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Bill Summary · SB 1002

Summary of Bill SB 1002 (Session 2025) – North Carolina

Title: Micro-Budget Productions and Film Grant Changes

Sponsor: Senator Lee (Primary)

Status: Filed April 30, 2026

Purpose
- The bill modifies the existing Film and Entertainment Grant Fund by creating a dedicated Micro-Budget Productions Account and expanding eligibility and grant rules to support smaller-scale film and video productions in North Carolina.
- It aims to encourage development of the state's filmmaking industry by providing targeted funding for low-to-mid-budget projects, including short films, documentaries, series, and online content.

Key Provisions

1) Creation of the Micro-Budget Productions Account
- Establishes a new, special, nonreverting account within the Film and Entertainment Grant Fund named the Micro-Budget Productions Account.
- Purpose: provide funds to encourage smaller productions to develop North Carolina’s filmmaking industry.
- Administration: Department of Commerce will issue guidelines for administering grants from this account, consistent with the section’s provisions.

2) Eligibility and Grant Parameters for Micro-Budget Projects
- Eligible production size: qualifying expenses must be at least $50,000 and up to $1,499,000 spent in North Carolina.
- Grant cap structure:
- Base grant: lesser of 20% of qualifying expenses or $100,000.
- Bonus options (to increase the base amount):
a) 5% bonus if the production company provides qualified accounting showing at least 75% of compensation and wages paid for the production went to North Carolina residents. This includes both direct payroll and certain related payments (e.g., withholding, Form 1099 payments), and accounts for fringe benefits, per diems, and similar payments. It also includes payments to loan-out companies for services in the state.
b) Either:
- 3% bonus if at least 75% of filming occurred in Development Tier 2 areas, or
- 5% bonus if at least 75% of filming occurred in Development Tier 1 areas.
- The concept of development tiers uses geographic designations defined in North Carolina statutes (G.S. 143B-437.08).
- Residency and location requirement: at least 75% of filming must occur in North Carolina with the production company headquartered in the state.
- Distribution/guarantee: grants from this account are not contingent on a distribution agreement.
- Project scope: micro-budget grants can support a broad range of audiovisual works, including short films, documentaries, and other formats intended for distribution, not limited to traditional features or series.

3) Caps and Limitations
- No grant may cause the state's potential total annual liability for grants awarded in a single calendar year to exceed the available funds in the Micro-Budget Accounts for that year.
- Each grant is to be administered under guidelines that mirror the broader fund’s rules, with modifications for micro-budgeted projects.

4) Definitions (as relevant to Micro-Budget Account)
- Production: Includes feature films, TV series, made-for-TV movies, and productions intended for online distribution, with specifics mirroring the broader fund but allowing smaller-scale works (e.g., micro-budget live-action or online content).
- Qualifying expenses: Sum of eligible in-state expenditures, with certain exclusions (e.g., development, marketing, distribution costs, financing, insurance costs not allowable, etc.); special provisions limit compensation paid to highly compensated individuals.

5) Effective Date
- The act becomes effective July 1, 2026.
- Applies to grants made on or after that date.

Funding and Fiscal Note
- Section 2 appropriates $1.5 million in nonrecurring General Fund money to the Micro-Budget Productions Account for the 2026-2027 fiscal year and onward, aligning with the program’s start date.

Potential Impacts

  • For Filmmakers:
    • Created opportunity for smaller-budget productions to access state grant support (down to $50,000 qualifying expenses).
    • Additional incentives for hiring North Carolina residents and for filming in Development Tier 1 and 2 areas.
    • Flexible project types (shorts, documentaries, online content) beyond traditional features.
  • For North Carolina:
    • Encourages local talent development, job creation, and the aggregation of in-state spending on film production.
    • Geographic distribution incentives may drive investment to prioritized development tier areas.
  • For the Department of Commerce:
    • Requires development of precise guidelines to manage micro-grant disbursement, reporting, and compliance, including tracking residency, wages, and geographic spend.

Notes
- The bill adds a separate funding stream within the existing Film and Entertainment Grant Fund with distinct eligibility, caps, and bonuses designed to maximize in-state economic impact and local employment for smaller projects.

Compiled from official sources — confirm details with the bill’s official record.

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