HomeMy WebLinkAboutresolution.council.018-09RESOLUTION # ~~/
(Series of 2009)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASPEN
SUPPORTING HB 1010 CONCERNING THE PROMOTION OF
COLORADO AS A LOCATION FOR FILM PRODUCTION
ACTIVITIES.
WHEREAS, The City of Aspen is the second-most popular filming location in Colorado
and considers the film industry a part of our economy; and
WHEREAS, HB 09-1010 will create higher than average paying jobs quickly as soon as
legislation is in effect with more than 500 direct jobs and over 700 indirect jobs in the
first year; and
WHEREAS, It is critical that Colorado invest in avenues that can bring in more business,
creating more jobs, while being revenue neutral and bringing new money to Colorado
projected at $13 billion over 5 years; and
WHEREAS, Colorado currently loses out on tens of millions of dollars in business every
year because we don't have a sufficient film incentive program while places like
Wyoming, Utah, Montana, Louisiana and New Mexico are reaping the benefits; and
WHEREAS, States that have implemented this type of rebate have seen immediate
results, with New Mexico seeing production spending increase from $71 million in 2005
to $142 million in 2007; and
WHEREAS, The proposed Colorado legislation is very conservative with virtually no
risk at 10% incentive; and
WHEREAS, This program offers filmmakers a 10% rebate on qualified expenses, after
the money is spent in Colorado and not before; and
WHEREAS, Film production impacts both the Front Range and rural Colorado,
according to a 2008 study by the University of Colorado Leeds School Business Research
Division, film production had an economic impact in 75% of Colorado's 64 counties,
including Pitkin County.
NOW, THEREFORE, BE IT RESOLVED THAT THE ASPEN CITY COUNCIL does
hereby affirm support for HB1010 Concerning the Promotion of Colorado as a Location
for Film Production Activities.
Dated: ~~(/Tic~c~L ~~~~~/
~ ~-z?-o9
Michael C. Irel d, Mayor
I, Kathryn S. Koch, duly appointed and acting City Clerk do certify that the foregoing is a
true and accurate copy of that resolution adopted by the City ouncil of the City of
Aspen, Colorado, at a meeting held March 23, 2009. ~ ~
Kathryn S. Kglfh; City Clerk
HB09-1010
Colorado Legislatt~` ~l Fiscal Note
ST - ~ CAL
'ACT
Drafting Number: LLS 09-0461 Date: February 3, 2009
Prime Sponsor(s): Rep. Massey; McGihon Bill Status: House Finance
Sen. Gibbs; Spence Fiscal Analyst: Harry Zeid (303-866-4753)
TITLE: CONCERNING THE PROMOTION OF COLORADO AS A LOCATION FOR FILM
PRODUCTION ACTNITIES.
Fiscal Impact Summary FY 2008-2009 FY 2009-2010 FY 2010-2011
State Revenue up to up to up to
General Fund ($5,000,000) ($10,000,000) ($10,000,000)
Cash Funds
Colorado Office of Film, Television, and Gifts, Grants, Gifts, Grants,
Media Operational Account Cash Fund and Donations and Donations
State Transfers or Diversions
Transfer from the Film Incentives Cash Fund to
the Colorado Office of Film, Television, and
Media Operational Account Cash Fund* (Fund Balance Transfer)
Diversion from the General Fund to the
Colorado Office of Film, Television, and See the State Transfers or
Media Operational Account Cash Fund** Diversions section
State Expenditures
General Fund*** $55,852
Cash Funds
Colorado Office of Film, Television, and
Media Operational Account Cash Fund 580,008 540,008
FTE Position Change 0.0 FTE 6.0 FTE 6.0 FTE
Effective Date: Upon signature of the Governor.
Appropriation Summary for FY 2009-2010: See the State Appropriations section.
Local Government Impact: See the Local Government Impact section.
* The bill transfers the fund balance of the Film Incentives Cash Fund as of July !, 2009 to the Colorado
Office of Film, Television, and Media Operational Account Cash Fund. The year-end balance has not
been estimated.
* * See the State Transfers and Diversions section for an explanation of the bill's elimination of the current
law diversion of limited gaming fund moneys to the Film Incentives Cash Fund, and the alternative
diversion of moneys to the Colorado Office of Film, Television, and Media Operational Account Cash
Fund, as authorized in the bill.
*** This amount may be funded by line item in the FY2009-/0 Long Bill for programming costs in the Department
of Revenue for 2009 legislation.
