Lights, Camera, Inaction! Arkansas Film Rebates on Hold Until Study Data Comes In

Zak Heald, left, at his Bentonville Studios with filmmaker Lesa Crowell and grip Caleb Hoenshell. They want improved state film incentives. (Michael Woods)

The next few weeks could be a turning point for Arkansas’ growing TV and filmmaking industry, and an economic impact study due in mid-March could plot the future of state incentives.

Industry pros are lobbying lawmakers for guaranteed funding of a longstanding film rebate, and they say a hold on grants this year has projects in limbo.

Producers and film studio leaders like Lesa Wolfe Crowell of Russellville and Zak Heald of Bentonville fear that Arkansas could miss a half-year or more of film work if the state doesn’t bolster incentives soon.

And they say the state should  make a long-term commitment to incentives to help land productions like the Academy Award-winning “Minari.”

Heald says the state lags behind neighbors like Oklahoma, where Director Lee Isaac Chung, who grew up with his Korean immigrant family in Arkansas, filmed “Minari.”

Oklahoma offers up to $60 million a year in incentives to offset production costs. The Oklahoma Film & Music Office website lists all incentivized productions and every state penny spent on them since 2010. Last fiscal year, it spent $43.4 million on film rebates. That was up from $16.9 million in fiscal 2023, including $4.4 million for Martin Scorcese’s “Killers of the Flower Moon.” In 2022, Oklahoma devoted $17.6 million to film incentives.

Meanwhile, Arkansas’ film tax credit is capped at $4 million a year, and the state approved a total of $4.14 million for all incentives in fiscal year 2025, which ended June 30. That figure was down from $11.6 million in fiscal 2021, when incentives for several big productions from previous years, including the third season of HBO’s “True Detective,” went down on the books after final auditing.

“If you look at Oklahoma, they’ve just raised their cash rebate cap to $60 million,” Heald said. “Before 2021, when it went to $30 million, it had been at $8 million. That’s what’s been happening across the country, and when states study this, they see it’s a no-brainer.”

Research in other states has shown that the film industry’s impact adds up to $8 to $10 gained for every dollar of state incentives spent, Heald said. His 10,000-SF studio has benefited from some of that money. Meg Ryan used Heald’s Bentonville soundstage in directing her first feature film, “What Happens Later,” co-starring David Duchovny.

But conservative groups, including Opportunity Arkansas, question the practice of devoting public funds to private film ventures.

“As a matter of policy and principle, we oppose film incentives that take dollars from hard working Arkansans and redistribute them to companies that government has deemed more deserving. Arkansans know best how to spend their own money, not state government and politicians in Little Rock,” said Nic Horton, Opportunity Arkansas’ founder and CEO.

He said a growing number of studies “unsurprisingly” show that incentives “do not live up to their promises of economic growth.”

Oklahoma officials doubled down on their program after calculating that $40 million in state incentives over 10 years enticed film companies to add over $300 million to the state economy.

Oklahoma Film Incentive Rebate Payments (Fiscal Year)
Total Rebate Amount (Dollars in millions)

Arkansans are looking to the coming study by Olsberg SPI of London for details on how much the industry means to Arkansas’ economy. Industry veterans like Heald, Crowell and Gary Newton of Little Rock have all been interviewed by Olsberg, or expect to be.

Heald, who owns Bentonville Studios, said that filmmakers like Arkansas’ tax credit but would prefer the simplicity of a rebate check.

Both the tax credit and the rebate offer the same percentages as incentives. They offer a 25% base incentive for the cost of Arkansas goods, services and nonresident labor. An additional 10% incentive is applied to the labor of full-time residents, and an extra 5% is applied if the Arkansas employees live in economically depressed areas.

Heald believes Arkansas Film Commissioner Christopher Crane could help the industry by lobbying harder for bigger incentives with permanent funding.

Arkansas Fiscal Year Disbursement Totals
For Digital Product & Motion Picture Incentive

*Note: Projects might not be audited for a year (or maybe two) after completion of principal photography. (Source: Arkansas Economic Development Commission)

But officials at the Arkansas Economic Development Commission say its employees, including Crane, must avoid weighing in on policy or legislation. Crane has been film commissioner since August 2007.

The state declined to make Crane available for an interview for this article. But Tyler Hale, an AEDC spokesman, gave Arkansas Business a statement.

It said the Film Commission has “a long track record of providing excellent customer service to filmmakers and producers, helping to secure locations, obtain permits, and work through the many obstacles they face over the course of a production. Our high level of customer service has been recognized by numerous filmmakers and has helped Arkansas attract repeat productions from multiple producers.”

