ALC-Executive Subcommittee

Thank you.

all right members if you could go and grab a seat we're going to get this meeting of the executive subcommittee called to order members we're still working to get the motion picture folks online for that presentation so for now we're going to skip item B and move down to item C it's consideration of an emergency rule by Department of Shared Administrative Services we have mr. Grant Wallace or Jessica Patterson okay morning these would just when you get set down and hit your button and introduce yourself for the record and then you can tell us about your emergency rule working now is yours on still not working okay okay you're good now

hello grant All right, Grant Wallace director of employee benefits and office of property

risk Jessica Patterson chief legal counsel for shared administrative services and director of the office of state procurement. Okay, go

ahead and present your rule. So the emergency rule

you have before you really is just putting into rule the kind of operational aspects or early days of the captive program it delineates claims that were prior to july 1st 2025 and how those were going to be treated and then the ones that come that came after july 1st how we were going to treat those the first section dealing with mitigation services obviously in some of these instances we don't want to delay in being able to stop further damage from being done so this just gives us the ability to allow mitigation services to be done quicker than just the normal procurement process and i'll let jessica kind of speak to that if there are any questions on that but with that be glad to answer any questions all right senator rice you recognize thank you hello grant jessica good to have you here today in the rule making dale i would just point out the cause of something that i'd heard of on one of my local school systems is to keep in mind uh you talked about mitigation and you know you got to get some stuff done sometime but sometimes when there is a dispute something can be vastly on whether it's held damage or not held damage how much and all I just ask to keep in mind what a process would be to allow some fair way to be able to do that for the school systems there's always that between insurance companies and others but there needs to be a fair dispute. Okay. And there are additional rules, more permanent rules that are coming and that would probably be appropriate place to address those issues. Thank you. Yes, sir. Thank you, Senator. Members, any other questions? Ms.

Patterson, do you have anything to add to that or are you good? No, unless there

are questions, I'm happy to answer them, but. All right.

Seeing no other questions without objection, the proposed emergency rule is reviewed and approved and the review and approval shall be effective upon adjournment of legislative council meeting this friday august 15th thank you guys thank you all right members next takes us to uh consideration of an emergency rule for the department of corrections we have miss elaine lee miss tony rowell and mr trent rigden one of you would just introduce yourself for the record and you can begin presenting your rule

I don't know why that one's not working try one of the others better all right there we go good afternoon Chief Legal Counsel Department of Corrections Tony Rowell so we have in front of you and proposed amendment to the rule that is promulgated by the Arkansas Sentencing Commission that sets out which offenses required to serve 25 and 50 percent of their sentence um y'all passed quite a few criminal offenses this legislative session of those only two went on to the 50 list one was fleeing class a and the other was coerced abortion by fraud that brings that 50 list to 26 total offenses the remainders all went on that 25 list there's 408 total on that now um fleeing class a the class B felony is actually a hundred percent so that one's on the 50% until this body has an opportunity to decide whether they want that class A to be a 100% or not. This is actually should result in a net savings to the state just because the rule as it was drafted two years ago provides that if an offense is not set out as a 50% or 25% in the rule it automatically defaults to a 50%. As you know one of the charges of the sentencing Commission is the efficient utilization of state correctional resources so that's just what this does and as soon as it's ready to go then we

can push forward with permanent promulgation and i'll take any questions all right members any questions

all right seeing none thank you for your testimony members without objection this proposed emergency rule is reviewed and approved and the review and approval shall be effective upon adjournment of legislative council meeting this friday august 15th thank you all right members that takes us to item e it's consideration of an extension of the publishing and editing of statutory materials agreement between blr and matthew bender i believe we have miss jill thayer and kevin coon get it thank

you so they're bureau of legislative research

kevin coon bureau of legislative research thank you

so you should all have in your packets a copy of a publishing and editing of statutory materials Services Agreement. This is the Bureau's contract with Lexis for the publication of the statutes, the code. The current contract that we have expires this December. The Code Revision Commission at its last meeting authorized the entering into the automatic renewal term that starts upon expiration of this contract. The contract provides for two automatic renewals, But because it is a contract that Marty will have to sign and has to continue, we need legislative council approval. So the Code Revision Commission gave that recommendation for approval, and now we just need the same from y'all, if that's your desire. We'll answer any questions that you may have. Thank you for that. Members, any questions

on this one? Mark, seeing none, I'm going to need a motion to approve. The motion is second. Any discussion? All those in favor signify by saying aye Opposed guys haven't just proved. Thank you That takes us back to the top All right, we're still waiting on the motion picture folks to sign on Yeah members if you would we're gonna skip back down to item F and

