BOSTON — The state’s film tax credit program cost taxpayers $44.1 million in 2011, creating 497 new jobs for Massachusetts residents and sparking $38.7 million in net economic impact, according to a new report from the Department of Revenue.
The study of the tax credit’s impact offers a fresh look at the program as lawmakers mull its future.
Gov. Deval Patrick has proposed a budget for fiscal 2014 starting in July that would cap the film tax credit program at $40 million a year, a move that Patrick said earlier this year was in part due to concerns that the money was being used to fund the excessive salaries of film stars.
Efforts to limit the tax credit program in the past, however, have met resistance from lawmakers who cheer its success in luring high-profile film and TV productions to the Bay State.
The study found that $44 million in tax credits were claimed in 2011 by 77 individual productions, up from $18 million in 2010 but still off the peak of $120.4 million in 2008. A total of $326.5 million in tax credits have been claimed by film productions since the program started in 2006 giving projects a 25 percent break on production costs if they filmed in Massachusetts.
“The production incentive is not only creating jobs, it’s creating an industry,” said Don Packer, president of the Massachusetts Production Coalition and co-owner of Engine Room Edit, a post-production facility in Boston that employs 18 people, three times as many as before the program started. “Dozens of local entrepreneurs are building small businesses that are part of the state’s growing creative economy.”
Rep. Steven Howitt, a Seekonk Republican and member of the Screen Actors Guild, said he thinks the DOR report failed to capture the full picture of spending that takes place in restaurants, hotels and other business when a production sets up.
When the town of Essex, for example, hosted much of the filming of the Adam Sandler film “Grown Ups” in 2009, the film generated few, if any, long-term jobs, but nonetheless pumped more than $1 million into the town’s economy given the crew’s spending on goods and services. And it left the town with a new basketball court — albeit without the film’s grandstands — at Centennial Grove.
Similarly, the 2008 filming of the high-profile romantic comedy “The Proposal,” starring Sandra Bullock, in Rockport — which stood in for the Alaskan fishing village of Sitka — did not generate local long-term jobs, but spurred added tourism interest in Rockport and Cape Ann at the time, local tourism officials said.
“I think capping it is one of the worst things that can happen. Even if you capped it at $100 million, just having a cap creates a stir in the industry,” Howitt said, who has had background roles in movies like Company Men, 27 Dresses and Pink Panther II.
Howitt said that, beyond the actors, and film crews that get paid partially through the credit, luring productions to Massachusetts creates jobs for carpenters, truck drivers and caterers. “A tax credit is never going to make money, but it does produce a lot of nicely paid jobs,” Howitt said.
The DOR report found the film tax credit generated $174.6 million in new spending in the Massachusetts economy in 2011, including $113.3 million in wages and $61.3 million in spending on goods and services. Of that spending, only $26.8 million in wages went to Massachusetts residents and $27.4 million was spent with out-of-state businesses.
After accounting for the money spent on non-Massachusetts employees and businesses and the state spending reductions required to fund the tax credit, the Revenue Department estimated $38.7 million in net new spending in the economy in 2011.
For every job created for a Massachusetts resident by the film tax credit program, taxpayers paid $74,659. Of the 1,236 full-time jobs added by film productions and the multiplier effect of money being spent in the local economy, 367 jobs went to out-of-state employees, according to the report.