Film tax credit backers say they have the votes

Dispute findings of tax expenditure commission

SUPPORTERS OF THE state’s film tax credit, which came under fire this week from a commission examining Massachusetts tax breaks, say they have the votes to pass legislation that would make the tax credit permanent.

The credit, which under current law is scheduled to sunset on January 1, 2023, provides a tax credit equal to 25 percent of whatever is spent in Massachusetts on commercials, TV series, and movies. Since many Hollywood studios don’t have tax exposure in Massachusetts, the credit is structured in a way that allows it to be sold to taxpayers that do have liabilities.

The Tax Expenditure Revenue Commission released its initial report this week, raising concerns about the efficacy of a number of tax breaks, including the film tax credit. The report said the film tax credit has succeeded in generating jobs in Massachusetts but at an extraordinarily high cost – between $56 million and $80 million a year, or an average of about $100,000 per position.

“We conclude that this is not the best use of the state’s money,” the commission said in its report.

Despite the commission’s misgivings, the film tax credit appears to have strong support in the Legislature. The Massachusetts Production Coalition, which represents film and TV workers and businesses in the state, said legislation it is backing that would eliminate the sunset has majority support in both branches of the Legislature – 102 members of the House and 23 in the Senate are cosponsors.

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.

In a statement, the Massachusetts Production Coalition said the state commission relied on “flawed 5-year-old state data” assembled by the Department of Revenue. The commission report relies on actual data through 2016 and some projections through the current year. It also relies on an analysis of the data provided by the Department of Revenue.

The Massachusetts Production Coalition relies on some of the data generated by the Department of Revenue, but also on a report it paid for that used inside data from Warner Bros. on the filming in Massachusetts of the Castle Rockseries, which ran on the Hulu streaming site.

That report found that the production spent $58 million on Castle Rock’s first season and received a tax credit from Massachusetts worth $14.6 million. Of the $58 million, the report said, $30 million went to addresses inside Massachusetts and $28 million to addresses outside the state. But the report said a closer look at the $28 million indicated only $16.5 ended up being spent outside the state. The remaining $11.5 million was spent inside the state, according to the report, which significantly increased the economic impact inside Massachusetts.

“Right now, the demand for studio and soundstage space in Massachusetts is exceeding supply, and many of our local businesses are ready to make major investments in new infrastructure, equipment, and capacity to grow the local film industry,” the coalition said in its statement. “That’s why majorities in both chambers of the state Legislature support legislation to remove the film production incentive’s expiration date in order to protect and grow the jobs and economic benefits it creates.”