Marty has an announcement that you need to hear back in 2019 Senator Disman and then Representative Dodson, along with the legislature, passed an act creating the Code of Arkansas Rules. It was assigned to the Bureau of Legislative Research to create a website and a program where all of the agency rules were going to be housed on one location. This was an enormous project, but when you talk about good government, this is good government. We had agency rules that could be found in someone's drawer. You know, they were old rules on agency websites. Our staff has worked for the past six years to create this website. It's a lot of tears and efforts. And I actually have to thank the governor's office as well as the agencies for working with us to create this. So it is up and running as of January 1. And this last week, I believe, at the Administrative Codes and Registers Conference, our program and our website received the Robert Colburn Jr. Innovation Award for our Code of Arkansas Rules, and it's really a big honor. And I have to thank my folks for doing really just an immense amount of work. Isaac Lynham, Rebecca Miller-Rice, we had a huge team of editors and attorneys that put a lot of effort into this program. And again, I can't overstate what an impact this will be for the citizens of the state of Arkansas. This is a whole lot of transparency for agency rules in one location. So I just want to let you all know this is good stuff. So Senator Dismang was a Senate sponsor. I didn't want this, but we got it. Thank you, Marty. That's

fantastic. And we sure all of us, I know, appreciate the hard work that BLR does on our behalf. So thank you very much. Senator Disman, also thank you for your foresight in this. I'm grateful. All right, thanks, Marty. All right, members, we have the motion picture folks signed on now, so we'll skip back up to the agenda, item B. We have Ms. Mina Sadler and Mr. Mira Sadler, excuse me, and Mr. Leon Ford. Did I get it right? Close? You did. Thank you, Chair. All right,

you're recognizing. Go ahead and present. Great. Thank you. I'm not going to share any slides. I'm just going to speak for a couple of minutes and then

be very glad to take any questions. So our company, Oldsburg SBI, was retained by the Bureau of Legislative Research to undertake a study on the Arkansas Digital Product and Motion Picture Incentive, which we delivered. And the full study is now online. It's a pretty detailed piece of work. So I'm just going to pull out some key findings and numbers for you today. Just a quick word on scope. The study, we were asked to look at the economic impact of the digital product and motion picture incentive and make a set of recommendations around the structure, the administration and other elements with a view to helping Arkansas maximizing future economic contributions of the screen production sector. A quick word about context. What we found, and Mira and I spent some time in state, both in Little Rock and northwest Arkansas, we found that the state does have a small but lively industry for screen production, but it has struggled for consistency. And part of that is about larger macro factors. Coming out of the COVID-19 era, the investment in screen production is recalibrating. But a big part of that inconsistency was the state incentive, which is currently not optimal in terms of its structure or in terms of its budget. It runs with an annual system budget of around four million dollars, which is significantly lower than Arkansas's neighbors and significantly neighbor states, I should say, and significantly lower than some of the competitors. And just to flag that these these sort of automatic incentive systems, film and television, are very widely used. There's about 120 of them globally, and there's a lot of competition for screen production dollars. So to have a system that is has a very low budget and is fairly unpredictable in how that is funding is funded is not optimal. We did find there is an opportunity to build a more stable sector. which I'll come on to. Just two flags and numbers for you. We looked in our economic work at fiscal year 2014 up until fiscal year 2025 to date. And what we found was that through the Arkansas cash rebate and the tax credit model, the state had invested about $19.7 million over that time. We used the state outlay to estimate qualifying production expenditure, which isn't tracked. The state only tracks the amount it invests in these productions. But we were able to use the incentive rates to estimate qualifying production, which we found to be about $94 million over the fiscal year 2014 to 2025 period. period so almost 20 million dollars invested by the state and almost 94 million dollars in qualifying spend um to flag a couple of key economic impact numbers and if you are interested in these numbers we there's a lot of detail in the full report but to pick out uh pick up three overall metrics which combines all channels of impact so direct indirect and induced we found that the incentive had delivered or production spending going through the incentive had delivered just over $54 million in total GVA between 2014 and 2025. And in terms of GVA return on investment, that was about $3.62 in value created for every dollar spent. In job terms, film and television production is is um is largely a freelance um larger freelance workforce so we look at full-time equivalent jobs and we found that the peak average over the time frame we were looking at was about 600 full-time equivalent jobs in fiscal year 2018 which was a the busiest year in terms of film and television production in the state and a kind of model of how many jobs could be created if Arkansas was to keep attracting production at that same level, which it isn't consistently. And then just finally, before questions, we were

