Governor’s budget could jeopardize the local film industry

By Jon Chesto
January 28, 2010

If you’re tired of running into all the traffic related to movie productions around the Boston area, you could be in luck: Gov. Deval Patrick is trying to severely cut back how much money the state spends to subsidize filmmakers.

Patrick unveiled the latest proposal to restrict tax credits for the film industry in his state budget on Wednesday. His proposal would limit the total number of credits to $50 million a year for 2010 and 2011 – meaning the state’s 25 percent tax credit could subsidize no more than $200 million worth of production activity each year.

Patrick tried to play down the impact, saying there wouldn’t be much of an effect on the industry here. But it’s hard to believe that’s true, given that the state allocated more than $100 million in tax credits in 2008 and most likely exceeded that mark again in 2009.

At least this proposal is better than the last concept that Patrick’s aides supposedly persuaded lawmakers to include in their budget last year – a proposal that was quickly struck from the books once legislators realized what they had done. At the time, lawmakers briefly approved a $2 million cap on the amount of a movie star’s salary that could count toward the credit. That cap, if it was allowed to stand, would have driven away big budget pictures, like the Cameron Diaz-Tom Cruise action flick “Knight and Day” that was shot here last year.

So this latest proposal from the Patrick administration represents an improvement, to be sure. But it also sends a mixed message to Hollywood types who might be considering shooting here. Producers may think twice about committing to the Bay State if they are worried that they may miss the cut-off for reimbursements.

Naturally, the Massachusetts Production Coalition has vowed to fight the $50 million-per-year cap as the state budget moves through the House of Representatives and the Senate. Legislative leaders have been generally receptive to the film industry’s needs. But lawmakers are also feeling the pressure from within their ranks and from outside critics to rein in film spending.

A Department of Revenue report that was released last year on this issue has been widely mischaracterized as a scathing assessment of the tax credit. In fact, that report shows that the credit has been a success, conservatively sparking more than $300 million in direct economic activity in Massachusetts in just its first three years (that’s excluding the salaries for out-of-state actors and other crew members).

There’s no question times are tight, and it’s hard to blame Patrick for trying to balance human services cuts with reductions in business benefits (the beloved life sciences industry is also taking a hit, albeit a smaller one). Subsidies for any private industry certainly deserve close scrutiny before the state zaps essential services.

But there’s also no question that this cap on the film tax credits could deter some productions from coming here in the future and potentially pull the plug on the momentum behind one of the few growing sectors in the state’s economy.

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