The Massachusetts House rejected a bid to cap film tax credit expenditures at $40 million a year, with a top House leader saying a cap would end up killing the state’s fledgling film and television industry.
Rep. Angelo Scaccia offered the cap as an amendment to the House budget on Monday. His proposal, which was defeated by voice vote, was identical to one offered by Gov. Deval Patrick in his budget proposal, which was dropped from the House’s spending plan.
Scaccia described Patrick as a huge fan of the film tax credit, but nevertheless said the governor felt compelled to call for a cap as he pressed for $1.9 billion in tax increases to fund transportation and education initiatives.
“He had to be personally embarrassed to subsidize Hollywood actors, directors, producers while picking the pockets of the taxpayers of Massachusetts,” Scaccia said of the governor. “Even he knows there’s a sham. Even he knows he can’t hold his nose that long.”
The state’s film tax credit offers a credit to producers equal to 25 percent of whatever they spend in Massachusetts shooting films, television shows, and commercials. The state Department of Revenue compiles a report each year on the film tax credit that shows the credit is successful in attracting films and other shows to Massachusetts but that most of the money flows back out of state to actors, directors, and producers.
Of the $113.3 million that productions spent on wages in 2011, for example, 76 percent of the money went to nonresidents and just 24 percent to residents. About $54.3 million, or nearly half the total, was paid out in increments greater than $1 million, nearly all of it going to a handful of stars and directors who came here temporarily to shoot films.
House Speaker Robert DeLeo has refused to support Patrick’s push for steep tax hikes to fund government transportation and education initiatives, but he has remained steadfast in his support for tax breaks for movie and television productions that shoot in the state. House Majority Leader Ronald Mariano of Quincy said the film tax credit has enabled Powderhouse Studios in Somerville to triple its employee base and revenues since the film tax credit was launched in 2006. He said a film studio in Devens being constructed by a company called New England Studios will cost $36 million to build and generate $62 million in spending. “This is real,” Mariano said of the state’s growing film industry.
Mariano said the cap proposed by Patrick and Scaccia would be the death knell for the industry because it would indicate inconsistency and show the state is not serious about courting the industry. “The worst signal you can send would be a cap,” he said. “Either we’re going to be in this business with two feet or we’re not going to be in it at all.”
Rep. Cory Atkins of Concord, the House chair of the Legislature’s Committee on Tourism, Arts, and Cultural Development, said the state must stay the course. “We either have to do it or not do it,” she said, suggesting a cap was an unacceptable middle ground.
Rep. Sheila C. Harrington of Groton, who represents Devens, said the tax credit is what is fueling the private investment in her district. “This tax credit is crucial to the success of New England Studios,” she said.
Scaccia, who confessed that “tax credits drive me nuts,” spoke in support of his amendment but did not demand a roll call vote that would have forced House members to take a position on the film tax credit.