Montana Lawmakers Focus in on Capturing Film Industry Dollars

For two whole days in October, the sounds of shattering glass and blood-scrubbing brushes rocked Ruby’s Cafe in Missoula -- a charming, 40s-style diner owned by Brenda Hallas. She spent the days in her basement office, listening to the chaos without a worry in her mind. In fact, given the chance, she said she’d invite the noisemakers back for another round.

“I really hope if something comes up again, and they need a diner again, they’re going to call us,” Hallas said in a phone call. “I want to have a rapport with these people.”

When the crew moved out, Ruby’s looked just as it had before they arrived. That’s because it wasn’t a gang of mobsters she hosted in her restaurant -- it was the cast and crew of Paramount’s hit TV series “Yellowstone,” starring Kevin Costner.

The production moved its season-four shoot to Missoula and the surrounding areas in fall 2020, bringing with it an air of excitement that infected Missoulians and a bulging wallet that fed a stream of revenue into local businesses.

Hallas said scouts for the show walked into her restaurant and said it was the perfect location for the scene, and with the signing of a contract, she secured two days worth of compensation for her business and her employees -- and, she says, a hopeful uptick in business she expects to see once season four airs.

“It was kind of crazy,” she said, describing how Missoulians set out chairs and lined around the block to watch the shoot. “I still, to this day, have people coming in and saying, ‘Oh, you filmed in Yellowstone!’”

Film industry supporters say neither the (pretend) mayhem in Ruby’s Cafe, nor the economic benefits from the filming of “Yellowstone” would have been possible without the passage of the MEDIA Act in 2019, which courted the booming film industry to Montana through a system of tax credits. Now the bill’s original crafters are back together with a plan to expand the program, hoping the state will continue to reel in film productions and their big budgets -- though some lawmakers are concerned the proposal for unlimited tax credits will lead to an unpleasant fiscal plot twist.

The Montana Economic Development Industry Advancement Act debuted in the 2019 Legislative Session as the brainchild of a group of producers, film entrepreneurs and lawmakers who wanted Montana to take a bite out of an industry that generated $75 billion in 2019 in the United States alone, according to Statista.

Current Speaker of the House Wylie Galt, R-Martinsdale, sponsored the bill, which proponents pitched as a way to capitalize on more than just Montana’s scenic vistas, but to make the state attractive to entertainment productions, both inside the studio and out.

Though it took a long road through the Legislature, the MEDIA Act eventually passed into law with bipartisan support and took effect in July 2019. The bill offered film productions tax credits of up to 35% of their spending in the state, with the percentage increasing with certain criteria, like hiring Montana residents.

A report submitted to the Montana Film Office in June 2020 took a look back at the first year of the program and indicated it was a booming success, not the least of which can be attributed to “Yelloswtone’s” move into the state.

The report indicated an average of 80 entertainment productions filmed in Montana per year over the last decade, while a total of 122 productions were filmed from 2019 to June 2020. Ten of those films qualified for the tax credit and accounted for more than half of the total production expenditures in the state that year -- more than $19 million.

The report also estimates that the total economic impact to Montana from productions in those 18 months is about $47.6 million, manifesting in the creation of new jobs, spending in the hospitality industry, labor industry and more.

When “Yellowstone” moved in for its Missoula shoot, the production spent heavily with local businesses beyond Ruby’s Cafe. Just two blocks away from the restaurant, TC Glass project manager Cortney Reynolds remembers the day she picked up the phone and heard a request from one of her favorite TV shows: would TC Glass be interested in helping with the shoot at Ruby’s?

Reynolds gave them a speedy “yes.”

“I binge watched all three seasons in a weekend, so it was exciting,” she said. “You watch the show, and then you get to be a part of it.”

TC Glass removed all the tinted glass at Ruby’s and replaced one window with tempered glass three times after actors shattered it while filming different takes. The whole process lasted less than 48 hours, but brought the company business and a lasting relationship with the production; during filming later at a ranch, “Yellowstone” asked TC Glass to replace glass from a broken fireplace and storm window.

With the numbers indicating the MEDIA Act’s big success, the backers of the initial measure returned to the 2021 Legislature on Tuesday, Feb. 23, to throw their support behind a new bill brought by Galt that they say will further incentivize filmmakers to choose Montana.

