The state’s film and life sciences tax credits work the same way, but they are administered very differently.
On Wednesday, the Massachusetts Life Sciences Center awarded nearly $24 million in tax credits to 30 companies. The vote was taken in public, each company received a set amount, and each firm promised to create a minimum number of jobs during the coming year or face the prospect of giving the money back.
By contrast, the state’s film tax credit is all cloak and dagger. Movie producers come to Massachusetts, shoot their films, and receive tax credits equal to 25 percent of whatever they spend. There is no application process, no job-creation requirements, and no disclosure of who is receiving what.
This year’s budget requires more transparency about film tax credit recipients, but that information has yet to materialize. Aggregate data on the credit is also hard to get. The state Revenue Department is supposed to release a report each year on the film tax credit, but the agency has been sitting on the data for more than six months, presumably because it will show most of the money is flowing out of state to Hollywood actors and directors.
In October there had been speculation that the Revenue Department was sitting on the report until after the gubernatorial election. Now it appears the Patrick administration plans to release the report in the dead zone between Christmas and New Year when no one is paying attention. (Update: The report was not issued over the holidays and is scheduled to be released within the next two weeks.)
The governor is a big supporter of the film tax credit, but its combination of high cost and skimpy benefits is putting him between a rock and a hard place. The tax credit is expected to cost $65 million in the coming fiscal year (the Revenue Department lowered its estimate from $100 million to $65 million because of a downturn in the number of movies being filmed here) and the governor is trying to close a $2 billion deficit.
The bang for the film tax credit is nice but not great, according to past reports from the Revenue Department. Last year’s report, released on the day before the July 4 holiday, said the state issued $165 million in film tax credits over the previous three years, which attracted $676 million in spending and generated the equivalent of 3,177 full-time jobs. Only 1,876 people worked directly on films, and they were paid a total of $429 million. Massachusetts residents held roughly 40 percent of the jobs but received only 18 percent of the wages. Nonresidents pocketed the bulk of the money, with $177 million going to just 37 out-of-state actors, directors, and producers.
By contrast, $50 million in life sciences tax credits have now been issued and they are expected to generate 2,000 jobs in Massachusetts. Those jobs will probably create jobs in other businesses that support the life sciences sector. One can quibble with issuing tax credits to companies like Sanofi-aventis, which has a market value of $85 billion and is in the midst of trying to buy Genzyme Corp. of Cambridge. But at least the Massachusetts Life Science Center makes its tax credit awards at public meetings and lets people know which companies are receiving the money.
In the past, the governor has been the rope in a tug of war between aides over the film tax credit. One set of aides wants to scale back the tax credit and reduce its cost. Another set wants to keep the tax credit in place with the goal of developing a year-round film business in Massachusetts. Patrick keeps getting pulled back and forth. Last year, he signed a budget provision limiting the scope of the film tax credit and then flip-flopped, signing a new law that did away with that restriction. He and the Legislature changed course after the producers of the Tom Cruise film Knight and Day complained.
Greg Bialecki, the state’s secretary of housing and economic development, said after this week’s meeting of the Life Sciences Center that the budget is probably not the best place to sort these issues out. He says the governor and House and Senate leaders will probably talk things over after the new Legislature is seated. He also noted that any change in the film tax credit probably wouldn’t have an immediate impact on the state’s budget gap because film companies would continue to redeem previously issued credits.
Bialecki sounded like a person who believes the film tax credit isn’t going anywhere. “We have not talked about scaling back on the film tax credit,” he said.
