November 17, 2010 | last updated May 29, 2012 11:42 pm

CT, other states' film credits panned

Almost 43 states, including Connecticut, have adopted tax subsidies for film and TV productions in an attempt to create local jobs and boost the state economy, but the cost of the subsidies is outweighing their benefits, according to a new national report released Wednesday.

The report by the Center on Budget and Policy Priorities, a left leaning advocacy group, concluded that film subsidies fail to produce promised benefits in large part because film makers usually give the best jobs to scarce, highly paid talent brought in from other states.

Jobs for in-state residents tend to be spotty, part-time, and relatively low-paying work that is unlikely to build the foundations of strong economic development in the long term, the report said.

Connecticut offers three film tax credit programs for production, infrastructure and digital animation. Since the credits went into effect in 2006, more than 100 productions have come to Connecticut, officials said.

About $41 million in film tax credits have been claimed in Connecticut this year, and the state has awarded $116 million to the industry since 2006, the report said.

The Connecticut Production Coalition, a trade group that represents the film industry, fired back at the report saying that it is based on faulty data and "neglects to cite several studies that clearly indicate the positive impact of film tax incentives."

"The study released today by the Center on Budget & Policy Priorities is another example of Mr. Tannenwald (the author of the report) irresponsibly publishing inaccurate and incomplete data from widely discredited sources, demonstrating a clear bias against film tax credits," the coalition said in a written statement.

Until 2002, only a few states had film subsidies and these were limited in scope, the report explains. But led by New Mexico and Louisiana, which made aggressive (and initially successful) efforts to attract film productions, 43 states have now adopted them, and they cost states about $1.5 billion last year.

Certain features of the credits make them especially valuable to producers - and therefore costly to states, the report said. Some states' credits are refundable, meaning that if the credit exceeds the producer's state tax liability, the state will write the producer a check for the difference.

Other credits are transferable, meaning that producers can sell them to other companies (often insurance companies and banks) that owe taxes to the state.

In Connecticut, for example, Bank of America and Wachovia purchased a combined $7 million in film tax credits in 2006 and 2007, the report said.

Wednesday's report is likely to fuel more debate about Connecticut's film tax credit program, which has been a hot-button political issue in recent years, as the state struggles with massive budget deficits.

In 2009, the activist group Connecticut Voices for Children issued a similar report that slammed the film tax credit program, concluding that only 11 percent of the $113.2 million in tax credits given to the film industry at the time were actually spent in Connecticut and that the state has awarded $2.73 in production tax credits for every dollar of actual Connecticut spending on the production of films, television shows, commercials, infomercials, and video games.

"I think this new report confirms what we had suspected about the film tax credit program," said Joachim Hero, a research analyst for Connecticut Voices for Children. "We had long suspected that Connecticut had been swept up in a classic race to the bottom. It's a great deal for the film industry, but a bad deal for state budgets."

The Connecticut Production Coalition disputes the claim that only 11 percent of the tax credits have been spent in the state, noting that state law requires "only Connecticut expenditures qualify for the tax credit."

In 2009, Connecticut Voices recommended eliminating or capping the film tax credits to preserve state funds. Hero wouldn't confirm if his organization would lobby for that again in the upcoming legislative session when lawmakers will be battling a $3.4 billion budget deficit.

But, Hero did say all corporate tax credits, and especially the film tax program, need to be evaluated and benchmarked to see if they provide a net positive gain for the state.

Supporters of the credit, which include key Democrats like Sen. Gary LeBeau, co-chair of the commerce committee and former House Speaker James Amann, have said capping the film tax credit would significantly hamper the industry because the state wouldn't be able to provide large enough incentives.

Just last week, it was announced that a new $100 million movie that production officials are calling a "submarine thriller," will be shot in Connecticut, generating an estimated 200 temporary jobs.

Production officials of "Thunder in the Deep" said they were attracted to Connecticut for its "deep history with the submarine industry," as well as the generous tax credits the state offers to the film industry.


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