Page 2
February 3, 2009
Summary of Legislation
HB09-1010
HB09-1010 creates the Colorado Office of Film, Television, and Media (office) within the
Colorado Office of Economic Development in the Governor's Office. Duties include marketing
Colorado as a destination for making movie films and other related activities; coordinating efforts
among production companies and government agencies; conducting educational seminars;
administering the Colorado film production tax credit; and issuing income tax credit certificates.
No later than January 30, 2010, and each January 30 thereafter through 2015, the office must report
to the Finance Committees of the General Assembly regarding all credit certificates issued.
The Colorado film production tax credit is established for income tax years commencing on
or after January 1, 2009, but prior to January 1, 2014. Before principal photography begins on a film
in Colorado, applications for the credit will be submitted to the office for review and conditional
approval. The credit shall be an amount determined by the office, subject to the following
guidelines:
• the credit shall be up to 20 percent of a production company's total qualified
expenditures. Qualified expenditures include payments made by a production company
operating in Colorado to a business in Colorado in connection with a film produced in
the state, plus payroll expenditures that exceed $250,000. Expenditures in excess of
$3 million per employee or contractor are excluded ;and
• the aggregate sum of credits annually approved by the office, including credits carried
forward, shall not exceed $10 million in any income tax year.
If the tax credit issued by the office exceeds the taxpayer's income tax due for the taxable
year, the excess credit maybe carved forward for up to three years, or the taxpayer may transfer all
or a portion of the credit to one or more taxpayers in amounts of at least $5,000 per taxpayer. No
later than November 30, 2009, and each November 30 through 2015, the office must provide the
Deparhnent of Revenue with an electronic report that identifies the taxpayers receiving a credit.
The bill creates the Colorado Office of Film, Television, and Media Operational Account
Cash Fund (COFTMOA Cash Fund) in the State Treasury. The fund is to consist of moneys
appropriated by the General Assembly; gifts, grants, and donations from private or public sources;
and a transfer of the fund balance of the Film Incentives Cash Fund as of July 1, 2009. For
FY 2009-10 and each fiscal year thereafter, the bill diverts $600,000 (adjusted for inflation) of
Limited Gaming Fund moneys that would otherwise be transferred to the General Fund to the
COFTMOA Cash Fund. At the same time, the diversion provided by current law of gaming moneys
to the Film Incentives Cash Fund is eliminated.
Page 3
February 3, 2009
State Revenue
HB09-1010
For income tax years commencing on or afrer January I, 2009, but prior to January 1, 2014,
the bill provides for up to $10 million per year in income tax credits to production companies based
on qualified expenditures. Since the tax credit is effective January 1, 2009, the credit will reduce
General Fund revenue by up to $5 million in the current fiscal year, FY 2008-09 (for one-half
year on an accrual accounting basis), and by up to $10 million in FY 2009-10, and each year
thereafter through FY 2012-13. Since the credit is only valid through the end of 2013, the General
Fund revenue reduction in FY 2013-14 will not be more than $5 million for the remaining one-half
fiscal year.
The state income tax credit will provide an additional incentive for film companies to
conduct business in the state. However, since the degree to which jobs may be created expressly due
to the bill is unknown, the fiscal impact stated above does not incorporate increased revenue from
potential job creation or production activity. To the extent that the tax credit is the sole determining
reason that film production occurs in the state, sales and income tax revenue from those jobs would
serve to partially offset the estimated loss in state revenue. An estimate of indirect state revenue and
the need for additional state services for businesses and the families of employees whose jobs are
created as a result of the tax credit is beyond the scope of the fiscal note.
State Transfers and Diversions
Background. Based on the December 2008 Legislative Council Staff revenue forecast,
revenue will be insufficient to increase General Fund appropriations by the 6 percent limit during
FY 2008-09 and FY 2009-10. As a result, funding for certain programs, which is triggered only
when the 6 percent limit is reached, will not be available. These programs include film incentives,
new jobs incentives, tourism promotion, and funding for the State Council on the Arts. They would
have received a combined total of $26.6 million in gaming revenue at the end of FY 2008-09. Of
this amount, the Film Incentives Cash Fund would have received $654,000 on June 30, 2009. These
moneys were to be used in the current Colorado Film Incentive Program fora 10 percent cash rebate
on certain film production costs. It should be noted that a portion of federal moneys received by
Colorado through the federal stimulus package may help "prop up" the General Fund forFY 2008-09
and FY 2009-10 to potentially allow for a full or partial funding of these incentive programs.
