Baker plan to cut film tax credit gets cool reception in Devens
After years of failed proposals by other developers throughout the state, New England Studios in Devens became the first film studio to open doors in March 2014, and the owners had high hopes for attracting major movie productions to Central Massachusetts.
With all the infrastructure and equipment necessary to shoot major productions, New England Studios fills a previously unmet need for production companies shooting in Massachusetts. In the past year, the studio hosted a handful of productions, including “Tumbledown,” a movie starring Jason Sudeikis and Blythe Danner that has yet to be released, as well as commercial and music videos, according to spokeswoman Justine Griffin.
The company has a number of prospects, but that’s in jeopardy now that Gov. Charlie Baker has proposed eliminating the state’s 2005 film tax credit established under former Gov. Mitt Romney to boost the Bay State film industry.
The program grants a 20-percent credit for payroll expenses for motion pictures and 25 percent for production expenses, plus a sales tax exemption on personal property. Baker wants to use the money saved by cutting those credits to double the earned-income tax credit for low-income working families to a maximum of $1,873 in three years, up from $937 now.
“This is one way, in addition to increasing the minimum wage and some others, to provide them with more bang for their buck,” Baker told The Boston Globe on Monday, two days before releasing his $38.1 billion budget for fiscal 2016.
But local businesses that support the film industry say Baker’s proposal will hurt small businesses. Griffin released a statement on behalf of New England Studios on Wednesday warning of potential repercussions for “thousands of Massachusetts jobs in the film industry,” and immediate consequences for New England Studios.
“New England Studios has been open for one year and is a multi-million dollar investment in a state-of-the-art facility to support the industry. Major players from Hollywood are scheduled to visit here in the next few weeks as they decide on locations. Even the specter of the repeal could send them elsewhere,” she said.
In an interview Wednesday, Griffin noted that Pennsylvania’s cap on film tax credits prompted producers of “American Hustle” to turn to Massachusetts as an alternative location to shoot the 2014 Oscar-nominated film—an indication that tax credits can be key in attracting filmmakers.
Baker and critics of the film tax credit have questioned whether it has had a true positive impact on the Massachusetts economy. According to a 2014 report by the state Department of Revenue (DOR) that measured the credit’s impact in 2012, the state shelled out $78.9 million in credits, up from $47.8 million in 2011. But the film productions receiving the credits spent far more of their budgets out of state than they did in Massachusetts, according to the DOR. Film productions spent about $50 million both on wages and non-wage expenses inside Massachusetts in 2012, but they spent $144.8 million on out-of-state wages and $59 million on non-wage expenses outside the Bay State.
Billy Pitman, Baker's deputy communications director, reiterated the governor's intention to help working families in an e-mail statement in response to a request for comment.
“Governor Baker believes the hardworking people of Massachusetts deserve a break as reflected by today’s budget proposal that increases the Earned Income Tax Credit to benefit low-income working families and does not raise taxes," Pitman wrote.
Thatcher Kezer, who assumed the role of MassDevelopment’s senior vice president of Devens this week, said he has yet to form an opinion on Baker’s proposal.
“I know there’s a lot of debate as to whether the tax incentive is actually attractive or not,” said Kezer, a former mayor of Amesbury.
Kezer declined to comment further on the potential impact on Devens, saying he’s still getting acquainted with the local economy.
A studio's 'worst nightmare'?
But Peter Lowitt, who leads the Devens Enterprise Commission, the local authority that handles business permitting, was frank about what the film tax credit means to businesses like New England Studios that have set up shop to serve film productions.
Lowitt said New England Studios made a significant investment in Devens based on the existence of the tax credit program, and to lose it could be “their worst nightmare.”
“I would say having the film tax credit was a key feature in their decision making,” Lowitt said.
Lowitt has studied and written articles on the impact of tax credits in the 38 states that offer them. One thing is clear, he said.
“Without them, (film productions) won’t come,” Lowitt said.
Baker’s first budget season could test his grit. His proposal is likely to alienate at least some of the business owners who supported him during the 2014 election. Steve Catalano, a Baker supporter who runs a Harvard-based catering business geared toward the film industry, is one of them.
Catalano had planned to open a catering facility near New England Studios, but if the film tax credit is canceled, he said that probably won’t happen.
“It’s probably pretty bleak, I don’t know that we’re going to continue to build infrastructure,” Catalano said.
Image source: Freedigitalphotos.net
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