Foray for Hollywood.

• Author: Mooneyham, Scott
• Position: CAPITALGOODS - Tax law

Perhaps Hollywood could turn it into a movie: A Cinderella-like character, a small-town girl with big dreams, is swept up in the glitz and glam of big city life. She meets dashing men, ball players on their way to the big leagues and dance instructors who can't seem to stay in their shirts. She hangs out in sparkling mansions built by robber barons and seaside cottages where waves crash at the doorstep. Suddenly her suitors decide she's not so attractive anymore. A cousin who lives down South has become the talk of the town. A next-door neighbor is more attractive. One by one, the suitors move on. She buys new clothes but still doesn't turn heads. Then an old acquaintance accuses her of stealing to buy them. The inhabitants of her small town begin to talk, wondering what happened to the girl they used to know.

Our character is North Carolina, her new clothes the series of tax breaks that state lawmakers and governors have heaped on the film industry to try to regain the glory of landing film productions like Bull Durham, Dirty Dancing and Last of the Mohicans. It's not certain how the script will end. What is clear is that the state's ramped-up film incentives are becoming more controversial, even as other states continue to best North Carolina with bigger and better giveaways.

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In July, Gov. Beverly Perdue put her signature to expanded film incentives. It was the second straight year that she and the legislature had upped the ante. The latest changes mean that individual film productions could qualify for a tax break worth up to $20 million, raising an earlier cap of $7.5 million. Combined with the 2009 changes, producers can write off up to 25% of their in-state spending. The tax credit is refundable, meaning that a film or television production company that qualified for more money than they owe in state taxes would receive the difference, a check from state taxpayers.

Perdue hadn't even signed the legislation into law before she began to complain that it wasn't enough. Louisiana had no caps and, unlike North Carolina, didn't prohibit the salaries of big-name stars from counting toward the total. Georgia's tax breaks were bigger, too. North Carolina officials point to figures showing the film industry bringing more than $326 million in direct spending to the state over the past three years. But a quick look at Louisiana's film office website shows that state brimming with productions, 12 films and six television...