Movie tax break divides legislators

Charles Thompson

Jun. 4, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- A new report suggests the $75 million in tax breaks for in-state movie and television shoots has put Pennsylvania on more moviemakers' maps.

Supporters point to key numbers in the report for the bipartisan Legislative Budget and Finance Committee on the state's film production tax-credit program: $524.6 million in total economic impact and nearly 4,000 jobs created.

"It's a new industry with high-tech, good-paying jobs. ... that Pennsylvania's in dire need of," said state Rep. Tony DeLuca, a Pittsburgh Democrat.

Critics seize on the fact that new tax revenue from approved projects brought in only $18 million to state and local governments in 2007-08 compared with the $58 million in potential collections forgiven as write-offs against in-state production costs.

"I know the movies are glamorous and wonderful. ... But we have some things that are much more needed by our families in these dire economic times," said Sen. Pat Vance, R-Cumberland County, noting that on Wednesday alone she'd heard from advocates for libraries, mental-health providers and nursing homes, all vying for scarce funding in a deficit-ridden state budget.

She and others want to see the film tax credits suspended until the state's deficits are addressed.

The credits have been controversial since Gov. Ed Rendell made them a late demand in his 2007-08 budget Some fiscal conservatives call them a handout to Hollywood friends who have contributed to Democratic campaigns.

Shoots in Pennsylvania have increased in recent years. According to the Internet Movie Database, in 2002 -- two years before direct industry incentives began here -- 31 films were released in which some or all shooting took place in Pennsylvania.

That number grew to 175 by 2008, the first full year of the expanded credit program.

Growth in film industry jobs averaged 3.3 percent annually during that time. The Economics Research Associates report notes that the figure for all private industry during that period was 0.6 percent.

Still, some question how much of the current film business might have come to Pennsylvania anyway.

Gene Barr, vice president of government affairs for the Pennsylvania Chamber of Business and Industry, said many of his members would prefer the state stop picking winners among specific industries.

"That $75 million could be better applied in business-tax cuts across the board," Barr said. "Just cut taxes, and then let people go out and compete."

The report says film production is a strong generator of spin-off economic activity, due in part to reliance on local resources, such as rental cars, lodging and catering.

There also might be other effects. Fourteen years after the release of "The Bridges of Madison County," tours of covered bridges in Madison County, Iowa, draw 50,000 visitors each year.

The benefits in Pennsylvania appear to be highly localized so far. ERA's examination of the in-state industry showed 87 percent of all revenue went to firms based in Philadelphia and Pittsburgh.

J. Mickey Rowley, who oversees the tax-credit program for the state, argues that since the credits are reserved for productions intended for a national audience, any shooting in Pennsylvania draws attention to the state as a whole.

Rowley said a major film scheduled for release this summer, "Another Harvest Moon," was shot in large part at the former Harrisburg State Hospital in 2008, injecting $436,000 into the midstate's economy.

The ERA report cautions that most states offer incentives, so if Pennsylvania would drop its credits, it likely would lag in new business.

The Rendell administration has vowed not to let that happen.

"More movies shot in Pennsylvania means more awareness of what Pennsylvania has to offer," Rowley said. "The tax credit is an economic development tool that works."

Newstex ID: 35527014