S.C. Taxpayer Tab for ‘Army Wives’: $37 Million-Plus

April 21, 2014

Investigative Reports

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FilmmakerThe reality cable television shows “Southern Charm,” “Welcome to Myrtle Manor,” and “Party Down South”were each produced in South Carolina without direct handouts from S.C. taxpayers, according to the state’s tourism agency.

Not so with “Army Wives.”

The fictional Lifetime Television show, which was produced in Charleston and ran for seven seasons before its cancelation last year, received nearly $37.4 million in taxpayer-funded rebates from 2006 through last year, The Nerve found in a review of S.C. Department of Parks, Recreation and Tourism (PRT) records. And that doesn’t include sales tax exemptions that the show’s production company likely was eligible to receive under state laws aimed at wooing the Hollywood industry to the Palmetto State.

In total, film and television producers received $48.9 million in direct rebates from 2005 through 2012, records show. “Army Wives” received about 65 percent of those incentives during that period, The Nerve’s review found.

To put the $37.4 million taxpayer-funded gift to “Army Wives” in perspective, it represents more than this fiscal year’s entire ratified budgets of 56 state agencies, divisions and major funds, including, for example, the S.C Attorney General’s Office; and more than a third of PRT’s total budget.

If film incentives are supposed to bring more business to the Palmetto State, PRT’s own records don’t necessarily bear that out. For example, in 2012 dollars, production companies spent about $248 million in South Carolina from 2005 through 2012 when the state offered direct rebates.

But in the previous eight-year period when the rebates weren’t offered, production companies spent a total of nearly $315 million in 2012 dollars, The Nerve’s review found.

Under state law, eligible production companies can receive up to a 25 percent rebate on wages paid to actors and other production employees who are S.C. residents, up to a 20 percent rebate for wages paid to out-of-state performing artists, and up to a 30 percent rebate on in-state purchases of products and services. An eligible company must spend at least $1 million in South Carolina to receive the rebates.

“SC’s rebate is a cash incentive, not a tax credit involving brokers and a waiting period,” says the S.C. Film Commission’s website. “Your rebate check is cut within 30 days of our final audit – use the money in post!”

From 2006 through last year, ABC Studios, formerly known as Touchstone Television Productions, received a total of $21.1 million in wage rebates and about $16.3 million in supplier rebates for producing“Army Wives,” PRT records show.

In addition to rebates, the Palmetto State offers other incentives to the Hollywood industry, according to the S.C. Film Commission, a PRT division, including:

  • Sales tax exemptions on purchased goods, services and accommodations if a minimum of $250,000 is spent in the state;
  • State income tax credits of up to 20 percent, with certain caps, for investing in the production of motion pictures or the construction of production facilities in South Carolina;
  • State income tax credits of 10 percent for companies that produce commercials in South Carolina with a total base investment of $500,000; and
  • No-fee filming on property owned by the state.

Debate Over Rebates

The Nerve last week asked PRT whether “Army Wives” would have been produced in South Carolina if rebates had not been offered. PRT spokesman Marion Edmonds didn’t answer the question directly but in a written response Friday said, “The incentives entice a production company to bring some 30-40 people to SC to make a project and hire 60-90 full-time folks, and between 300 and 2,000 extras, police, background, support (day players).”

Asked why the state offers no rebates to reality television shows produced in South Carolina, such as“Southern Charm,” Edmonds replied, “Reality shows are not included in the incentives program based on policy established from the intent and guidelines of the legislation.”

State law (Section 12-62-20 of the S.C. Code of Laws) defines motion picture production companies that are eligible for state film incentives as companies “engaged in the business of producing motion pictures intended for a national theatrical release or for television viewing.” The term “motion picture” under state law does not include the “production of television coverage of news and athletic events.”

“Reality shows have their own small crews (6-12 people usually) that they travel with,” Edmonds said. “They hire few if any local people and do not leave a big spending footprint in the marketplace like feature films do.

“SC and its citizens derive little benefit from reality shows … less value to tourism, usually no local hiring and little local spending with hotels, lumber companies, porta johns, rental cars, food vendors, clothing stores, etc., etc.”

In a prepared statement Friday to The Nerve, an ABC Studios spokeswoman said South Carolina’s incentives played a key role in locating “Army Wives” in the Palmetto State.

“We chose Army Wives for SC because it worked creatively and we could access the incentive,” Janet Daily said. “Without the incentive we would have chosen a different location. These days we look only at locations that have incentives when we decide where we will shoot our productions.”

Daily did not respond to The Nerve’s questions about how much state and local taxes ABC Studios paid while in South Carolina. Edmonds referred those questions to the S.C. Department of Revenue, which typically has declined The Nerve’s inquiries about specific companies, citing state privacy laws.

Proponents of incentives for the film industry contend that South Carolina productions account for tens of millions of dollars spent at local businesses. But in a 2008 study of nine film and television productions made in the Palmetto State, College of Charleston economics professor Frank Hefner found that the return to the state’s general fund for each rebated tax dollar was only 19 cents.

“Army Wives” followed the “struggles, dreams and friendships of a diverse group of women – and one man – living with their spouses and families on an active army post,” according to the ABC Studios website. In 2010, two of the show’s stars – Catherine Bell and Kim Delaney – visited the S.C State House to make their case that their show couldn’t survive without extra taxpayer-funded incentives. The Senate changed its collective mind on an earlier vote and overrode, by more than a 2-to-1 margin, then-Gov. Mark Sanford’s veto of a state budget proviso benefiting “Army Wives” and other productions.

“This is just one of those small things we can do,” said then-Senate President Pro Tempore Glenn McConnell, R-Charleston, at the time. “What we’re really doing is investing in the future.”

In his written veto message, Sanford, a Republican, said the state “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 functions.” In the end, though, both the House and Senate voted to override the veto.

In 2011 – her first year as governor – Republican Nikki Haley made a cameo appearance on “Army Wives,” despite voting against the increase in incentives for the program the year before when she was a House member.

‘Reality’ Shows in S.C.

A former state official – ex-S.C. Treasurer Thomas Ravenel – is a regular cast member on the current reality cable television show, “Southern Charm,” which began airing this year on the Bravo TV channel. The show “goes behind the walls of Charleston, South Carolina’s most aristocratic families to reveal a world of exclusivity, money and scandal that goes back generations,” according to a description of the show on Bravo’s website.

Ravenel was sentenced in March 2008 to 10 months in federal prison, a $221,323 fine and $28,676 in restitution to the state for the cost of a special legislative session to name his successor after pleading guilty to one count of conspiracy to possess and distribute less than 500 grams, or about a pound, or powder cocaine. Authorities said Ravenel, the son of former U.S. Rep. Arthur Ravenel, routinely provide cocaine at parties at his Charleston mansion. He resigned his $92,000-a-year treasurer’s post  in July 2007 – approximately a month after he was indicted and about 6.5 months after he took office.

Ravenel, 51, and fellow “Southern Charm” cast member Kathryn Dennis, 22, are the parents of a baby girl born March 24, according to media reports. The first season’s last episode is scheduled to air tonight at 10.

“Welcome to Myrtle Manor,” which aired its second season this year on TLC, “revolves around the quirky mobile home residents” of Patrick’s Mobile Home Park in Myrtle Beach, according to the Discovery website.

“Party Down South,” which premiered this year on CMT, featured eight young adults, all of whom are from outside South Carolina, who lived together – mainly partying – in a home in Murrells Inlet. The show’s second season is being filmed in Athens, Ga. – the home of the University of Georgia, according to media reports.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.