House follows Mariano’s lead on film tax credit

THE HOUSE, getting in line behind a high priority of Speaker Ron Mariano, unanimously passed a budget amendment on Monday that would do away with the planned sunset of the film tax credit program at the end of next year.

The vote was 160-0, with no one in the chamber dissenting despite a recent report by the state Tax Expenditure Commission said the film tax credit “is not the best use of the state’s money.” The commission, which included two members of the House, said the film tax credit creates jobs and economic activity, but at an incredibly high cost of $100,000 per job.

Rep. Tackey Chan of Quincy, the sponsor of the amendment, said in an interview that he had filed the proposal 10 times over the past few years and never succeeded in bringing it to the House floor.

The key difference on Monday was Mariano, who has made removal of the sunset provision a top priority. In a statement, Mariano said the vote sends “a clear message to the film industry that we are open for long-term commitments and the economic benefits they bring to Massachusetts. By making the film tax credit permanent, Massachusetts will become a true competitor and an attractive location as the film industry continues to grow and evolve. The level of impact and the amount of benefits the film tax credit brings to Massachusetts is immeasurable, creating local jobs and boosting overall economic activity in our cities and towns.”

Chan said the pandemic has highlighted the value of the film tax credit. He said the pandemic has pared back economic activity across the state and highlighted how much the film tax credit is contributing to the economy. As an example, he said, hotel occupancy has fallen from 68 percent to 38 percent during the pandemic, but film productions have helped the hospitality industry weather the storm.

Chan said the film Don’t Look Up led to the booking of more than 15,000 hotel room nights from November 2020 to February 2021. He rattled off a number of other films and television series that have added thousands of hotel room nights in communities across the state during a period when the hospitality industry has been devastated by COVID.

“This is now part of pandemic recovery,” Chan said of the need to remove the film tax credit sunset provision.

Rep. Ann-Margaret Ferrante of Gloucester, who also spoke in favor of the amendment, said the economic analysis developed by the Department of Revenue for the state commission failed to take into account the economic ripple effect of film and TV productions on local businesses and even local governments. She mentioned spending at local hardware stores, the restoration by films and TV shows of homes and public buildings, and even police details.

“None of this shows up in the DOR report,” she said.

The film tax credit offers those shooting commercials, TV shows, and movies in Massachusetts a tax credit equal to 25 percent of whatever is spent in the state. The tax credit, which costs the state between $56 million and $80 million a year, is particularly attractive because it can be converted into cash by selling it to those with high Massachusetts tax liabilities.

In the section of its report dealing with the film tax credit, the Tax Expenditure Commission indicated it was “between ‘somewhat’ and ‘strongly’ disagreeing that [the film tax credit] justifies its fiscal cost. While the film credit provides some immediate stimulus, it does not contribute to the long run growth of the state’s economy. Even though we are able to measure in detail all of the economic benefits of this credit, it still results in a cost of $100,000 per job created. We conclude that this is not the best use of the state’s money.”

Chan said he expects members of the film and TV production community to begin an all-out lobbying effort to convince members of the Senate to join the House in eliminating the film tax credit sunset provision. Some Senate leaders have indicated an interest in modifying the film tax credit to reduce its cost.

Letters signed by local business owners and the Massachusetts Production Coalition extolling the benefits of the film tax credit were circulated to House members in advance of Monday’s vote and that type of lobbying pressure is expected to intensify in the Senate.

“Many of our businesses are ready to make major investments in new infrastructure, equipment, workers, and capacity to grow the local film and television industry,” said the letter from local business owners. “But the scheduled end of the production incentive puts these substantial investments at risk. Businesses will not invest in an industry that’s scheduled to disappear. At a time when Massachusetts needs economic stimulus the most, the uncertainty created by the rapidly approaching sunset of the production incentive is preventing job-increasing investments now. “

The Massachusetts Production Coalition has said eliminating the sunset provision has majority support in the Senate, with 23 of 40 senators cosponsoring the legislation. The Senate list of cosponsors includes all three Republicans – Bruce Tarr of Gloucester, Patrick O’Connor of Weymouth, and Ryan Fattman of Sutton – and three members of the Senate’s top leadership– Harriette Chandler of Worcester, Sal DiDomenico of Everett, and Michael Rush of West Roxbury.