asked to set out a number of key ones. And I'll pick up on four very briefly.

The key one coming out of the study is around the incentive. As I say, these are key sectoral development tools for screen production, and the Arkansas model is not competitive. It has a low cap, $4 million, and has not been consistently funded, creating some uncertainty in the state. Our recommendation is that Arkansas considers expanding this tool if the state wishes to expand the screen production sector. And we think a sort of 20 million cap rather than a 4 million cap would enable a sort of meaningful change in building the size of the industry and creating a more consistent production industry annually. And we include some sub-recommendations there around the type of incentive and some provision for the lower budget projects that tend to film in Arkansas. also recommend a cohesive industry development strategy alongside any expansion in the incentive in in doing our consultations in state it was clear that the industry is fairly unconnected and fairly uncohesive so having a a strategy that builds the industry if if a new tool like the incentive is expanded um having a sexual development strategy would be important and then finally on the film commission and on data the film commission when we were doing our study was a one-person office which um did not compare favorably in in personnel terms with arkansas's neighbors who have similar offices but but more staff to operate them and we recommend an expansion of of that office and more industry involvement to ensure that it it has the resource to take a proactive role in building the sector. And then finally, on data, one of those issues behind the lack of cohesion that we found was that people, there was a lot of uncertainty about how much incentive investment might be left in any given year, what the usage of the incentive looked like, what the production throughput in state looked like. And that was limiting for workers in the state who were unsure where they could find opportunities. So again, a recommendation around improving that data side. As I say, very, very quick headline results from the study, which is now fully online, and I'd be very glad to answer any questions that you may have.

Sir, I have a quick question. I'm looking at some of the charts in here, and you've got arkansas comparing to oklahoma texas louisiana and mississippi can you give me some idea i think we're all aware that georgia has a pretty robust film industry where how does georgia compare to the states that you have shown

in these charts yeah it's it's a great question and we we've undertaken an economic impact study of the georgia state incentive

i mean it's it's very much one of the largest if not the largest um incentive models in the united states it's an uncapped model which means that the you know the the amount of incentive or the amount of tax credits has has no cap so technically the the industry can service an unlimited amount of production and because of that we've seen a large amount of investment in in infrastructure like studios and a lot of a lot of crew growth as well. But as we say in the report, that's not the only approach that we see in other states. You know, many of the ones we found that similar to the Arkansas level do have caps, which enables the legislature to control the annual investment that they're making into this industry and have a sense of how much is going to be spent on that investment.

Do you have any sense of what sort of economic activity that means to Georgia, the way they do it, in terms of dollars? We

do have those numbers. I'd need to pull them out of our files, but it was a public report that we

undertook in Georgia, so I'd be very happy to circulate. Well, if you don't mind, send that to staff, and we can get it

to the membership. Of course. All right. Thank you.

Thank you. Co-chair Gilmore you recognize. Thank you So I'm looking at page nine figure two Where you have some findings and recommendations and perhaps and I'm sure there's gonna be other questions related to this So I'm not gonna ask you to belabor it a couple of things there that give me Concerns, I'm sort of wanting to examples perhaps where you talk about lack of clarity transparency of cohesiveness strong words What can you elaborate on? What led you to that?

