Hollywood haves and have-nots
Film tax credit economic benefits flow primarily to Greater Boston
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Hollywood also appeals to him, not because he has any red carpet aspirations himself, but because of what he thinks a movie or a TV series could do for the city. He talked it over with Martin Chávez and Richard Berry, both of whom served as mayor of Albuquerque during the production of the hit series Breaking Bad. They told him the 62-episode series injected an average of $1 million per episode into the local economy. And even though the plot of the TV series revolved around methamphetamine dealing, Mitchell says the two mayors felt the exposure was positive.
“It made Albuquerque seem a little more edgy, a little more offbeat and novel, and people digged that. It actually induced more tourism,” Mitchell says. “I think there’s a lot to be said for that. By and large, movies and TV shows elevate a city’s profile, and we would welcome that.”
Yet over the last decade, only five productions have filmed in New Bedford. A recently released documentary on former New England Patriots tight end Aaron Hernandez conducted some interviews there in 2017. In 2014, a film called Good Kids spent about $20,000 shooting scenes in town. In 2010 and 2011, a pair of lower-budget indy films called Whaling City and Fairhaven shot in New Bedford. The only big budget movie to film there was Knight and Day, starring Tom Cruise and Cameron Diaz, in 2009. But Mitchell says the movie was only in town long enough to film a car chase on Route 18.
New Bedford isn’t alone. CommonWealth analyzed data gathered by the Massachusetts Film Office and found that the economic impact of movie and TV productions, lured to the Bay State by the state’s generous film tax credit, is not distributed evenly across the state. Nearly three-quarters of the state’s film shoots over the last decade took place in Greater Boston, with 13 percent in Boston alone. Forty-three percent of the state’s municipalities scored no film shoots at all over the last 11 years, and nearly three-quarters of cities and towns scored two or fewer.
Mitchell thinks union work rules that increase costs for productions shooting more than 30 miles from Boston are discouraging Hollywood from exploring the rest of the state. New York faced a similar problem, with most movies filming in New York City, so in 2013 its legislature sweetened the film tax credit to incentivize productions to give upstate New York a try. Mitchell says New Bedford might have landed a major movie if Massachusetts had a similar incentive, but instead the production went elsewhere to film because of the higher cost. He declined to identify the production.
The International Association of Theatrical Stage Employees, whose members earn more if a film is shot more than 30 miles from the film’s base, which is typically Boston, declined comment. So did the Massachusetts Film Office. The Teamsters, a union heavily involved with movie productions, did not respond to a request for comment.
Susan Nelson, executive director of the SAG-AFTRA New England local, which represents on-screen actors, said her members don’t receive more money if the production films more than 30 miles from Boston. She said she doubted union costs would be a key factor for most productions when deciding where to film. She said most first look for the best location from an artistic and convenience standpoint—and then weigh any financial considerations.
Nelson said she thinks most films are shot in and around Boston because the infrastructure is there. “Everything they need is in the Boston area, everything from props to talent to crew people. Even the hotels where the big-name actors like to stay are in Boston,” she says.
Whatever the cause, the real problem is that the entire state of Massachusetts is giving a tax break to movies and TV shows that film in the Bay State, but most of that filming—and the economic benefits that go with it—is taking place in Greater Boston. Mitchell says the geographical disparity illuminates a flaw in the way the tax credit is designed.
43% of towns saw no Hollywood action
The state’s film tax credit has received lots of scrutiny over the years, but no one has ever taken a close look at how the economic benefits are distributed across the state. The Massachusetts Film Office gathers data on where scenes for movies and TV series are shot, but has done nothing with the information other than post it on the agency’s website.
CommonWealth analyzed the data for the period from 2007, when the film tax credit took its current form, through 2017. The data indicate 186 productions filmed at 992 locations across the state. Seventy-three percent of the locations were within I-495, or roughly a 30-mile radius of Boston. Boston itself had the most location shoots, at 13 percent. There was a big fall-off after Boston, with Chelsea coming in at 2.5 percent and Lynn at 2.4 percent. Rounding out the top 11 were Worcester, Cambridge, Quincy, Gloucester, Danvers, Newton, Everett, and Ipswich. The top 11 combined for 31 percent of all location shoots.
Of the state’s 351 cities and towns, 153, or 43 percent, played host to no film shoots over the 11-year period. Most of the communities that failed to attract any film shoots are small, but the group included such small-to-medium-size municipalities as Agawam, Chicopee, Holyoke, Methuen, and West Springfield. Some communities within 30 miles of Boston are also on the zero location shoots list, including Bellingham, Boxborough, Holbrook, Holliston, Stoneham, and Winthrop.
Fifty-four communities saw one film shoot come to town over the 11-year period, including Gardner, Pittsfield, Sandwich, and Wakefield. Another 47 communities, including Amherst, Arlington, Fall River, Fitchburg, Leominster, Springfield, and Taunton, played host to two film shoots.
Only 23 communities hosted 11 or more film shoots, meaning they averaged at least one a year over the 11-year period.
Worcester is one of four communities that averaged two or more location shoots per year over the 11-year period, making it one of relatively few municipalities beyond I-495 that has managed to capture significant film business. Film industry officials say Worcester has great locations and the cost of shooting there is far less than it is in Boston, which may offset any higher labor costs associated with mounting a production more than 30 miles from the city.
Erin Williams, the city’s cultural development officer, says Worcester has had success landing films such as American Hustle and The Surrogates because of its diverse stock of locations and the willingness of municipal officials to supply permits and location assistance quickly. “We will drop whatever we’re doing to make sure the needs of the producers or the location scouts are met,” she says.
