Senate President Therese Murray says “liberal tax policy people” in Massachusetts are waging a campaign to repeal the state’s film tax credit, but she says that would be a big mistake.
In an interview with CommonWealth, Murray said film tax credits are not tax breaks for the wealthy, as critics suggest, but investments in the development of a whole new, high-paying industry for Massachusetts.
“It’s the one exciting thing, next to life sciences and new energy programs, for the future of our economy. Why wouldn’t you reach out?” she asked. “You have to put money out to bring money in.”
Over the last three years, the state has issued $167 million in film tax credits, which have induced movie and TV producers to spend a total of $676 million here, according to a recent Revenue Department report. Much of the money went to non-Massachusetts residents. The report said producers paid a total of $429 million in wages to 1,876 people. Massachusetts residents held roughly 40 percent of the jobs but received only 18 percent of the wages. Nonresidents pocketed most of the money, with 37 actors, directors, and producers receiving $177 million, or 41 percent of the total.
Gov. Deval Patrick is officially a supporter of the film tax credit, but key members of his administration are split on its value. Murray said she no longer knows where the governor stands and added that she was disappointed with a number of recent decisions by his administration that hurt the fledgling film industry.
Chief among them was a decision not to provide $50 million in infrastructure funds for road, water, and sewer projects associated with a proposed film studio in Murray’s hometown of Plymouth. Murray said she recalled a meeting at the start of the year where the governor met with her and officials from Plymouth Rock Studios and said, “Let’s get this to happen.” She added, “I was surprised later on when they said it wouldn’t happen.” (“Hollywood East” image from Plymouth Rock Studios website.)
Patrick’s secretary of administration and finance, Leslie Kirwan, ruled the project did not qualify for so-called I-cubed infrastructure money because the net new tax revenues from the project were not enough to offset the state’s costs. Kirwan reached that decision after taking an expansive view of the state’s costs. She concluded the movie studio itself would generate more than enough tax revenue to offset the state’s borrowing costs, but not enough to also cover the cost of film tax credits issued to producers using the studio. In essence, the studio project not only had to cover the cost of the bonds for its project but also the cost of film tax credits issued to third parties.
Murray said her constituents in Plymouth are angry about the decision. Asked how she felt personally, she said, “Let me put this diplomatically. I was not happy.”
“It just means so much for all of southeastern Massachusetts,” she said. “It just defies logic, I guess, why someone wouldn’t have reached out and talked to me if there was an issue.”
Murray said the decision doesn’t bode well for future I-cubed projects, including ones benefiting the life sciences industry. “It’s confounding to me,” she said. “If it doesn’t work here, what does it work on?”
The Senate president said Plymouth Rock officials are trying to move forward without the state funds by finding additional investors. She said state officials are looking for other ways to help Plymouth Rock and added that US Representative William Delahunt is steering studio officials to a federal funding program.
The film tax credit suffered another temporary blow during recent budget deliberations when Patrick tried to cap at $2 million the amount of a star’s salary that would qualify for the tax credit. Patrick included the cap in a revised budget he filed in June, and House and Senate conferees, with the blessing of House and Senate leaders, included it in their joint budget. Patrick administration officials said the cap would save the state $20 million.
Murray said the provision was rushed through and signed into law with no outside input. “As soon as it was done, the input came in fast and furious,” she said. Legislative leaders and the governor responded by repealing the provision in a separate spending bill, once again making all of a star’s salary eligible for the tax credit.
The Legislature approved a tax credit transparency provision in its budget, which would require state agencies issuing certain tax credits, including the film tax credit, to report on their economic performance. Patrick sent the provision back to the Legislature with an amendment requiring that the recipients of tax credits be identified, as he had proposed in his original budget filing. Murray said she didn’t know how the Legislature would respond to the governor’s suggested amendment.
“This I don’t have a strong feeling about either way because I haven’t invested enough time in it,” she said.