Yeah, so a few things. I mean, on the lack of clarity side, what we found

was, and this is particularly relevant when we're thinking about investors or producers coming to Arkansas or looking at Arkansas with a potential investment in a project, generally the first thing that a producer like that will do is they will have a long list of potential uh potential production destinations usually based on creative elements you know the story the setting the locations and you know always including an analysis of the cost base and the incentive and what we found is that when when those producers were looking at arkansas you know the fact it's funded by the governor's quick action closing fund there's real uncertainty around is is money available for this production right now and you know if you think about the financial risk that that a film or television production involves you know many millions of dollars you know in in productions going to Georgia you know sometimes talking about hundreds of millions of dollars that risk becomes unpalatable for those producers and leads them to choose jurisdictions that are clearer, that are more sort of stable in that information. And even within the small incentive funding that Arkansas has, we found that the sector often, you know, one key issue is that they often had no understanding of whether there was any money left in the fund for that year, whether it could fund to more production service, more productions. So just that lack of knowledge and certainty about the incentive side was a very significant problem. And

then I think the last finding there where you mentioned limited level of interest, what kind of data, so speak to that if you would, where you've talked about published data is limited. What should there be available?

So I think, yeah, this was a key recommendation. And I think the lack of information here is around some of the incentive processes. So there's some technical elements to that

recommendation, which is some people were just unclear in practice how certain elements of the system worked. but

then also the sector itself you know some of the people some of the sort of stakeholders we spoke to were uncertain what productions were coming

in you know we spoke to a lot of crew members who often only found out about you know productions when it was too late for them to be connected with potential job opportunities um and and there's always a bit of a dance there because productions like to you know for their intellectual property they they don't want to announce that they're going to be filmed but we do see in some other jurisdictions a much more proactive sort of data and publishing of information to alert the sector that this production is coming in three months and is is crewing up here's who you can contact if if you're interested And that wasn't necessarily happening as much as we thought it could have

in Arkansas. Thank you. Speaker Evans, you recognize? Thank you, Mr. Chair. Over

the last two or three weeks, I've had the opportunity to visit with some legislative colleagues from other states in the southeastern part of the United States who have very robust film programs. And I see in your packet, your firm has been doing this for north of 30 years. So a lot of experience. How often with the states that you've worked with, has it been your recommendation to move the film office out of economic development into parks and tourism? Because the states that I talked with, theirs is in economic development. So curious as to why the recommendation here was to do that.

Yeah, thank you for the question. And there's a number of reasons for that. I think, again, going back to the sort of resourcing and the cohesiveness point that we were talking

about, I think that the natural home for film commissions is often economic development, because, you know, incentives are economic development tools. I think what we heard, you know, we spent time in state talking to some of your legislative colleagues about the sort of economic strategy for Arkansas on a more general basis and heard a lot about the visitor economy and the growing, you know, the growing tourism sector in Arkansas. And it felt to us that this could be an opportunity to revisit whether a different department would be more suitable for the aims of building the film production sector. And as I say, that's set against the context, which is in the years we've been talking about, the aim of the incentive, which was to expand the industry, had not really happened. And so we were looking at options to try and drive that change and considering the department in which, you know, the key film

commission agency is housed within was one of those options.

So it's, if I understood what you're saying, it's not necessarily always your recommendation to do that. You just find Arkansas to be unique to where it's better

suited to move it there? Yeah, it's certainly, it's

not, you know, all of our work in, you know, in each state or jurisdiction we work in is completely bespoke to that. It's not a kind of standardised recommendation by any means. I mean, if we do this type of work in any jurisdiction, we'd look at the formulation of key offices, which we did in this instance.

And, yeah, I think on an international basis, these offices tend to

be economic development more frequently, but also, you know, tourism and some other departments as well. But, yeah, this was a specifically Arkansas consideration.

I may have missed it in the report, but in the

conversation I had in other states, it may be the same thing, just different terminology that we speak here versus what they speak there. But you mentioned quite often the incentive. And if I understand it, the incentive that you're recommending here is a tax credit buyback. But other states that I've talked with talk about a rebate. Is there a difference? Is that the same thing, just someone's terminology is different to

