Government & Politics
7:49 am
Wed February 26, 2014

Corbett Administration Urges Caution on Film Tax Credit Expansion

The Corbett administration is still cautioning lawmakers against uncapping a tax credit for the film industry.

Several Republican legislative leaders, along with Democrats, have voiced support for increasing the state’s annual $60 million in tax credits. Supporters say it would attract more big-budget films to the commonwealth and support a growing industry.

But Alan Walker, secretary of the state Department of Community and Economic Development, said there are complications to consider.

“Be careful what you wish for because you might get it,” he told the Senate Appropriations Committee Monday. “The states that have uncapped the film tax credit have very, very serious restrictions on what you can actually apply for so our program, which basically has a wide range of what’s covered by the program, is probably better.”

Walker says rather than uncap it, lawmakers may want to look into simply raising the cap on tax credits. The film tax credit program was established in 2007, with a $75 million limit. Since then, it has been cut to $42 million and restored to $60 million with a law in 2011 creating a permanent cap.

Recent changes include awarding the tax credits as multi-year grants to attract television series to Pennsylvania, and allowing the commonwealth to borrow from future years’ tax credit allocations to award a greater sum.

Walker acknowledged that there would be benefits to greatly expanding the amount of tax credits awarded to the film industry.

“Your goal should be to get more films made here in Pennsylvania so the infrastructure can come along with it,” he said. “And the more films we make here the more infrastructure we’re going to get for editing and the whole nine yards, and that’s where you really start to create the jobs.”

Sen. Larry Farnese (D-Philadelphia), is among Democratic lawmakers pushing for uncapping the credits, pointing to the film American Hustle, shot in Massachusetts, despite entreaties to draw down tax credits to shoot in Pennsylvania (Massachusetts has no cap on its film tax credit program).

“I want to make sure we’re seeing the things clearly,” Farnese said, emphasizing the high demand for the tax credits among production companies. “They’re literally lining up and they’re going elsewhere because it’s not uncapped.”

A bemused Sen. Jake Corman (R-Centre) decided to highlight the fact that Farnese is among those pushing for lower taxes for the film industry while supporting higher taxes for the natural gas drilling industry.

“Do you know of any other industry in Pennsylvania that pays a tax on top of their normal business taxes, just to do business in Pennsylvania?” Corman asked Walker. “Like a severance tax, impact fee. Any other business in Pennsylvania pay anything like that?”

“Not that I know of,” Walker said.

Farnese said the two industries can’t be compared. “We don’t dispute that they are job creators,” he said, speaking of the natural gas industry. He supports levying a severance tax on drillers, as opposed to the impact fee now in law, collecting about $200 million annually for state and local governments. “The commonwealth should be realizing greater amounts of revenue.”

Organizations on either side of the ideological divide have questioned the efficacy of the film tax credit. Studies by both left-leaning and free-market groups have suggested the tax credits often go to projects that were slated to be filmed in Pennsylvania anyway, and create only temporary jobs.