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Posted at 12:10 PM ET, 06/15/2010

Hello, Hollywood

By Paige Winfield Cunningham

Unlike Michigan, Virginia probably won't be paying $800,000 to Clint Eastwood anytime soon. But the state nonetheless became Hollywood's newest suitor with a Monday signing by Gov. Robert F. McDonnell.

After endearing himself to Northrop Grumman and Canadian tourists, the governor is going courting again -- this time to production companies now eligible for millions in tax credits if they film in Virginia.

It's a popular new incentive, receiving approval from most lawmakers this session. Until now, Virginia didn't do much to attract film companies -- at least compared with other states, where more and more legislators are using film credits as a sexy, glamorous way to make it look like they're boosting local economies.

Producers of the popular John Adams HBO miniseries received sales and use tax exemptions and $1.5 million from Virginia back in 2004. Now, film companies may receive back 15 to 20 percent of direct production costs.

The size of the incentives are still moderate in contrast with packages offered in states such as Michigan and Connecticut, where companies can receive back 30 to 40 percent of their expenses.

Those states have extended their helping hands a little too far, according to some studies. While film credits do help businesses and boost tax revenue, they offer diminishing returns at some point.

Michigan has handed $150 million to filmmakers in the last few years, but only received back 10 cents for every dollar spent. Amid criticism that the state's program is too generous, the director of the state's film office announced her resignation last week.

In Connecticut, 89 percent of the credit-eligible spending occurred outside the state.

Virginia's new package falls in about the middle of the spectrum of how much money states will dole out to entice production companies. It also lines up with McDonnell's outward-reaching style, as he tries to draw businesses and tourists to Virginia.

McDonnell has tried hard to make the world his oyster. The new film credits will hopefully roll in pearls, instead of losing state dollars.

Paige Winfield Cunningham is an investigative reporter and managing editor at Old Dominion Watchdog. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.

By Paige Winfield Cunningham  | June 15, 2010; 12:10 PM ET
Categories:  HotTopic, Local blog network, Virginia  
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