Tax Credit Behind MA Film, TV Boom Fading To Black

MASSACHUSETTS — A budget battle on Beacon Hill could alter — or even end — a tax credit that set off a boom of film and television production in Massachusetts after it went into effect in 2006.

House lawmakers approved permanently extending the lucrative incentive, which is set to expire at the end of the year, by a vote of 160-0 in April. But earlier this month the Senate Ways and Means Committee submitted a budget filing that only extended the tax credit through the end of 2026 and put new wrinkles into the incentive to encourage more spending in Massachusetts. Under the current tax credit, which costs the state up to $80 million per year, producers get a 25% credit on anything they spend in Massachusetts.

"Too much of the money, the tax credits and the benefits of the tax credits, goes to out-of–state individuals and out-of-state companies," Sen. Michael Rodrigues of Westport, the chair of the Senate Ways and Means Committee, told Commonwealth. "We want to see more of the benefits be realized by Massachusetts residents and Massachusetts companies."

The committee recommended requiring production companies to spend 75 percent of their budget or 75 percent of their filming days in Massachusetts, a 50 percent increase from the current law. It also wants a $1 million cap on salaries that can be applied towards the credit and eliminate a provision that lets film production companies sell their tax credits.

Critics say those changes would immediately put Massachusetts at a disadvantage in getting film companies to shoot here.

"It essentially kills the program," Ryan Cook, a Massachusetts film producer, told Masslive when asked about the committee's changes to the film tax credit. "There are too many other states with competitive programs. They’ll go elsewhere."

The current tax credit is considered one of the most generous in the U.S. Since it first took effect in 2006, at least 38 films and television shows have been shot in Massachusetts, according to the Massachusetts Film Office. That includes 17 last year, with production taking place in more than 50 towns and cities. Proponents of the tax credit argue it has created jobs that would disappear f Massachusetts ends or puts new limits on the credit.

But a March report from the Tax Expenditure Review Commission questioned the state's return on the tax credit. "We are between 'somewhat' and 'strongly' disagreeing that it justifies its fiscal cost," the report said. "While the film credit provides some immediate stimulus, it does not contribute to the long run growth of the state’s economy. Even though we are able to measure in detail all of the economic benefits of this credit, it still results in a cost of $100,000 per job created. We conclude that this is not the best use of the state’s money."

The differences between the House and Senate versions will have to be hammered out the state legislature deliberates the state budget this summer.