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Pa. OKs tax credits for educational donations, research, film projects

Jason Cato
| Friday, Jan. 1, 2016, 10:33 p.m.

Though a final budget is five months past due, state officials in Harrisburg recently cranked up activity in several tax credit programs.

On orders from Gov. Tom Wolf, conditional approval letters went out on Christmas Eve granting tax breaks for educational donations. This week workers in the Department of Revenue continued processing approvals for research and development and film production tax credits.

“The film industry will be alive, well and prosperous in 2016,” said Dawn Keezer, longtime director of the Pittsburgh Film Office. “It might be our best year ever.”

Four tax credit approval letters arrived Wednesday for movie and television projects slated to spend $205 million this year in Pittsburgh and Western Pennsylvania, Keezer said.

She declined to provide details on the approved projects until producers received notice.

One production, however, will be another season of “Outsiders,” a WGN America television series shot here last year that will premiere this month.

The Pennsylvania Film Office declined to release details on projects it approved. A spokeswoman said the office is processing applications.

“We hope to have a list available within the next week or two,” Lyndsay Kensinger said.

Keezer complained when the Department of Community and Economic Development last week mailed conditional approval letters for donations made to the Educational Improvement Tax Credit and Opportunity Scholarship Tax Credit programs at Wolf's direction.

“If they are going to do something for one program, they ought to do it for all programs,” Keezer said. “I'm not trying to pit film tax credits against education at all. But at least show (producers that) we are trying to do something, that we're staying open for business.

“If every program was treated the same, then there would be no issue.”

When Wolf on Tuesday freed up emergency funding for school districts, counties and social service nonprofits, but vetoed parts of a $30.3 billion budget submitted by Republicans, a spokesman for the Democratic governor said none of the money would fund tax credit programs.

“In the past, certain tax credit allocations were reduced or eliminated as part of a final budget agreement; therefore, the Wolf administration has been unable to issue award letters,” Wolf's spokesman Jeffrey Sheridan said. “At this time, the legislature has not sent us a tax code. They left town without doing their job.”

He later acknowledged that approvals were being processed for the Research & Development Tax Credit program, which provides $55 million annually to encourage technology and scientific research in Pennsylvania.

The Revenue Department oversees 17 tax credit programs, including ones for creating jobs, economic development, historic restoration, community assistance, agriculture and manufacturing, among other areas.

The Film Production Tax Credit is capped at $60 million annually. Projects completed in previous years claimed nearly $19 million of that money through multi-year deals. That includes $10 million out of the current pot for “Concussion,” a film starring Will Smith that was released on Christmas Day.

The budget impasse, which began on July 1, cost the region one production: Starz television series “American Gods.”

A fifth project for 2016 plans to apply next week, Keezer said.

“I'm hoping there is enough (tax credits) left to do that one,” she said.

Applications for all tax credit programs should be processed, said Steven Miskin, spokesman for the House Republican Caucus.

“The whole thing was handled poorly,” Miskin said. “The only one who has been taking hostages is the governor. He's the one who has been picking winners and losers from the beginning.”

The Department of Community and Economic Development received approximately 4,500 business applications for the education tax break programs. The office on Christmas Eve mailed about 3,000 approval letters.

Last year, 2,700 EITC applications claimed the program's allotted $100 million. The program, created in 2001, allows businesses to get a 75 percent reduction for a one-year donation and a 90 percent tax credit for a two-year commitment up to $750,000 annually.

Since its inception, around $875 million has gone to private school stipends, public school programs and nonprofit groups that offer education programs.

The deadline for 2015 donations was Thursday.

Pittsburgh History & Landmarks Foundation relies on $50,000 to $70,000 in EITC donations each year to pay for its “Building Pride/Building Character” program, a partnership started in 2006 with Pittsburgh Public Schools to teach 12,000 students about local history and architecture.

Executive Director Louise Sturgess said she is grateful for the conditional letters, but that uncertainties over the budget have had consequences.

“We have not received one penny of corporate contributions to support that program,” Sturgess said.

Instead, the organization is pursuing $20,000 from two foundations and will contribute the rest from another grant and its own budget.

“To suddenly have a halt to that,” Sturgess said, “it stops the momentum built up over years of hard work.”

Jason Cato is a staff writer for the Tribune-Review. He can be reached at 412-320-7936 or Staff writer Natasha Lindstrom contributed to this report.

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