Sen. Michael Lee, R-New Hanover, responded in detail Thursday to an N.C. Department of Commerce statement regarding the state's film incentives.

While the state budget contained changes to the N.C. Film and Entertainment Grant – including increasing the maximum grant for a feature film from $7 million to $20 million and the maximum state grant for a TV series or scripted streaming service series from $15 million to $25 million per season – commerce officials have indicated the grant program's structure might not be conducive to providing the incentives to any new projects for a few years.

"In terms of recruitment efforts, this change in the funding model likely means that North Carolina will not be able to award any significant film grants for new productions until 2029," wrote officials with the commerce department, which administers the film grant program, in an email to the Business Journal on Wednesday. 

Lee said he believes the statement gives the wrong impression that filming in North Carolina will be shut down for three years.

"Every production that has been awarded a grant will be paid in full. North Carolina keeps its word. By Commerce's own account, the program's funding is committed for roughly the next three years. Committed to what? Productions. The reason there is little room for new awards is because Commerce has already awarded that money, years in advance, to productions that have not yet filmed here," Lee stated in an email. "A program whose funding is booked solid is not a program going dark. Those productions will be shooting in North Carolina, hiring our crews and spending money in our communities. Anyone who leaves my constituents with the impression that film in this state shuts down until 2029 is purposely ignoring the facts."

"Repeating the myth that North Carolina is closed until 2029 is doing Georgia's marketing for free."

He said the program's funding model has not changed.

"What changed is that somebody finally reminded Commerce that it has been operating in a way that is inconsistent with state law and how the program was developed. Since 2019, Commerce has run the Film Grant like a cash flow program, obligating money ahead of the appropriations to cover it. Commerce administers two programs with that authority, JDIG and One North Carolina, and state law gives it the authority to do that. The Film Grant statute never has," Lee stated. 

The film grant program operates differently than other programs because it has guaranteed recurring funding – $31 million – every year, he said. Every unspent dollar rolls forward instead of going back to the state, a structure built so productions could rely on North Carolina, Lee said.

"What the General Assembly never did was authorize this program to obligate money it didn’t have, and no guidance from any budget official can supply authority the law does not," Lee said.

In response to Lee's statement, Department of Commerce officials said, ​“The film grant program has been administered according to explicit instructions provided by central legislative staff. We believe the successes enjoyed over the last several years validate how well the program has been managed, with two more productions scheduled to film later this year."

The emailed commerce response also stated, "We’re pleased to receive the support of the NC General Assembly with the increased caps, but without additional funding, we may not be able to fully maximize new recruitment opportunities. As with all grant programs, we only award monies made available through the legislative process, and this will not change.”

Lee said the state budget, signed by Gov. Josh Stein on July 7 and representing the state's first full budget in two years, "delivers the most significant improvements to the (film grant) program in years: nearly tripling the cap for feature films, raising the cap for television, creating a new grant fund for homegrown North Carolina filmmakers and rewarding studios that make long-term, multi-production commitments to our state."

Officials, including Lee, have said productions currently holding awards will be paid in full.

The senator said he plans to keep fighting for the program and industry.

 "What I will not do is stay quiet while an agency that ran this program on authority the General Assembly never gave it tells my community the sky is falling," Lee said.