others? In part, yes. And we'd be

very happy to share. We have some literature on the verbiage and how things differ. But in general terms, the film and television incentives on a global basis are structured in sort of two headline ways. One is as a cash rebate, which is the production undertakes the spend and the jurisdiction refunds a portion of that cash, that production cash that was dropped in the economy. And that happens after an audit and after checks that each item of spend is eligible and has been undertaken. The other sort of main grouping is around tax credits. And actually, these are much more common in the United States than rebates. And sometimes people call tax credit rebates, but they are technically tax credit based models where the jurisdiction, instead of handing out a, you know, instead of cutting a check from the legislature's budget or the government's budget, it supplies a tax credit to the production. And that can either be monetized through selling it. So this is how Georgia works. The producer there will sell the credit to a taxpaying entity at a reduction on the dollar. And that way, the state government is paying for the incentive through foregone tax revenue rather than cash. And the other option, which is less common, is a refundable tax credit where this is similar to a rebate where the producer will give its credit to the state or the government and receive a rebate on that tax credit. What we've specifically looked at for Arkansas, again, we recommended a tax credit model and specifically a transferable tax credit model in, you know, from the logic that the cash rebate model that Arkansas has had has not functioned in building a sustainable industry. So, in our view, isn't a good bet for the future for building a sustainable industry. So, we looked at a transferable tax credit, which could expand the overall pool of incentive and be funded by foregone revenue rather than hash from the government, which has proven problematic. What we did hear a lot from the sector is that a lot of low budget work is made in Arkansas, and those producers and investors were very nervous about the additional costs involved in a transferable tax credit. so we recommended a a sort of a buyback clause if you like where rather than selling it to a third party the producer of certain low budget material could sell it back to the state at a at a kind of named discount uh model so that's that's the that's maybe going into too much detail um and i'm happy to send some literature that

we have on this but that that's the general picture and the specific recommendation

my last question mr. chair and and council staff can probably clarify this but i'm

curious is how this has worked in other states going back i meant to ask this on the first question in regards to running these projects through economic development i would think in most states that that would give the state foyer protection if you're negotiating on really big film project for your state i would think that the film industry would want that you know they wouldn't want everybody to know that they're about to come to arkansas and film a big project and someone run ahead of them or so forth but i'm not for certain that under parks and tourism that that same protection would be there so have you seen that in other states where Maybe production companies were hesitant to go into a state with a project because they might not have foyer protection as they would here under economic development.

It's a really interesting question. I'm not sure I have, to be honest. I think productions, you're completely right, productions do want

secrecy. And that's largely, you know, for the for the larger productions, that's about the intellectual property and keeping keeping the value of what's going to be in that film or TV show, keeping it under wraps so that when it hits the marketplace, it's new for people. And it hasn't been, you know, trailed six months earlier when everyone everyone saw, you know, paparazzi pictures of the stars or whatever.

I mean, so you're right. That's absolutely a key concern. And I haven't I haven't seen any productions pulling back from

specific jurisdictions because of Boyer, though. I think I think that can be managed in certain ways. I mean, productions often use working titles, you know, if they're on a studio lot, there'll be very stringent security around taking pictures and access and things like that. So, you know, and I think we commonly see the amount of incentive given to certain production companies in the public domain. So I think that's manageable. I don't think it's a deal breaker in that way. But we can also take a look at other examples and come back to you in case we can find anything. Thank you, Mr.

Speaker. Senator Dismayne, you recognize me. Yeah, and

I'm glad we're kind of talking a little bit about the proprietary side of things because I've heard a little bit about that. I mean, that cuts two ways, and I obviously think there's a way to do it. I mean, whether it be in economic development or parks, folks should know what they have to apply for, how to apply for it, and then to be quite honest, who else is receiving it, which is something that is very hard to track, at least my understanding, if you talk to people in the industry in Arkansas and creates a ton of confusion, and a lot of folks just choose to not participate or not even look at the state because of how muddy the waters are or can be here. And I guess my question was, before we just got to the previous questions, is it not important that that information be made public, even about who's being awarded? And I'm not saying we're going to publish someone's script, you know, or that sort of thing, but who's participating in the program? Because, number one, if there's successful studios or whatever it may be, film crews, whatever, that are filming in Arkansas and finding success, we want the rest of the world to know that that's happening, right? Because I think that helps create some awareness about what we have to offer, whereas if no one really knows until after it's all over with, I think that's a whole different ballgame. But so what do you see in other states as far as what's considered proprietary and open to the public versus what everyone should know? Because when we are talking about tax credits, the people of Arkansas and the state legislature should have banned some accountability about how they're awarded and that sort of thing. Or we're talking about rebates, one of the two. We have two programs in the state, both of those. Yeah. So can you just talk about that idea of what's proprietary and what's not in other states and maybe how we should look at structuring that as we're having this conversation about how we manage the program?

