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.
At a State House press conference on Wednesday to unveil his budget proposal for the coming fiscal year, Patrick said he is a fan of the film tax credit and its potential to create jobs. But he also said he occasionally hears reports that the tax credit is being used to subsidize questionable expenses, such as an “inflated bonus” for a movie star.
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.
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About Bruce Mohl
Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.
About Bruce Mohl
Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.
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.
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