There's no confusing a crab cake with a cheese steak or the U.S. Naval Academy with the Liberty Bell.

But these are fine distinctions in moviedom, as Maryland learned around this time last year, when Walt Disney Co. decided to film its movie "Annapolis" in Philadelphia.

"It hurt," said Dennis M. Castleman, Maryland's assistant secretary for tourism, film and the arts. "It really, really hurt. It stung."

That's when the state began plotting a way to woo Tinseltown.

Maryland was the obvious choice for a movie about a down-on-his-luck young man who gets accepted into the Naval Academy, the crown jewel of Annapolis. But Pennsylvania offered what Maryland did not: a lucrative tax credit. So Disney shuttered its Baltimore production office, canceled its hotel rooms, and took with it the $10 million it was expected to generate for Maryland's economy.

For at least a decade, states chasing after movie and television dollars had to compete with the cheap labor, the financial sweeteners and the favorable exchange rates of other countries, most notably Canada. Consider that the big-screen version of the musical "Chicago" was filmed in Toronto and the Civil War-era love story "Cold Mountain" was shot in Romania.

To head off so-called runaway productions, more than a dozen states began offering their own incentives within the past two years, and they're now locked in battle trying to one-up each other.

Maryland joined their ranks after the "Annapolis" debacle. This year, the state legislature approved $4 million in wage rebates for movies, television shows and commercials filmed in the state. Virginia, which lost $750 million worth of film work in the past four years, plans to propose its own perks when the General Assembly reconvenes in January. And the District is watching its neighbors and weighing its options as Maryland steals its scenes, with movies casting Baltimore in the role of the capital.

Even California, the moviemaking capital of the world, soon may enact subsidies to shore up its share of production dollars.

Jack Gerbes, director of the Maryland Film Office, said studio officials who once grilled him with questions about specific sites and the expertise of the state's workforce have shifted focus.

"This year, every question is, 'What will you give us to shoot in Maryland?' " Gerbes said. "It is always the first question."

The answer: up to $2 million. The more a production spends in the state, the more money it gets in return. Under the new law, producers can claim as much as 50 percent in rebates for the first $25,000 paid to an employee -- not the superstars, just those who earn less than $1 million.

That's all Erik Feig needed to hear. When his firm Summit Entertainment developed the screenplay temporarily titled "Music High," it did so with Baltimore in mind.

Feig, the producer, described the movie as a "modern, music-driven 'Saturday Night Fever' " about a kid from the wrong side of the tracks who ends up at a performing arts school in Baltimore. But because Maryland lacked incentives, the Santa Monica firm -- which also produced this summer's "Mr. & Mrs. Smith" -- started looking for alternatives.

"Maryland passed the rebates in the nick of time. We were going to shoot in New York," which offers aggressive tax breaks, Feig said. "The rebates were incredibly, incredibly necessary for us. It's very difficult for us to justify going with a state or country that does not have a rebate."

The film, which will shoot in Baltimore from September through November, applied for rebates when the law kicked in last month. The state also earmarked money for "Rocket Science," an independent film, and "The Wire," an HBO police drama in its fourth season.

Each will collect the rebates when it submits pay stubs, tax returns and other documents verifying how much it spent locally. If the paperwork checks out, the $4 million pot of money gets paid out.

Nina Noble, executive producer of "The Wire," said the money should defray the show's moving costs. The production recently schlepped its indoor sets and offices to Columbia after its lease at a Baltimore warehouse expired.

When the series starts shooting next month, it will pump money into Howard County's economy, spending on things such as hotels, caterers, office supplies and babysitters for the children of out-of-town workers.

"We will employ about 200 people in Maryland once we're up and running next month, and that doesn't include the extras that we hire by the day," Noble said. "Some employees are from out of state, but they're going to be living here and spending money here."

Some of that money will go to Bunnie Gleiman, vice president of Bond Lumber and Home Center in Lutherville, which works with productions all over the Washington region.

In the past three seasons, "The Wire" spent nearly half a million dollars at Gleiman's family-owned store on wood for indoor sets, such as police stations and other scenes.

"This year is going to be extra special for us because they're in a new building and things need to be reconstructed," Gleiman said. "We are delivering lumber left and right to them every single day."

Gleiman landed an equally impressive job in 2003, when "Ladder 49," a firefighting drama starring John Travolta, spent three months filming in Baltimore. "Their motto was buy it, build it, burn it," she said. "They spent over $300,000 on lumber."

But Gleiman's movie and television work came to a halt in September and picked up again only recently with "The Wire's" renewal, she said. "The business just dried up when states like Louisiana and Illinois and New York decided they were going to give incentives to production companies.

"It was dead," she said.

Now, state officials see signs of life thanks to the rebates. Maryland expects its $4 million investment to spur $65 million in local spending.

Some critics deride these incentives as "corporate welfare" and dismiss them as a flawed way of revving up the business climate.

A recent Sacramento Bee column blasted California's proposed subsidies as "a handout to some of the state's wealthiest residents."

