Patrick moves to cap state’s film tax credit
Governor raises concern about funding ‘inflated bonuses’ for stars
Gov. Deval Patrick says he wants to rein in the cost of the state’s film tax credit, capping the annual outlay to $40 million a year. Officials say the governor’s budget proposal would save an estimated $20 million in fiscal 2014 and $40 million in fiscal 2015.
The move was surprising. The governor made a similar proposal several years ago, but backed away from it in the face of opposition from state lawmakers and film industry officials. The uncertainty about the tax credit at that time caused Hollywood producers to start bypassing Massachusetts. But they began returning in 2011 after a high-profile delegation that included one of the governor’s top aides traveled to Hollywood and pledged support for the tax credit.
Movies productions not only started flocking to Massachusetts, but local businessmen began launching film-related companies in the state on the assumption that the film tax credit would keep the Hollywood money flowing. One investment group is building a $30-million film studio in Devens and many others have launched smaller film-related businesses.
Asked about businessmen who are relying on the film tax credit to support their own movie-related businesses, Patrick suggested the capped credit would be enough to support the ventures. “It’s a pretty generous tax credit. It doesn’t go away,” he said.
The state’s film tax credit offers virtually anyone who shoots a movie, TV show, or commercial in Massachusetts a credit equal to 25 percent of whatever they spend. The credit can be converted into cash by selling it back to the state or to a third party, who would use it to reduce his taxes.The governor’s announcement comes as the state Department of Revenue is preparing to release a report on the film tax credit’s performance in 2011. For 2010, the Revenue Department said producers spent a total of $58 million filming in Massachusetts and received tax credits worth $14.6 million. The agency at the time forecasted that producers would spend at least $222 million in Massachusetts in 2011 and possibly more in 2012. Producers would receive a quarter of those expenditures back from the state in the form of tax credits.
The rising tax credit numbers may have prompted the Patrick administration to scale back the credit as the governor pushes for new taxes worth $1.9 billion a year to finance spending on education and transportation. He says the new taxes are needed to set the stage for long-term economic growth.