Closing credits: This could be the end of the state incentive for film production.

• Author: Martin, Edward
• Position: COVER STORY

Above, under a full moon, mists shroud the forest's gnarled oaks. Down here, where there's neither night nor day, footsteps echo hollowly in a gloomy passageway. Serpentine roots reach out of gray rock walls. "These," a young woman whispers to her companion, as if hesitant to breathe in the odor of decaying flesh, "are the catacombs." Everybody whispers here, but the only smell is of freshly cut plywood. Signs warn: Hot Set--Do Not Enter. Fox Broadcasting Co., part of New York-based News Corp., films its Sleepy Hollow television series at EUE/Screen Gems Studios in Wilmington. At 50 acres, it's the largest soundstage lot outside California.

Outside again, executive assistant Layne Woods laughs as the golf cart in which she's ferrying a visitor from one cavernous metal building to another splashes through puddles in pelting rain. Later, her boss, Executive Vice President Bill Vassar, watches from his office window as a queue builds under a catering truck's awning. "It's a fairly normal day," says the 30-year veteran of managing film lots. "We've got three productions underway, so there are about 300 to 400 workers on the property. Sometimes, when we really get going, there are a thousand."

Since Italian movie producer Dino De Laurentiis arrived in 1984 to film Stephen King's Firestarter, at least 350 film, television and commercial projects have been shot at the studio. While the region around the Port City was earning its "Hollywood East" and "Wilmywood" nicknames, filmmakers gradually spread across the state. The Last of the Mohicans, released in 1992, helped put the North Carolina mountains on the movie map. Principal filming for Iron Man 3, last year's highest-grossing feature film, was at EUE /Screen Gems, but some scenes were shot at SAS Institute Inc. headquarters in Cary. For three seasons, Charlotte was home of Homeland, New York-based Showtime Networks Inc.'s Emmy-winning TV series. More than 30 counties hosted about 60 productions last year. "This is a serious industry" says Sheila Brothers, a Wilmington radio and TV personality who blogs about the film business. It's also an industry that could be in serious trouble in North Carolina.

Only six months after Gov. Pat McCrory reported that producers spent about $254 million in the state last year, creating 4,000 jobs and 25,000 part-time and temporary positions, the financial incentive that boosters insist keeps this industry in North Carolina faces a crucial test when the General Assembly reconvenes this month. Signed into law by Democratic Gov. Mike Easley in 2006, the tax credit returns 25% of a production's cost (page 53). Unless renewed, it will expire at year-end.

The issue divides politicians of all stripes. In Wilmington, a GOP state representative who commissioned a study critical of the incentive was singled out by a Democratic opponent as threatening "local jobs and a strong industry." Republicans, who gained control of both houses of the legislature in 2010 and won the governor's office two years later, are split, too. Some fear ballot-box retribution for killing jobs, while others fret over having to explain their support to conservative constituents who consider the incentive corporate welfare for rich, liberal Hollywood interests.

Stung by some in his party for seeming to endorse film incentives last fall, McCrory is undecided on the issue, his press secretary says. A spokeswoman for House Speaker Thom Ellis, who is running for U.S. Senate, says he "decides incentives on a case-by-case basis," though, she concedes, members of his caucus "obviously don't all see it the same way." Through his spokeswoman, Senate President Pro Tempore Phil Berger deferred to Bob Rucho, co-chairman of the Senate Finance Committee. "Those numbers are not credible," he says, attacking the figures McCrory cited. In an interview, the Matthews state senator says the industry provided fewer than 200 jobs--later amending that to fewer than 1,000--in 2013. "That 4,000 number includes people selling tickets and popcorn and everything else you can think of. The reality is, there are very few jobs, and they aren't even permanent. Most of these people work six weeks or three months, then they're off."

Ambivalence is evident even within Mc-Crory's administration. The state Film Office is under the N.C. Department of Commerce, whose secretary, Sharon Decker, supports economic incentives to attract and retain business. Film Commissioner Aaron Syrett, who works for her, says unequivocally that losing the credits would kill the Tar Heel film industry On the other hand, the John Locke...