Movies made in Massachusetts like The Fighter, The Town, and The Social Network are basking in award nominations right now, but there’s a sense the Bay State film industry is starting to fade.
The number of films shot in Massachusetts has been slowing for some time, and the state Revenue Department confirmed the downturn this week. In a report to the Legislature on Tuesday, Revenue Commissioner Navjeet Bal said her agency was lowering its estimate of the impact of the state’s film tax credit by about $35 million.
The Revenue Department had been projecting the film tax credit would cost the state $100 million this fiscal year, so her downgrade means state officials are forecasting a 35 percent drop in film spending.
Most state tax credits reduce how much tax a taxpayer owes, but the film tax credit operates more like a grant in that the credit can be turned into cash by selling it back to the state or to a third party. Virtually any spending by a movie producer in Massachusetts qualifies for the 25 percent tax credit.
The downturn in the local film industry comes as Gov. Deval Patrick faces some tough choices on what to do with it. A big booster of the film business, Patrick is faced with a huge budget gap and limited options. Many analysts expect him to try to rein in the film tax credit in his budget proposal for fiscal 2012.
Last year, Patrick signed legislation that would have capped at $2 million the amount of a star’s salary that would qualify for the film tax credit. Producers of the Tom Cruise movie Knight and Day, which was preparing to shoot in Massachusetts at the time, complained, and the governor and the Legislature flip-flopped, removing the cap.
The governor’s budget this year proposed capping the overall cost of the credit at $50 million for each of the next two years; that proposal, too, was shot down by the Legislature.
More recently, the governor removed Nicholas Paleogos from his job as head of the state’s film office. Paleologos had been critical of the attempts to scale back the film tax credit.
The Revenue Department was supposed to issue a status report on the film tax credit earlier this year, but the report was kept on ice until after the election. Look for it to appear during the holidays.
