The state of Virginia has just announced a new $2 million film fund for qualified productions including tax incentives.

The battle for film productions is heating up, with different states offering an array of incentives for filmmakers shooting documentaries, commercials and feature films. This will be the state of Virginia s first tax credit incentive, which took a reported 30 years to come to fruition. The news comes as a relief to the Virginia production Alliance, that for years lobbied the state to boost the local film industry.

Gov. Bob McDonnell signed the bills into effect just this week, which will provide a combined total of $4.5 million for qualifying productions. The Virginia film Office earlier stated that film productions in 2008 had created 4000 new jobs and a revenue stream of more than $350 million for the state.

The incentives will vary depending on the nature of productions and where they are shot within the state. Tax breaks for films could be as much as 20%. Despite the news, many other states have already put in place schemes such Michigan, which offers a 42% tax rebate, and several movie studios are to be built over the next few years.

Hollywood on the other hand is in the grips of a financial melt down , and will have to find a new way to lure productions back home with either increased tax rebates, a film fund, or development program that will strengthen local filmmaking and boost revenues through international distribution.

In June it was reported that the British film industry benefited hugely from government financing which contributed £4.5 billion to GDP and strengthened British culture at home and abroad.