Pennsylvania might not be Southern California, but enough filmmakers flock here that state has promised away all its film tax credit funds for 2010 with no more available until next July.
“Pennsylvania has always complained that we’ve lost manufacturing ... I counter that by saying that the film industry is manufacturing,” said Sharon Pinkenson, executive director of the Greater Philadelphia Film Office. “We're manufacturing entertainment.”
The state handed out $42 million in 2009 and $60 million this year to play host to such film classics as Marley & Me, Law Abiding Citizen, and The Last Airbender. Funding will jump back up to $75 million beginning July 1, 2011. Films are eligible for the state to pay up to a 25 percent tax credit so long as they spend 60 percent of their total production budget in Pennsylvania. Producers receive payment upon completing the project and submitting to an audit.
Proponents of the film tax credit cite job creation and tax revenue for the state. A 2009 study by Economic Research Associates (ERA) found the film industry spends $267.3 million in Pennsylvania, pays $17.9 million in state and local fees and taxes and creates 3.9 million jobs. Ms. Pinkenson said the tax credit has created 4,000 jobs in southeastern Pennsylvania alone.
“The economic impact and job creation speak for themselves,” said Jane Saul, director of the State Film Office. “It's a no brainer. It's bringing people to the Commonwealth and putting them to work.”
According to the Pennsylvania Film Office website 10 of the 15 movies shot in Pennsylvania and released in the past two years were shot in Philadelphia or the surrounding area.
ERA also reports the number of television and film productions in the state has risen steadily since 2002, starting around 50 and now eclipsing 200. Similarly, during that time, a study from the Tax Foundation, a tax policy group, found in 2002 only five states offered financial incentives for production. Compared to 44 now.
“The states are locked in. It’s a classic race to the bottom. They can't win,” said Robert Tannenwald, a senior fellow at the Center on Budget and Policy Prorities. “There are too many states chasing too few productions.”
Mr. Tannenwald contends if the subsidies are not there, the producers will just leave for a state that does.
“The full way in which the media industry is structured makes film tax credits a really bad idea for a state,” Mr. Tannenwald said. “Production is the least profitable. If it’s going to exist, it's got to be subsidized. It used to be subsided by studios, but they're not in control anymore. Who subsidizes them now? Governments.”
Massachusetts, which Mr. Tannenwald said is the only state that looked into compensation for its residents, found that only 16 percent of the pay for production work goes back to Bay State’s populous. The rest of the return goes to California.
“The states that just tried to up the ante by giving out more and more tax credits are not a sustainable program. Ours is 25 percent and ours has never been anything other than 25 percent. Twenty-five percent is very sustainable,” Ms. Pinkenson said. “We would not have production of any sizable amount whatsoever if we didn't have the tax credits.”
“Now we're even with all the great places for filmmaking,” Ms. Pinkenson said.
Matt Coyne is an intern at the PA Independent. He can be reached at intern@paindependent.com
