Some worry cut in film tax credits will slow local movie-making

Bob Bauder
| Friday, Nov. 12, 2010

As the first of three big-budget films shot last year in the Pittsburgh region hits theaters today, supporters of tax incentives credited with spawning a surge in local movie-making fear the state financial crisis will cut off such opening nights.

Pennsylvania's controversial film tax credits will be targeted along with other tax incentives designed to spur economic development, according to state Sen. Jay Costa, D-Forest Hills. He and other elected officials said it is too early to predict whether the tax credits will survive, or be eliminated as some conservative groups have suggested.

"Clearly, these tax credits will be up for debate, and they will rise and fall on their own merits," said Costa, a supporter of the film credits whose party loses control of the state House and governor's mansion in January.

This month will mark the first time in the 20-year history of the Pittsburgh Film Office that three movies shot here will play in theaters simultaneously. "Unstoppable," starring Denzel Washington and Chris Prine, opens today. It will be followed in successive weeks by "The Next Three Days" and "Love and Other Drugs."

The three films were awarded about $38 million in tax credits, including about $22 million for "Unstoppable."

Industry supporters attribute an increase in movie production across the state to the tax credits. Pennsylvania began offering them for movie production in 2004 and replaced them with a grant program in 2006. The Rendell administration revived the tax credit in the 2007-08 fiscal year.

Movie companies can receive a 25 percent credit if they spend at least 60 percent of their production budget in the state. Credits are awarded on a first-come, first-served basis, and the program is capped at $60 million, up from $42 million last fiscal year. The cap was $75 million in its first year and is scheduled to return to that level next year unless the Legislature alters it.

Groups such as the Commonwealth Foundation, a Harrisburg-based free market think tank, condemn the credits as unnecessary and unfair because they favor one industry over another and have not generated enough money.

If lawmakers cut or reduce the credits, movie companies will find other places to shoot, said Sharon Pinkenson, executive director of the Greater Philadelphia Film Office. She noted that the industry is highly competitive and that 42 other states offer some type of financial incentive for movie-making.

"That's the way movies are financed now," she said. "Without the tax credits, we would do nothing but a couple local commercials and student films. We'd be back to one or two projects a year."

Supporters say the credits are responsible for a recent movie boon.

The Legislative Budget and Finance Committee reported last year that the number of films produced at least in part in Pennsylvania increased cumulatively by 33 percent from 2002 to 2008. The report noted that the number of films produced in the state from 2007 to 2008 -- the first year of the most recent film tax credit program -- increased from about 100 to about 175.

The Pittsburgh Film Office reported the regional economic benefit of the three movies opening this month as at least $5.3 million spent at local businesses, 633 jobs for local film crew members, and 40,159 nights booked at area hotels.

Since 2007, the office reports, the film industry has generated $210 million for the Southwestern Pennsylvania economy. The Greater Philadelphia office reported that the industry generated $598 million in Southeastern Pennsylvania last year.

"This program puts money in the pockets of local Pennsylvanians," said Dawn Keezer, executive director of the Pittsburgh Film Office.

She and Pinkenson said they received assurances from Gov.-elect Tom Corbett that he would support the tax credits. Corbett's office did not respond to phone calls seeking comment.

Several lawmakers said the tax credits would come under scrutiny.

Rep. Jim Christiana, R-Beaver, a member of the Legislative Budget and Finance Committee, said film tax credits would come second to increasing incentives for businesses that donate to educational programs.

Sen. John Pippy, R-Moon, who chairs the committee, said credits boosted the state film industry. But he noted that the state faces a historic financial crisis.

"We're going to have to find ways to save money," he said. "I think there will be a need for significant justification, economically, for (film tax credits)."

Pippy said the program might be reduced instead of eliminated.

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