Patty Loew:
In our “Money Matters” series this week, a closer look at how your tax dollars are being spent. The original Wisconsin film tax credit was designed to attract Hollywood-style video and film productions to our state. The film "Public Enemies" opened last July featuring action shots from towns like Oshkosh, Columbus, and Manitowish Waters. It took advantage of the state's film tax credit. But the incentive program is not without its critics at a time when the state is struggling to make ends meet. Liz Koerner looks at whether the investment is paying off in Wisconsin.  

Liz Koerner:
For fans of Johnny Depp, it was a dream come true, a chance to see him in person working on location in Wisconsin. The Hollywood film "Public Enemies" came here in part because of the state's new film production credit, a rebate program. The program pays back 25% of the cost of production. But after one year, the state says the return on investment is too low. According to the department of commerce, "Public Enemies" provided a $5 million economic benefit to Wisconsin. The rebate came to $4.6 million.

Zach Brandon:
Some people would say, well, isn't that good? We broke even. But when you're talking about a competitive nature of state government's budgeting, that every program has to be compared to something else. We don't budget in the abstract.

Liz Koerner:
Advocates of the rebate program disagree with the state's assessment of "Public Enemies" economic impact. Their total is more than $2 million more.

Scott Robbe:
We have figures coming out of Oshkosh of $3.5 million in economic input. We have $1.5 million quoted in Columbus. This is money that tourists spent as well on hotel rooms, restaurants. But no one's tracking that money.

Liz Koerner:
The primary goal of a state rebate is to create jobs. Brandon says another state incentive program offered to Sargento Foods cost taxpayers much less per job.

Zach Brandon:
We gave them $3 million in tax credits. They created 500 new jobs, they retained 1100 new jobs, all family-supporting wages with benefits. They put $50 million into new production facilities.

Scott Robbe:
To compare jobs at Sargento Cheese and the film industry is like comparing apples to oranges. The jobs in the film industry are high-tech construction jobs. This is highly-skilled blue collar labor that moves from project to project and is paid a substantial amount of money.

Liz Koerner:
When it comes to the payroll for "Public Enemies," Brandon says even though Universal Studios paid $1.9 million in wages to Wisconsin residents, the majority of money went to out-of-state workers, not including the stars.

Zach Brandon:
For every dollar we spent on a Wisconsin resident, we spent $7 on out-of-state residents.

Liz Koerner:
But "Public Enemies" wasn't the only film eligible for the rebate last year. Steve Boettcher and Mike Trinklein own BT Media, a production company in Milwaukee. They produced a smaller budget film.

Steve Boettcher:
It was shot here in Wisconsin. We had already prepped it in Florida. Locations were scouted in Florida. Crews ready to go in Florida. We switched our plan because the incentive program came to Wisconsin.

Liz Koerner:
They also applied for a rebate for their four-part PBS series called “Pioneers of Television.”

Steve Boettcher:
And we're bringing all that work here, the editing, the writing, the music, all the post-production work is all being done here in Wisconsin.

Liz Koerner:
Boettcher and other advocates of the rebate program would like to change it to focus on creating more jobs in Wisconsin and reward production companies that spend money in the state.

Steve Boettcher:
I think if we can tighten those loopholes a little bit and make it Wisconsin residents that get jobs out of this, it's a home-run.

Liz Koerner:
The governor has proposed eliminating the rebates entirely. In its place he's proposed $.5 million in grants.

Zach Brandon:
We would look  to incent technology, small studios, young or start-up directors and in-state productions.   

Liz Koerner:
Video game development is currently eligible for the rebate program. Brian Raffel is the co-owner of the Middleton video game company called Raven Software. The company employs 185 people. He's not convinced the grant program will create jobs.

Brian Raffel:
I don't know who's out there, who's going to be trying to get to the till first, so to speak. So it helps, you know, in business to build a plan and to make sure that you have reassurances that you can count on this. So that would -- it's a nice -- it's a nice thought, but, you know, it's not going to really get us where we need to be.

Liz Koerner:
Raffel says that one year isn't long enough to prove the value of the rebate program.

Brian Raffel:
Like Microsoft, how many different businesses have sprung up around that, and once you started attracting creative industries such as that, more and more tend to kind of conglomerate together and work together.

Liz Koerner:
The development of creative industries has already started. RDI Stages near Milwaukee invested $6 million in production facilities, which include a large sound stage.

Janine Sijan Rozina:
The only reason we actually made the investment was because we knew the incentives in 2006 were projected to begin in 2008. We have two buildings now. We had a third on the horizon but we're holding off on that waiting to see what happens with these incentives.  

Patty Loew:
One year into the film tax credit the governor pared down the program. There's now a cap of $500,000 on credits per fiscal year. Other changes include a requirement that a 25% credit for salary, wages and contract payments be paid only to Wisconsin residents. If a film wants a 25% credit on production expenditures, it must buy Wisconsin products. One other stipulation. In order to qualify, 35% of the overall production budget must be spent in Wisconsin. Since these changes went into effect, only one video game production has applied for a tax credit. Janine from RDI Stages in Milwaukee told us that since film projects in Wisconsin have dried up, their expansion projects are on hold.