Report: Mass. Gained From Film Tax Credit
The state's film tax credit program cost taxpayers $44.1 million in 2011, creating 497 new jobs for Massachusetts residents and sparking $38.7 million in net economic impact, according to a new report from the Department of Revenue.
The study of the tax credit's impact offers a fresh look at the program as lawmakers mull its future.
Gov. Deval Patrick has proposed a budget for fiscal 2014 starting in July that would cap the film tax credit program at $40 million a year, a move Patrick said earlier this year was in part due to concerns that the money was being used to fund the excessive salaries of movie stars.
Efforts to limit the tax credit program in the past have met resistance from lawmakers, who cheer its success in luring high-profile film and TV productions to the Bay State.
The study found that $44 million in tax credits were claimed in 2011 by 77 individual productions, up from $18 million in 2010 but still off the peak of $120.4 million in 2008.
A total of $326.5 million in tax credits have been claimed by film productions since the program started in 2006, giving projects a 25-percent break on production costs if they’re filmed in Massachusetts.
"The production incentive is not only creating jobs, it's creating an industry," said Don Packer, president of the Massachusetts Production Coalition and co-owner of Engine Room Edit, a post-production facility in Boston that employs 18 people, three times as many as before the program started. "Dozens of local entrepreneurs are building small businesses that are part of the state's growing creative economy."
The DOR report stated the film tax credit generated $174.6 million in new spending in the Massachusetts economy in 2011, including $113.3 million in wages and $61.3 million in spending on goods and services. Of that spending, only $26.8 million in wages went to Massachusetts residents and $27.4 million was spent with out-of-state businesses.
After accounting for the money spent on non-Massachusetts employees and businesses and the state spending reductions required to fund the tax credit, the revenue department estimated $38.7 million in net new spending in the economy in 2011.
For every job created for a Massachusetts resident by the film tax credit program, taxpayers paid $74,659. Of the 1,236 full-time jobs added by film productions and the multiplier effect of money being spent in the local economy, 367 jobs went to out-of-state employees, according to the report.
Rep. Steven Howitt, a Seekonk Republican and member of the Screen Actors Guild, said he thinks the DOR report failed to capture the full picture of spending that takes place in restaurants, hotels and other business when a production sets up.
"I think capping it is one of the worst things that can happen. Even if you capped it at $100 million, just having a cap creates a stir in the industry," Howitt said, who has played background roles in movies like Company Men, 27 Dresses and Pink Panther II.
Howitt said beyond the actors, and film crews that get paid partially through the credit, luring productions to Massachusetts creates jobs for carpenters, truck drivers and caterers. "A tax credit is never going to make money, but it does produce a lot of nicely paid jobs," Howitt said.
The Massachusetts Production Coalition, an industry group, argues that capping the program would deter growth at time the industry is just getting a foothold in Massachusetts. The group points to two ongoing productions in Boston that might not have come to the state had Pennsylvania not capped its film tax credit at $60 million.
Charlize Theron is currently in Boston filming the pilot of NBC's "Hatfields and McCoys" for what could become a recurring TV show, while director David O. Russell and actor Bradley Cooper went directly to Pennsylvania’s governor asking unsuccessfully for the state to lift its film tax credit cap so a movie based on the 1970s Abscam scandal in Philadelphia could be filmed there. The movie is now being shot in Massachusetts.
"The money generated by the production incentive program in Massachusetts helps thousands of businesses, including caterers, hardware stores, lumber yards, cleaning companies and hotels, to name just a few," said Packer. "The film and television production incentive program is doing what it was intended to do, creating jobs and bringing private investment and economic opportunity to Massachusetts."
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