Each year the Massachusetts Department of Revenue is required to release a report analyzing the financial impact of the state’s film tax credit.
The first report, covering 2006 and 2007, was released in March 2008. The second report on 2008 wasn’t released until July 3, 2009 — the day before the Fourth of July holiday — largely because Patrick administration officials had been squabbling about whether to scale the tax credit back.
This year’s report on 2009 hasn’t surfaced yet – and it’s almost October. My guess is it won’t be released until after the election.
All of the reports have had a similar theme. They are written in a just-the-facts tone and take no position. Yet they indicate that, while the film tax credit has been successful in attracting movies to Massachusetts, the economic impact of those films has been relatively small while the cost will eventually be substantial.
Last year’s report, for example, said TV and movie producers over the previous three years had spent a total of $676 million shooting movies in Massachusetts, generating 3,177 full-time equivalent jobs. The report said $426 million was spent on the wages of 1,876 people who worked directly on films. But 82 percent of those wages went to out-of-state residents, with a whopping $177 million going to just 37 out-of-state actors, directors, and producers.
The film tax credit hasn’t garnered much attention during this year’s race for governor, but the release of another report suggesting the credit is a bonanza for out-of-state movie stars could trigger some interesting exchanges.
The whole issue has become a sore spot for Gov. Deval Patrick. The governor initially was one of the film tax credit’s biggest boosters, but as state revenues have become scarce he has tried to minimize the amount of money flowing out of state coffers to movie producers. Most tax credits reduce what a taxpayer owes, but the film tax credit operates more like a grant in that the credit can be turned into cash by selling it back to the state or to a third party.
Last year, Patrick signed legislation that would have capped at $2 million the amount of a star’s salary that would qualify for the film tax credit. Producers of the Tom Cruise movie Knight and Day, which was preparing to shoot in Massachusetts at the time, complained, and the governor and the Legislature flip-flopped, removing the cap.
The governor’s budget this year proposed capping the overall cost of the credit at $50 million for each of the next two years; that proposal, too, was shot down by the Legislature.
While the film tax credit hasn’t been a major issue in the race for governor, it has played a prominent role in one race for state representative. Rep. Steven D’Amico, a Democrat from Seekonk and the most prominent critic of the film tax credit on Beacon Hill, is being challenged by Republican Steven Howitt, a Seekonk resident and a member of the Screen Actors Guild.
Howitt has vowed not to raise taxes and pledged to roll back increases in the income and sales taxes, but he supports the film tax credit because he has witnessed first-hand its ability to create jobs. He has appeared in several films and TV shows, including 27 Dresses, The Box, and the Showtime series Brotherhood, in which he played a state representative.“It’s not a tax break,” Howitt says of the film tax credit. “It’s an investment for businesses to come to Massachusetts.”
D’Amico says southeastern Massachusetts is suffering because its economy is too closely linked to the Rhode Island economy, which is in shambles. He says the region needs to get more in step with the rest of the knowledge-based economy in Massachusetts instead of embracing slot machines and movies. “It’s a sad state of affairs when gambling and subsidizing Hollywood substitutes as economic development,” he says. As for his opponent’s role as a state rep, D’Amico says: “Hopefully, that’s as close as he gets to the job.”