Gov. Deval Patrick is not apologetic about curbing film industry tax credits
by Jon Chesto
March 4, 2010
Gov. Deval Patrick is not about to apologize for wanting to cap the state’s payout to the film industry at $50 million a year in tax credits – a move that would essentially more that halve what the state currently funds each year.
During a meeting last week with editors at The Patriot Ledger, Patrick told us the state is currently in a budget crisis mode – and expenses such as the film industry tax credits need to be curtailed until the economy rebounds.
“We are in an unusual place right now, and expecting everything to stay as it is while we are in the midst of a crisis strikes me as a little unrealistic,” Patrick said. “We’re not talking about eliminating the tax credit. It’s a temporary cap (on) a first-come, first-serve basis until we can afford an unlimited cap again.”
There’s a big problem with putting caps on these kinds of industry incentives: It opens up a whole new level of uncertainty that wasn’t there before. Filmmakers need to know they can take the state’s 25 percent tax credit on production expenses to the bank.
The governor’s plan could face a tough battle on Beacon Hill, where House Speaker Robert DeLeo and Senate President Therese Murray have both voiced their strong support for this growing sector.
The film industry has apparently found its voice in Massachusetts: Supporters swarmed the State House on Wednesday to urge lawmakers to oppose a bill sponsored by Rep. Steve D’Amico that would revive a $7 million cap on the amount of tax credits that would be available for each production.
The industry is showing itself to be a bigger force than it was in 2005, when lawmakers first adopted the credits, and in 2007 when they stripped away that $7 million cap. That’s because the credits are working, and there are plenty of local companies that have been adding many year-round jobs during the worst depths of the recession.
There’s a valid debate to be made about whether movie companies – or any private employer – should benefit from public subsidies such as tax credits. But state officials should realize that a watered down tax credit, in this case, might be almost as bad as having none at all.
The uncertainty caused by Patrick’s proposal is sure to make it tough for film producers to pull together financing or make the case to their superiors and financiers that they should shoot a movie in Massachusetts. That uncertainty could prompt most of the filmmakers that could have come to Massachusetts for the tax credit to take their productions someplace else. That uncertainty would most likely leave us with the productions that would have been shot here anyway – with or without the tax credit. And that uncertainty would essentially defeat the entire purpose of funding the tax credit.
D’Amico once told me he hoped that the movie studios that are proposed for Massachusetts would never get built. D’Amico’s reasoning is that such large complexes would create a critical mass of permanent film industry workers in the state, making it politically impossible to take the tax credits away.
State lawmakers are finding out that the critical mass is already here. The leaders on Beacon Hill will now need to decide if they want to chase it away.