Yeah, thank you, Senator. And, you know, you won't be surprised to hear that it

differs quite widely depending on the state and depending on the country, if we're talking internationally. And we should highlight that, you know, Arkansas is competing internationally as well as with other states. So I think what other countries are doing is relevant as well. I mean, I think, you know, as you rightly say, this is public money. This is tax money. And there is a, you know, there is a duty to taxpayers to inform them of how this money is being invested. So I think that there should be a some kind of mechanism to to show that in any in any system. I think, you know, and again, this differs very widely, but often we see reporting around on a production company level. So if, you know, it might not be broken down at a project level, but there could be reporting annually that says his his other tax credit has been invested this year. and here is the list of entities that have claimed this credit um so i think i think that's very important i think where it becomes problematic for investors and we've seen this not so much in the u.s but in in some international territories where there have been systems that do ask for things like scripts or at the back end you know there's often there's an acknowledgement that that often film and tv can lead to tourism and sometimes there has been from systems a bit of an unrealistic assumption that they can maybe send camera crews onto set to get uh tourism footage or interviews with stars and i think that it's that sort of side that gets problematic um and i think the other the other thing to flag is you know production budgets this is all sort of commercial commercially sensitive information and and competitor sensitive information so i think investors are uh very nervous about um you know any any data release that shows how much they're spending on uh on making making film and television you know what they're what they're spending on on on staff it's just it's not something and and many businesses are in that same position really wouldn't want to to have that out in the open market but i think the sort of headline investment level is is pretty pretty well accepted as a as something that

has to be has to be released really and just

so kind of a follow-up because i'm not sure how it works here and in your research what you saw were you able to kind of decipher how we awarded projects and how they were prioritized and who and how we set commitment levels and that sort of thing in your research what did that look like I mean what what was your conclusion to well you know the state of Arkansas prioritizes film projects based on these 10 criteria we routinely do that these types of projects aren't going to be awarded it's a first come first serve like what did our current system look like for the amount of money that we had available for rebates and then also tax credits?

Yeah, so I'll invite Mira to come in to this question as well, having worked on

the economic side. But, for example, and this may have just been the way the data was provided to us. I don't think, for example, we had project titles and I don't think we had exact spend from those projects. So, as I say, we estimated what we what we did have, what we did know is how much the how much the state spent on those projects. But we didn't have a corresponding figure that said for this incentive investment, this is how much exactly this project spent in Arkansas in qualifying terms. And also and that's also important because there's qualifying and non-qualifying spend. And I think for an incentive, you know, there's elements of that production spend that can be qualified through the incentive. And there are elements that can't. So every system has non-qualifying components. And what you're what you're missing by estimating based on the percentage of an incentive from how much the state has spent on it is that additional piece on the non-qualifying. So the whole picture isn't that clear, really, in terms of the exact dollar amounts that get spent. I don't know, Mira, if you'd

add anything to that. Just to say that the data that we received was by production company, so we couldn't assign it directly to specific project titles. And as Leon mentioned earlier, the only information that we received on that level of detail was the total incentive paid out and not anything on the amount of qualifying production expenditure that that related to by fiscal year

either. So maybe this will help with the question a little bit. Did you all

get to see what the form looked like for someone that was applying for an incentive in Arkansas? I mean, did you get to see the landing page or whatever it may be to, you know, I'm assuming there was some kind of rigorous process of, you know, yes and no questions and maybe more detailed questions about projects that were looking to do business in the state that didn't got submitted. So that, again, the commissioner can make a decision on, you know, we need to prioritize this and needs to be accepted. Were you all able to see any of that to tie it back to, oh, this is the formula for why Arkansas awards projects, you know, tax credits? Or was that fairly muddy? I'm not trying to lead. I just

honestly don't know. So we didn't, and Mira, correct me if I'm wrong, we didn't see that.

We didn't know in terms of, you know, if there were decisions made about, you know, we only have this amount of funding and here are two projects, you know, we're going to go

with this one. We didn't have information on that.

