Lobbying intensifies in Pa. over tax break for filmmakers

Carrie Rickey and Mario F. Cattabiani

May 2, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- When State Rep. Scott Boyd (R., Lancaster) walked into a public hearing yesterday about whether Pennsylvania should repeal the $75 million in annual state tax credits for film production, he wasn't clear about how the program worked.

After listening to testimony on the controversial appropriation he concluded, "The way it works is that we're not giving Tom Cruise a tax credit." Instead, he agreed, Tom Cruise is becoming a taxpayer to the state and Pennsylvania is creating new jobs.

Ten months into the fiscal year, as the state budget deficit continues to grow and officials project a $3 billion shortfall, legislators in both houses have drafted bills that either would delay the tax credits or nix them outright.

But yesterday, the state and city film offices, along with a leading film-craft union, the International Alliance of Theatrical Stage Employes, succeeded in thawing some ice-cold opponents of the credits.

One was Rep. Stephen Barrar (R., Chester). "Why is the state subsidizing a billion-dollar global entertainment industry?" he asked three weeks ago in an e-mail sent to fellow legislators.

Yesterday, having toured the set of M. Night Shyamalan's The Last Airbender with a delegation of state representatives, and having spoken with Pennsylvanians employed by the production, he said, "I am coming around. I was not aware of the advantages of the film tax credit that accrued in my own backyard."

Sharon Pinkenson, executive director of the Greater Philadelphia Film Office, quantified the advantages. Airbender, she told 13 state representatives on the Tourism and Recreational Development Committee, will spend an "estimated $78 million in Greater Philadelphia." That consists of $46 million on the local-hire payroll (which includes 400 crew members, 10 actors, its writer-director and more than 5,000 extras), and $32 million to local craftsmen and vendors. The production is expected to book 15,000 hotel-room nights.

According to Jane Saul, whose state film office is under the umbrella of the Department of Community and Economic Development, "the outcome of the $150 million in tax credits since the enactment of the program have resulted in $210 million in direct spending, an economic impact of $430 million and 2,657 full-time jobs." An audit from a Chicago-based firm will produce its independent findings in late May, before the budget debate in Harrisburg heats up.

There are many ways to analyze the cost benefits of the film tax-credit program. Critics, such as Sen. Patricia Vance, (R., Cumberland) who has written a bill to postpone the credits, points to the fact that Pennsylvania received $18.3 million in direct tax revenue from the film industry as a result of the $74.9 million in tax credits issued in 2008. "If you put out 75 to get 18, that's a poor investment," she said in an interview.

"The purpose of a tax credit isn't to create tax revenue," Pinkenson responded yesterday. "It's to create job stimulus."

According to Ray Carballada, president of Shooters, a Center City post-production company, the credit is having its designed effect. "Driven by opportunities offered by the tax credits," he said, Shooters grew from $11 million in sales and 45 employees in 2006 to $20 million in sales with a full-time staff of 70 plus 114 free-lancers.

Rep. Thaddeus Kirkland (D., Delaware), who cochairs the Tourism and Recreation committee with Barrar, wrapped up the meeting with this concise conclusion: "Film tax credits equals income equals income tax equals real economic stimulus."

Contact movie critic Carrie Rickey at 215-854-5402 or crickey@phillynews.com.

Newstex ID: KRTB-0160-34604566