The geographical disparity in filming in Massachusetts adds a new element to the debate over the film tax credit, which has been controversial from the start because of its size, its extraordinary flexibility, and its economic impact. Most tax credits reduce how much the recipient has to pay in taxes. The film tax credit works the same way, but comes with a significant, added benefit. If a production company doesn’t have a tax liability in Massachusetts—and most don’t—the film tax credit can be sold to someone who does, or it can be sold back to the state. In other words, a film tax credit can be converted into cash.
The film tax credit can attract significant movie investments, but the cost is high. The film tax credit is equal to 25 percent of whatever the production company spends in Massachusetts. When Joy, which starred Jennifer Lawrence, filmed in Massachusetts in 2015, it was awarded a tax credit of $14.8 million, which means its total budget was probably about $59 million.
Unfortunately, Massachusetts workers and businesses don’t capture all the expenditures of a production. The state Department of Revenue says a lot of the movie investment money eventually flows out of Massachusetts to imported actors and out-of-state businesses. According to the Department of Revenue’s latest report covering 2014, there was $254 million in spending eligible for the film tax credit. Of that total, 45 percent went to Massachusetts residents or businesses and 55 percent to non-residents or out-of-state businesses.
The amount of movie expenditures has increased fairly dramatically since 2014, when the state issued $64.5 million in tax credits. In fiscal 2017, which ended on June 30, 2017, the state issued $90.9 million worth of tax credits, according to the state’s Comprehensive Annual Financial Report. That’s the most since 2008, when the state issued a record $120 million in film tax credits.
Like many analysts who follow public financial issues, Noah Berger, the president of the Massachusetts Budget and Policy Center, is not a fan of the film tax credit. He noted a production that pays a Hollywood actor $10 million on a film shoot in Massachusetts will receive a tax credit worth $2.5 million, but Massachusetts would see almost no gain because nearly all of the money would accompany the actor when he or she returns home.
He also says the Massachusetts tax credit can’t be targeted to parts of the state that need economic help because productions receive the same size tax credit whether they film in Boston or Holyoke. “In general, it’s not an effective way to put money into the economy,” he says.
New York’s approach
Ghostbusters, the remake with Melissa McCarthy, Kristen Wiig, Kate McKinnon, and Lesley Jones, shows just how much money a big-budget movie can drop during a film shoot. According to state records, the film received $26.7 million in film tax credits in 2016, meaning the total outlay in Massachusetts was probably about $107 million.
Some of that money was undoubtedly spent in the communities where the film was shot—Boston, Brookline, Easton, Everett, Norwood, Waltham, and Weymouth. That doesn’t mean, however, that some of the spending didn’t spill over to other communities. Using percentages from the 2014 analysis of the film tax credit by the Revenue Department, an estimated $27 million of the $107 million would probably have gone to wages for Massachusetts residents and $22 million to nonwage spending, including hotel rooms, food, set construction, car rentals, cameras, costumes, and on and on.
Municipalities like playing host to film shoots because they inject money into the local economy and come with few negative consequences. For the most part, productions dole out money shooting a scene and then move on. Typically, no permanent jobs are created, which is both a negative and a positive—a negative because the economic impact dissipates unless another production comes along to employ the same crew; a positive because the collateral impacts associated with permanent workers (more children in schools, more city services needed) are avoided.
New York dealt with the geographical disparity associated with its film tax credit in 2013 by adding an extra 10 percent credit for productions that shoot in 41 upstate counties. In 2017, another 11 counties were added, making all of upstate New York eligible. The extra 10 percent was targeted specifically at qualified labor costs incurred by productions that shoot more than 30 miles from New York City.
Jason Conwall, a spokesman for New York’s economic development office, says the “bump” for upstate productions is having a positive impact. He says 45 percent of the productions coming into the state in 2017 applied to shoot outside New York City. Of those 103 productions, he says, 53 scheduled more than half of their shoot days (967 total) in upstate counties.
Oregon, Louisiana, and California are other states that offer some form of incentive to producers to spread their movie shoots around the state.
House Majority Leader Ron Mariano, a leading supporter of the film tax credit, says he would be reluctant to revisit the language of the Massachusetts film tax credit, partly for political reasons and partly because he is skeptical of Mitchell’s claims. “I think it’s been fairly spread out across the east coast,” he says, referring to location shoots. “Because they haven’t gotten to New Bedford specifically, there could be a lot of different reasons for that. It’s all based on location and the scenes that they want to recreate.”
Mariano, who represents Quincy and Weymouth, two communities that have benefited from the tax credit, says he is wary of tinkering with the tax credit. “We’ve been fighting to keep this and finally we’ve got it established as a tool to create jobs,” he says. “Now to sweeten it and go back to the original fight all over again to increase it, I don’t know if it’s worth it. I’m not ready for that fight all over again. I think the governor is starting to realize there’s some benefit to this.”
Sen. Michael Rodrigues of Westport, who has proposed legislation to pare back the film tax credit, says the issue of geographical disparity has come up in his discussions with lawmakers.
“Very few districts, very few regions see the benefit of these tax investments, absolutely,” he says. “So the industry is certainly centered in and around 495. There are a few communities [that have benefited] out in the Berkshires, a couple down on the Cape because they have some unique geography. But it’s primarily Greater Boston. That’s why, although I never espouse to eliminate the tax credit, I think it’s very expensive for the return we get on it.”Rodrigues wasn’t familiar with New York’s law, but he said the Empire State’s approach is interesting.
“We could look at it. That’s a unique idea,” he says. “If that means we expand the tax credit, so we add to the cost, I can tell you there won’t be much appetite for that. Maybe we could carve some out of the existing tax credit to ensure geographic distribution. But it’s not even on the radar screen for this session because the House has made it very clear they don’t want to change it.”