 to 2009.

In addition, four film-related businesses opened as a result of the production, accounting for more than $1.5 million annually in expenditures, according to the Film Commission.  Also, four “Army Wives” actors purchased homes in Charleston, while crew members bought nine homes, commission records show.The mainstream media detailed a number of those benefits in its reporting of the July 11 meeting. But no specifics were given in those media reports about the cost of the incentives.

Reach Brundrett at (803) 254-4411 or rick@scpolicycouncil.com