HB09-10101mpact. Beginning with FY 2009-10 and each fiscal year thereafrer, the bill
replaces the current law diversion to the Film Incentives Cash Fund with a similar diversion to the
COFTMOA Cash Fund. Assuming that the 6 percent appropriations growth limit were to have been
reached, the bill would have diverted $600,000 to the COFTMOA Cash Fund in FY 2009-10. This
amount is to be adjusted annually by the percentage change in the Denver Metropolitan Area
Consumer Price Index. This diversion will not occur unless the 6 percent appropriations limit is
fully funded.
Page 4
Febmary 3, 2009
HB09-1010
HB09-1010 also transfers any moneys remaining in the Film Incentives Cash Fund on
July 1, 2009, to the COFTMOA Cash Fund. An estimate of the year-end balance (June 30, 2009)
in the Film Incentives Cash Fund is not known at this time, partly because the year-end diversion of
gaming revenue to the fund may not happen given the current General Fund revenue situation.
State Expeuditures
Based on the December 2008 Legislative Council Staffrevenue forecast, there is insufficient
revenue in the General Fund to allow General Fund appropriations to increase by the maximum
allowable growth rate of 6 percent in FY 2008-09 or FY 2009-10. By reducing General Fund
revenue, this bill will reduce the amount of money available for General Fund appropriations in
FY 2008-09 by $5 million and in FY 2009-10 by $10 million.
Governor's Office. As shown in Table 1, the Governor's Office will require $580,008 and
6.0 FTE in FY 2009-10, and $540,008 and 6.0 FTE in FY 2010-11 to fulfill the responsibilities
of the Colorado Office of Film, Television, and Media.
Tablel. Expenditures Under HB09-1010
Cost Components FY 2009-10 FY 2010-11
Personal Services $349,308 $349,308
FTE 6.0 FTE 6.0 FTE
Operating Expenses 47,200 47,200
Marketing and Education 93,500 93,500
Travel and Trade Shows 50,000 50,000
Capital Outlay 40,000 0
TOTAL $580,008 $540,008
The Colorado Office of Film, Television, and Media will market Colorado as a destination
for film making, provide assistance to production companies, provide permitting and coordinating
assistance to production companies and state and local government agencies, issue tax credit
certificates, administer the tax credits, and offer educational seminars to promote film in Colorado.
Based on these duties, the office requires a total of 6.0 FTE, including a division director, assistant
director, locations coordinator, education/marketing coordinator, administrative assistant, film
incentive fund administrator, and an accounting technician. Many of these individuals currently
work for the Colorado Film Commission to encourage film companies to operate in Colorado. This
bill makes them state employees. As the marketing agent of the state, the office will be involved in
trade shows, film festival sponsorships, production of promotional videos and brochures, and
maintenance of a website that promotes Colorado as a destination for films, television shows,
commercials, still photography, music videos, and emerging mass media projects.
Page 5
February 3, 2009
HB09-1010
Department of Revenue. The Department of Revenue requires $55,852 General Fund in
FY 2009-10 to add a new line and new accounting item on several income tax forms, as well as
changes to the CITA/GenTax System. This will require 616 hours of computer programming
(Information Technology Professional III at $38.63 per hour), plus 160 hours ofcontracted computer
programming (at $200 per hour). Finally, contracted services for $56 in data entry requirements will
be necessary. These costs maybe funded by line item in the FY 2009-10 Long Bill for programming
costs in the Department of Revenue for 20091egislation.
Expenditures Not Included
Pursuant to a Joint Budget Committee policy, certain costs associated with this bill are
addressed through the annual budget process and centrally appropriated in the Long Bill or
supplemental appropriations bills, rather than in this bill. The centrally appropriated costs subject
to this policy are summarized in Table 2.
Table 2. Expenditures Not Included Under HB09-1010*
Cost Components -Governor's Office FY 2009-10 FY 2010-11
Employee Insurance (Health, Life, Dental, and Short-term Disability) $41,076 $41,076
Supplemental Employee Retirement Payments 10,173 12,990
Leased Space 29,730 29,730
TOTAL $80,979 $83,796
*More infarmaiion is available al: http://wwws[ate.co. us/gov_dir/!eg_dir/Icsstaff/1009/comsched/Common Policies2009.pdj
Local Government Impact
To the extent that new film activity is conducted in the state, local governments will benefit
from increased sales tax revenue on taxable purchases made by the industry and their employees.
State Appropriations
The Governor's Office requires a cash funds appropriation of $580,008 and 6.0 FTE for
FY 2009-10 from the Colorado Office of Film, Television, and Media Operational Account Cash
Fund to implement the bill. Based on current state revenue estimates, it appears unlikely that the
COFTMOA Cash Fund will have sufficient revenue to cover the required appropriation from the
sources identified in the bill.
Departments Contacted
Revenue Law Governor's Office State Treasurer