Hale offered a list of film producers to testify to Crane’s hard work and Arkansas’ film appeal. Arkansas Business spoke to four of them, including Steven Shapiro, executive producer of “What Happens Later.”

“The film commissioner … bends over backwards to make everything work for us,” Shapiro said in a telephone interview, “and I intend to bring more productions to Arkansas. The tax credit is competitive, the crews are good and costs are reasonable. The Film Commission does have to focus on the tax credit vs. the rebate. That would be helpful, but I believe they are doing that.”

Shapiro said he is set to shoot two more pictures in Arkansas.

Another producer, Vince Jollivette, said he had completed four movies in Arkansas recently.

“We had heard that there was a good rebate there for independent films,” Jollivette said. “So we talked to the film commissioner, and he helped us sort of navigate our way through it, which was pretty easy, actually.” Soon, Jollivette found more to like than the rebate. “As we shot our first film there, the crews were good, we got so much help from Chris Crane, and everyone was just so nice, we decided to shoot other movies there as well.”

Following the Money

The governor’s office has exclusively funded the film rebate back at least as far as Mike Beebe’s administration (2007-15). That’s the recollection of Newton, CEO of Arkansas LEARNS and one of the producers of “Antiquities,” a 2019 movie featuring Arkansas-born Mary Steenburgen.

Newton said it’s encouraging to hear that lawmakers might consider a system to appropriate funding for the rebate, but he fears the tax credit, enhanced in 2023, muddied the issue politically. “In my view, that was a mistake,” he said. “I think it was done without consultation with the film community as a whole about what’s most competitive.”

Newton said that after the tax credit passed, policymakers “had an excuse to say, ‘Well, the incentive is embedded in this tax credit. Let them use that,’ rather than funding what was our most competitive of all incentives, the rebate.”

The rebate money has traditionally come from the governor’s office’s discretionary and quick action funds, via the AEDC. The grants are awarded project by project.

Gov. Sarah Huckabee Sanders has funded no rebates this year, said Crowell, who has co-produced a half-dozen movies and shorts in Arkansas.

Crowell works mainly with SkipStone Pictures, owned by Johnny Remo, she said. “We have three films ready to go, and [the lack of] this rebate is holding us back, literally, from being into pre-production right now. We’re now looking at Kansas; we’re looking at Missouri,” Crowell said.

SkipStone made “God’s Country Song,” starring Mariel Hemingway and Justine Alpert and directed by Remo, in Arkansas in 2022. It is the last Arkansas-made picture listed on the Arkansas Film Commission’s website. The site lists no Arkansas-made movies from 2023 or 2024, though some were made.

‘Arkansas Stories’

Crowell and Heald have been working with state Sens. Jonathan Dismang, R-Searcy, and Clarke Tucker, D-Little Rock, on legislation to fund a filmmaking rebate by appropriation. They expect a proposal to take shape after Olsberg issues its report next month.

Heald said the current rebate funding mechanism lacks long-term stability, and he pointed out that in some other states, tourism officials pay for film incentives. “The way it has been in Arkansas has always been a handicap for us, because large productions don’t want to come here when they feel like the governor could change their mind at any time.”

The filmmakers said they tried but failed to get an emergency outlay from the governor’s office in early January. “They basically said they wouldn’t provide emergency funding until [the Olsberg data] comes back,” Heald said. “I understand her perspective from an executive standpoint. She’s close to having hard data on Arkansas film.” But the delay has stalled projects, he added.

Caleb Hoenshell, who has worked as a grip on dozens of Arkansas productions, insisted that rebates do not line the pockets of out-of-state producers. “It incentivizes them to bring their money here and pour it into local economies,” he said. “It goes to people like me and my small business. But it also goes to mortgages and food for the crew. It goes to caterers and coffee shops, restaurants and bars. It helps so many people in the state of Arkansas.”

The governor’s office issued a statement that didn’t mention film incentives: “The Governor is working hard to grow Arkansas’ economy by expanding our workforce, investing in education and cutting taxes and will review legislation as it is introduced,” it said.

Crowell said films offer the state advertising and marketing benefits far beyond the economic multiplier effect on the state’s economy.

“I want to showcase my state, and show people how beautiful it is to visit and live in,” she said. “We are trying to tell Arkansas stories. One of my movies planned this year is an Arkansas story. I don’t want to tell that story from Mississippi.”