Americans for Tax Reform, a group that pushes for lower taxes, said the rosy economic projections tied to these subsidies are suspect and easy to manipulate. "Politicians like to offer [incentives] because if you have a tax credit for a company that comes through and does a film, then the governor gets to stand there and cut the ribbon," said Grover Norquist, the group's president. "Cutting taxes and regulatory burdens for everyone would be more helpful."

Because of the controversial nature of the tax breaks, many studios declined to discuss them publicly, including a Disney spokeswoman, who said her company does not comment on the financing of its movies. But she confirmed that Disney abandoned Annapolis because it wanted the tax breaks Philadelphia offered.

Another executive at a major studio would speak only if his name was not used because he sees weaknesses in Maryland's program and does not want to alienate his friends there. The executive, who supports rebates, faulted the state for offering too little money and for failing to guarantee future funding.

"You have to give the film industry some assurance that there's longevity," the executive said. "The industry works on long lead times. If we don't know about what's happening in Maryland the next year or the year after, it becomes less attractive."

The appeal of these incentives has everything to do with the rising cost of making films, said Vans Stevenson, a senior vice president at the Motion Picture Association of America. Last year, the average production cost of a feature film was $62 million, up from $34 million a decade earlier, Stevenson said. Throw in advertising and marketing and the costs jump higher.

Then consider that show business, like any other business, is struggling with the increased cost of transportation, labor and just about everything else. The computer-generated special effects that thrill moviegoers and the multimillion-dollar salaries of big-name stars only exacerbate matters.

Hence, the clamoring for rebates, movie industry officials said.

But even without rebates, Maryland has a lot working in its favor, including its proximity to the nation's capital, a sought-after location that poses logistical nightmares for producers because of the city's security concerns.

To avoid bureaucratic hassles, films that feature Washington often limit their time in the city to a few quick shoots in front of the monuments and then retreat to Baltimore to film streetscapes that easily pass for the nation's capital.

So even though Maryland is fuming about Philadelphia wrestling "Annapolis" away from Annapolis, the state has done its own share of snatching work from others.

The Maryland Film Office said Baltimore doubled for Washington in major studio productions including "Enemy of the State" and "Absolute Power." In the comedy "Head of State," Chris Rock played a presidential candidate. Yet only a few remote scenes were shot in the District, and Baltimore filled in for most of the rest.

That's not a problem, said Crystal Palmer, director of the District's Office of Motion Picture and Television Development. The way she sees it, the District, Virginia and Maryland all benefit when a film comes to the region because the jobs cross over between jurisdictions.

"We're competitors, but we're friendly competitors because we want the business to stay in the region," Palmer said. "We'd rather that a film go to Virginia or Maryland than anywhere else."

But if Maryland can't secure future tax breaks, the films won't come, said Hannah Byron, director of the Baltimore City Film Office. And if they don't come, the electricians, construction workers, cameramen and wardrobe designers might move.

"That would put us at a significant disadvantage," Byron said. "One of the big draws for studios in this area is they can save millions of dollars by hiring locally. Without that expertise, we're in trouble."

William H. Spencer Jr., better known as B.J., can attest to that. Spencer owns VIP Security Unlimited in Baltimore. His firm has provided security services for studios working in the District, Maryland and Virginia. Back when "Ladder 49" was in town, he had 60 workers securing locations, keeping an eye on trucks, props, people.

The stream of work was steady from about 1999 through 2003, he said. Then came the lull. At the low point, he had only two employees working for him.

"So my guys are going on unemployment and that's where they sat for a long time until about three months ago," Spencer said. "Their rent was not getting paid. Their child support was not getting paid. . . . The phone stopped ringing."

But then "The Wire" got renewed and hired his firm. The incentives kicked in. "Music High" came knocking at his door.

The phones started ringing.

"I'm starting to bring my guys back in," Spencer said. "I'm starting to smile again."

Staff researcher Richard Drezen contributed to this report.

Leon Hector nails together supports for the sets of the HBO police drama series "The Wire" in Columbia.

Annapolis has the Naval Academy, chapel and all. So why did producers go to Philadelphia to film a movie that's supposedly set at the academy? Tax breaks.HBO's "The Wire" is filmed and set in Maryland, where the backdrop plays a central role in the story. This year, filmmakers will benefit from wage rebates offered by the state.A crew works on what will be the police headquarters in the HBO series "The Wire." The production, which recently moved its indoor sets and offices to Columbia after its lease at a Baltimore warehouse expired, is expected to pump money into Howard County's economy.

Chris Rock wears a Baltimore Orioles jersey with Cal Ripken Jr.'s number as he and the Orioles mascot film a scene for "Head of State" between games of a doubleheader against the Toronto Blue Jays at Camden Yards in 2002.

Mayor Martin O'Malley with actors Rori D. Godsey and Joaquin Phoenix on the set of "Ladder 49," filmed in Baltimore in 2003. The producer of "Music High" decided to shoot in the city this fall because of Maryland's new wage rebates.