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Bid to ax tax break for films rejected

Panel votes 8-0, in hope of job rise

By Michael Levenson
Globe Staff / March 12, 2010

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A legislative committee yesterday rejected a bill that would have sharply curtailed the state’s tax credit for the film industry, saying the legislation would hurt a thriving industry that is one of the few bright spots in a dour Massachusetts economy.

The Revenue Committee’s 8-0 vote was a sign the controversial credit could survive this year, even as Governor Deval Patrick has proposed trimming it to help close the state’s budget gap for the next fiscal year.

Supporters of the film industry praised the vote, contending that when many businesses are shedding jobs, the tax incentive has helped to bring thousands of jobs and hundreds of millions of dollars to Massachusetts.

“Defeating this bill is an important step in preserving the hard-won gains for the scores of Massachusetts businesses and the thousands of working men and women in the Commonwealth who have benefited from the film credit,’’ Joe Maiella, president of the Massachusetts Production Coalition, said in a statement. “The Commonwealth simply can’t afford to lose the film credit.’’

Critics have contended that the credit does not bring sufficient economic activity to justify its cost, which is about $100 million this fiscal year and is projected to grow to about $125 million next fiscal year.

In July, a Department of Revenue report found that Massachusetts reaps only 16 cents for every dollar the state spends on the incentive and that much of the benefit from the program flows to out-of-state companies and workers.

“All the evidence shows that this is a very costly tax credit with minimal economic impact, and the failure to limit it will require deeper cuts in other state programs, including aid to cities and towns,’’ said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, a business-funded watchdog group. “The consequences for local schools and human services, which are already bearing the brunt of cuts, are very serious.’’

Senator Benjamin B. Downing, a Pittsfield Democrat and Senate chairman of the Revenue Committee, essentially abstained from yesterday’s vote. Downing said the bill deserved further consideration because, while the tax credit might be creating jobs, lawmakers must consider cutting it in a dire budget year.

“Everything has to be on the table in a crisis like this,’’ said Downing. “I don’t want to be making promises to an industry that we are not able to uphold as we go through the budget process and through this year.’’

Representative Jay R. Kaufman, a Lexington Democrat who is the committee’s House chairman, disagreed. He said that the credit has not only created jobs but sparked interest from developers who want to build studios in Massachusetts.

“We looked at it as something that promises tax returns over time and an investment worth making,’’ Kaufman said.

The bill would have drastically reduced the credit, in part by capping it at $7 million per film.

The governor, as part of his budget proposal for next year, has proposed a less drastic cut. His plan would cap the overall payout to $50 million per year for the next two years. His plan has not been acted on by lawmakers.

Representative Steven J. D’Amico, a Seekonk Democrat who sponsored the bill that was rejected by the committee, said he would continue pushing the issue.

“Every dollar we waste on a Hollywood dream is a dollar less we’ll have to provide education for our kids or fire safety or mental health support,’’ he said.

Levenson can be reached at mlevenson@globe.com.