In its original form, House Bill 340 would remove the $10 million cap on tax credits for film productions, meaning any production eligible for the credit would be able to claim it without fear of being crowded out by others. The bill also makes postproduction -- the process of finalizing a film after shooting is complete -- an expenditure eligible for the tax credit.

According to the Montana Film Coalition, which testified in support of the bill, “Yellowstone” moved to Montana after outgrowing Utah’s $8.3 million tax credit cap. In 2020, it absorbed 85% of Montana’s $10 million cap, thereby blocking other big-budget productions from accessing the incentive.

At the hearing, Steve Grover spoke in favor of the measure on behalf of his company, Montana Studios, and told the committee removing the cap would help businesses like his grow.

“Now we’re right at that next place -- the industry’s pivoted, they’re paying attention,” Grover said. “The next question is, can we attract investment in infrastructure, and that’s really where that cap is limiting us right now.”

Grover started Montana Studios in 2018 as a company designed to help studios produce their films. But at the time, big-budget productions had little interest in moving their whole operation to Montana. While Grover worked with Galt and industry professionals behind the scenes to get a tax credit passed, he acknowledged starting his company was a risk.

“It was definitely a roll of the dice,” Grover said in an interview. “We did our best to make it an educated roll.”

With the passage of the MEDIA Act, that gamble paid off as “Yellowstone” arrived and asked Montana Studios for logistical support, earning Grover a three-month contract. Now, Grover is hopeful that lifting the cap on tax credits will keep the ball rolling for himself and others in the industry.

Even lawmakers got in on the feeding frenzy. Rep. Jim Keane, D-Butte, saw firsthand the economic fruits of the MEDIA Act, as his home district became a popular site for film shoots. One production even asked Keane to film on his property, and granted him a role as an extra.

“Everyone’s talking about the tax credit, but this generates a lot of revenue for wherever they’re shooting the movie,” Keane said in the interview.

That’s why he introduced a measure to add a requirement to the MEDIA Act tax credit eligibility process for 50% of a production’s hired crew to be Montana residents. During his bill’s hearing, though, he asked members of the House Taxation Committee to table the measure and roll it into Galt’s bill in some form.

Industry insiders and some committee members expressed concern that the 50% requirement might be too high, given Montana’s low population and proportional number of entertainment industry workers. Keane said the actual percentage isn’t as important as the message it sends to the business: you’ll receive a larger incentive if you hire Montanans, rather than bringing your out-of-state crew into ours.

“We’re just trying to level that playing field a bit,” Keane said.

But in all the excitement over expanding a proven program, some lawmakers are raising concerns over the expansion’s potential costs.

During the bill’s hearing, some lawmakers and members of the public brought up HB 340’s fiscal note -- a notice attached to the bill that explains its potential effects on the state’s coffers. With an unlimited cap on tax credits, HB 340 could cost the state nearly $50 million in lost tax revenue per year by 2025 -- something that concerns Rep. Mary Ann Dunwell, D-Helena. Dunwell asked Galt to be part of the process of debating an amendment that would reinstate a cap of some kind, which Galt said he would be open to doing.

Data from the Montana Film Coalition indicates that even filmmaking hotbed California has a $330 million cap on their tax credit program.

In an interview, Dunwell said that while incentivizing the lucrative film industry is a good thing, she’s concerned about the state programs that could face the chopping block if the film tax credit saps $50 million away.

“I’m really reluctant to give such a huge wad away to film production companies,” Dunwell said. “It’s got the potential to spur the economy, but I don't think we should invest all our eggs at once.”

But for Hallas and other Montana companies, doing business with more and larger entertainment productions in the future is a tantalizing prospect -- both financially and personally.

“They work hard for what they do, I work hard for what I do,” Hallas said. “If ‘Yellowstone’ came knocking again, I would do it in a heartbeat.”

Austin Amestoy is a reporter with the UM Legislative News Service, a partnership of the University of Montana School of Journalism, the Montana Broadcasters Association, the Montana Newspaper Association and the Greater Montana Foundation. He can be reached at austin.amestoy@umontana.edu.