As far as it being at AEDC, I know we've had some of that question. Is it when those decisions were made, were you able to tell who was making the decision? Was it solely up to the commissioner? Did it go through AEDC's board ultimately, or how did they receive the tax credit ultimately? I mean, from all the applicants that are submitted, so you didn't even get to see the application. So we don't know how many were not awarded in a given year, essentially, because we don't know what the criteria was. We don't know how many were submitted. We only got to see who was awarded and only by a company level, not by a film level. Is that what I understood you to

say? Yes, exactly. Okay. Yeah, yeah. All right. That

sounds like something we may need to look into so we can get a better understanding of that process, especially since it's related back to tax credits that were enabled by the legislature. So thank

you. Thank you, Senator Disming. Senator Tucker, you recognize me.

Thank you, Mr. Chair, for recognizing a lowly non-member of the committee. I've got kind of two areas of questions for y'all. First of all, Leon Amir, I just want to thank you all for your extensive work on this. I know it was a lot, and you all came overseas to come visit Arkansas and meet face-to-face with a lot of the stakeholders and legislators and everything. So thank you all for your work. My first question, I want to follow up on what the chair asked, you know, about the cap. And if you look on page 10 of the proposal, there's other places where, in the report, where you comment that we compare favorably with our neighbors in terms of our percentage of the incentive, right? But when it comes to the cap, we don't. And I just want to make sure the members see that we have a $4 million cap in our neighbors. Oklahoma has 30. Texas is 200. Oklahoma's 30 million. Texas is $200 million over a two-year period, so $100 million per year. Louisiana is $125 million per year, and Mississippi is $20 million per year. So from a cap standpoint, we are just not competitive with our neighbors. Is that fair?

Yeah, and thank you, Senator. Yeah, that's exactly right. I'd say very, very uncompetitive. I think to the point where if you were an

investor who had never considered Arkansas, you could look at the list, you know, and there are lists that we and others produce of caps and just see it as being

too low to, you know, too low to make your short list, really.

And as you say, the headline rate, which is the percentage of qualifying expenditure that a production can get rebated or returned in some way in a tax credit. Arkansas does does compete in those terms. It's it's it's up to 30 percent in the current, you know, with add ons. So it's competitive in those terms. It's just the underlying, both the size of the cap and the uncertainty around that cap and its linkage to the quick action closing fund.

So, obviously, we want to attract out-of-state investment. You know, that's a goal of

ours. I've heard reports from Arkansans who have left the state and are producing, Arkansans who are producing films in other states because of the low level of our cap and the uncertainty around that. Did y'all hear any of those stories when you were on the ground

doing interviews here? Yeah, we

did. And it was usually Arkansans who

wanted to work in, you know, obviously wanted to work in the industry. And either they left because they couldn't get the type of role, the type of level of role they wanted in the state, or they left because the sort of year round stability of the sector couldn't support them. And, yeah, so I think that we definitely heard that from crew members that, you know, crew members and filmmakers, not just, you know, there's a difference in case you're not aware between the filmmaker side and the crew side. And I think both elements, we found examples of that sort of outflow of talent and workforce to other parts of the United States. Okay. For

me, a goal is I want to attract out of state folks, but I just want

to keep Arkansans here too. So thank you for that. Can you just kind of give the members who are here participating in this discussion a sense of how quickly $4 million goes in terms

of film productions or like a season of television and that sort of thing?

Yeah, so, you know, at a

20, at a 25% rate, you know, that, that would serve as a $16 million production spend thereabouts. And if you think, you know, Arkansas isn't, isn't a market built for very large studio productions, you know, you don't have larger, large stages like Georgia does. but one of those productions alone can be 200 million plus dollars and even you know putting aside that top end of the market even even lower to mid-budget work can be you know pretty pretty larger than 16 million dollars for one production so it's it's just not it's not an amount of investment that can create a year-round stable valuable industry um it's just it's just too low i think what what it's been doing and there have been exceptions there have been you know there's been at least one very large production come to arkansas but generally it's been it's it's not been sufficient to to attract larger productions it's it's just not not at a competitive

level okay and as y'all showed we have a strong roi from the dollars that

we do spend and you know no one hears the decision making in georgia including y'all but as representative ease pointed out they have no cap and so my analysis of that is they decided that if the formula works at one dollar then it works at a million dollars and 10 million dollars and 50 million dollars and so forth so um okay i have just kind of one other area of question and it follows up on what senator gilmore and speaker evans and senator dismay we're all asking about and that is you know i just i've heard consistently from folks in the industry that they don't know how films get selected they don't know how much money is remains for either in a rebate or or the tax credit they don't know what jobs are available in arkansas and uh and senator dismaying asked you specifically what some other states have done so i was i was happy to hear that discussion i've heard you know in other states that they they literally just post on the website as soon as a film gets approved so that crew in the state know what jobs are there to apply for is that something

