Film incentives-production expense rebate.

06LSO-0049.L2

FISCAL NOTE

This bill contains an appropriation of $2,000,000 from the GENERAL FUND to the Wyoming Business Council.

	FY 2007	FY 2008	FY 2009
NON-ADMINISTRATIVE IMPACT
Anticipated Revenue Increase:
GENERAL FUND	26,000	104,000	110,000
LOCAL SOURCES FUND	23,000	93,000	97,000

Source of revenue increase: Sales tax collected on expenditures made by film production companies.

Assumptions:

Key Assumption: We have assumed in this estimate that there would be the equivalent of one major film project per year.

1) Fifty percent (50%) of a film production’s qualifying expenditures are subject to state sales tax (average of 5.2%):

FY2007 FY2008 FY2009

Qualifying expenditures

  Film project #1               $1,875,000      $5,625,000      $       -      

  Film project #2               $       -       $1,968,750      $5,906,250

  Film project #3               $       - $       - $2,067,188

Total qualifying expenditures   $1,875,000 $7,593,750 $7,973,438

Qualifying expenditures subject

  to sales tax (est. 50%)       $  937,500      $3,796,875      $3,986,719

Sales tax (average 5.2%)        $   48,750      $  197,438      $  207,309   

2) Due to timing necessary to get program and rules established, first year qualifying expenditures are assumed to occur late in FY2007, with the majority of expenditures occurring in following year. Each subsequent film project is also assumed to start in one fiscal year and finish in following fiscal year.

3) Film project #1 qualifying expenditures of $7.5M are based on an average of the estimated production costs for “An Unfinished Life” filmed in 2003 ($9M) and “Brokeback Mountain” filmed in 2004 ($6M). Qualifying expenditures for projects #2 & #3 assumes a 5% inflation rate over the previous year as follows:

     Film project #1      $7,500,000

     Film project #2      $7,875,000

     Film project #3      $8,268,750

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4) Percentage of film production qualifying expenditures subject to state sales tax (see 1 above) is based upon production costs for “Starship Troopers” filmed in 1996 in Wyoming.

5) Assumed an average sales tax rate in the state of 5.2%. Assumed allocation of sales tax of 53% to the General Fund, 47% to local governments.

We have assumed in this estimate that there would be the equivalent of one major film project per year and, based upon that assumption, we believe we have sufficient existing resources to administer this program.  If activities in this program exceed this estimate, it may be necessary at that time to add funding to cover personnel and support costs sufficient to administer the program.

Prepared by:   Diane Moser, WBC   Phone:   777-2848

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