On September 4, Missouri's governor, Matt Blunt, signed an economic development bill that contained a modest increase in the cap on the film tax credit, raising it from $1.5 million to $4.5 million. Unfortunately, that same law lowered to maximum tax credit from 50% to 35% -- a move that makes the Missouri less competitive with other states.

The law is a baby step forward and a giant step backwards. I asked one producer about it, and he described the new 35% maximum tax credit as "idiotic."

On the surface this law doesn't look so bad. At 35%, Missouri is still, at least nominally, the highest in the country. Connecticut is next at 30%. But Connecticut has an unlimited cap, a much larger and more experienced crew base than Missouri, a better infrastructure, and other incentives, including a hotel tax exemption for film productions. Since the Connecticut law passed, in July, 2006, there has been $450 million in production-related spending in Connecticut. In the six months before the law was passed, it had only $1 million. What's more, Lions Gate is planning to build a motion picture soundstage in Connecticut.

The state is predicting that it will soon have $1 billion in production annually.

Missouri can't compete with Connecticut. It also can't compete with Puerto Rico, which has a 40% tax credit (which includes spending for equipment brought on to the island) and a crew base that's three deep, meaning that there's enough crew for three films to shoot at once. (Missouri's is about 1 1/2 deep).

The Canadian province of Nova Scotia recently went the exact opposite direction than Missouri, raising its tax credit from 35% to 50%.

The new law even makes Missouri less competitive with Louisiana, which has a 25% maximum tax credit. As one producer told me, "do the math." He went through the figures with me.

Let's say you're planning to shoot a film in Missouri, with a projected budget of $1 million, in-state. In Missouri that would now mean a maximum tax credit, not of 35%, but 32.5% because Missouri is the only state that charges an administrative fee on its film tax credit -- 2 1/2%.

But Missouri's 32.5% is a soft 32.5% -- few film productions get the full amount of the tax credit, because the Film Commission and the Department of Economic Development (DED) approve each project for a dollar amount -- not a percentage. If a film goes over-budget in Missouri, the dollar amount will not increase; if it goes over-budget in many of the competing states, the dollar amount will increase. Very rarely, if ever, has a film in Missouri been given the full percentage of the tax credit.

But even if a film were to get the full 32.5%, it still couldn't compete with many states -- even Louisiana's 25%. Why? Louisiana gives producers 20% cash upfront.

So, here's how the math works out. A $1 million film would get, at most, tax credit of $325,000 in Missouri. Many producers use these tax credits as collateral for a bridge loan to pay production expenses; they can get about 60% of the value of the tax credit in a bank loan. Take 60% of $325,000 and you get $195,000.

On the other hand, Louisiana gives you 20% upfront. Take 20% of $1 million, and you get $200,000. Louisiana is the better deal for a filmmaker who needs cash to pay production expenses. When you factor in the bigger, more experienced crew base in Louisiana, the unlimited cap, and the larger infrastructure, as well as the soft 32.5%, MO just doesn't compete, according to the producer I talked to.

Some states, such as New Mexico, are offering even sweeter deals. The state just gave Kevin Costner a $15 million, two-year, interest-free loan to make a film there. The Memphis City Council just voted to recommend a $150,000 incentive to lure a new film company there. The company, Our Stories Films, plans to shoot six to eight feature films a year, most of them in Memphis.

Missouri's new law might increase the dollar amount of production here next year. I hope it does. But the 35% tax credit is a huge step in the wrong direction and could hurt the film industry here in the long run. Other states taking their film industry seriously, while Missouri piddles around with chicken feed.

How did this happen? It's probably not productive to point fingers and try to assess blame. It happened. It's now time to look to the future and in a more positive direction.

POSITIVE DEVELOPMENTS

The new law also lowers the minimum in-state spending to qualify for the tax credit from $300,000 to $100,000. This might make it easier for lower-budget locally-made films to get the tax credit -- and help build up the in-state film industry. It also raises the maximum tax credit per production from $500,000 to $1 million, which could help lure some bigger-budget films.

Another positive develop, which has nothing to do with the new law, is the Missouri Motion Media Association (MOMMA) --a budding, statewide organization for the film industry. If the Missouri film industry wants to move to the next level, it will have to get its act together -- organize, lobby, and build a grassroots movement to put pressure on the legislature to pass the laws necessary to make Missouri a top-tier film production state.

Other states have done it. Some 34 states currently offer a film tax incentive. Many states are building multi-million dollar industries within a year or two, simply by passing the right set of laws. There's probably no other industry that can be built faster in a state than the film industry.

MOMMA might be just the right vehicle to drive this forward. It will be in operation soon. We'll have a more complete report in an upcoming issue.

Mike Ketcher is an actor, writer, and producer based in St. Louis.