that you all have seen in your experience and how common is that yeah it is it definitely does happen um there can be

you know again going back to the discussion about confidentiality you know it doesn't it doesn't may not often name the film or may not often name the studio it might be you know it might be the special purpose vehicle company that has been set up to make that but yeah I think we we definitely see information being circulated online through through agencies or film offices saying this the show is crewing up and partly because you know it's it's a competitive um space and i think particularly in recent years coming out of the covid boom although this maybe is tailing off slightly now there's been a huge amount of competition in some markets for for staff for crew so i think a lot of productions have had to to to you know use those sort of film commission tools to advertise the fact that they're they're crewing up and they're looking they're looking for work so yeah i think we've we definitely have seen that in in other places

so there are definitely ways to communicate with the industry in ways that facilitate work where you're

also protecting the trade secret type information of the of the production it's what you've seen yes yeah yeah

yeah and i should as a caveat i mean we for our study we we were spent a lot of time looking at the the economics of the the system rather than the sort of crewing up side. So I think we're much closer to that. But yeah, in terms of those job opportunities, it's definitely something that

we see elsewhere. Okay. So really my last question is about one of

your recommendations. So expanding the film commission, that's pretty clear. We don't compare favorably with other states just in terms of the number of staff, right? but another structural recommendation y'all made was to create an industry advisory board and i wonder if y'all could just speak to that a little i guess i'm inferring but it seems to be some communication issues between the industry and and the state and and that could help facilitate that more transparency and accountability for what projects are chosen or can you just kind of speak to what the purpose of that board would be yeah

thanks senator and i think just underlining the point we made earlier around the lack of cohesion in the sector i

think in when mir and i were we're in arkansas and meeting stakeholders crew uh people who work in the sector people who supply the sector we definitely heard that point about the lack of there was a lack of knowledge between people and across people around what was coming into the industry where where opportunities were coming in and i think you know that's there's a couple of recommendations coming out of that finding which you know one is about the need for a shared strategy the need for the industry to be on the same page about what you know to be clear about what what the state government wants to achieve through this sector and and um you know where the sector is going you know in terms of its niche in terms of um you know what are its ambitions and i think the other the other part of that recommendation is around having the industry in some way be much more involved in you know in in not not so much decision making but steering and maybe in some in some cases oversight you know and we see some film commissions in very major markets might have advisory boards and it's it's frankly it's a way of getting the industry both in state and out to to keep talking about arkansas and to keep sharing information and making sure there's a forum for, you know, leaders in the industry, the ones who might service productions when they come into Arkansas or state producers or filmmakers who might be the ones creating new intellectual property that could create value for Arkansas, that there is some kind of forum for them to come together and have a shared understanding and a voice in where the sector is going. And that could be relevant across a number of areas. I mean, obviously, the issue about getting information out to the sector, you know, that's something those producers, filmmakers, you know, whoever was on that sort of board can have a view on and help sort of, you know, help sculpt and shape. And also helping deal with challenges as they arise, you know, so if there's if there's a particular production issue, you know, learning from that in state and if there's gaps in supply chain or gaps in the workforce, you know, having having a grouping like that can help, you know, come up with a strategy to escalate that. How do we create more workforce in that area? And I think we see this in other markets, and I think it's a very positive way of, you know, learning from senior people in this sector and bringing them into the tent. And they wouldn't get special access to the incentive or anything like that. They should still be rigorous, you know, rigorous application processes and independent application processes. But having that industry involvement in the strategic direction of the sector can

only be a good thing if it's well sort of designed and organized.

That's extremely helpful. Again, thank you all so much for your work. Really appreciate all your effort on this. Thank you, Mr. Chair. Thanks,

Anton. All right, members, any other questions? Matt Miller, any questions you wanted to add? You're good? All right. Thank you both for being here. We appreciate the hard work and for the presentation. All right, members. Thanks so much. Thank you. Thanks. Any other business? All right, seeing none. Thank you for your participation. We are adjourned.

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