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March 20, 2024

ESPN: Repealing film tax credit ‘will cause a chilling effect’ on sports media company’s future growth in CT

HBJ Photo | Skyler Frazer Nick Teeling, advocacy deputy director at Connecticut Voices for Children, testifies in favor of eliminating film production tax credits in Connecticut. Behind him, film industry workers and employers hold signs that say "Films = Jobs."

Dozens of film and production industry workers and leaders converged on the Legislative Office Building in Hartford Wednesday to voice their opposition to a bill that would eliminate Connecticut’s film production tax credit.

Among the companies raising red flags about the proposal is sports media giant ESPN, which has its main campus in Bristol and employs about 3,600 people in Connecticut. 

In testimony on the bill, ESPN said "Repealing or changing the credit will not only affect the media industry in the state – but will cause a chilling effect on ESPN future growth in Connecticut and a ripple effect throughout the state economy." 

It added that the bill “will do irreparable harm to the digital media industry and the vendors it supports in the State of Connecticut.”

What’s in the bill:

House Bill 5110, which was introduced by the Finance, Revenue and Bonding Committee, would amend the state’s general statutes to eliminate the film production tax credit.

The credit, officially called the “Digital Media & Motion Picture Tax Credit,” offers tax credits to production companies that spend at least $100,000 on motion pictures, documentaries, television series, music videos, commercials, miniseries, video games or other forms of media.

Eligible companies must also conduct at least 50% of principal photography days within the state; expend at least 50% of post-production costs within the state; or expend at least $1 million in post-production costs in the state.

Productions that have between $100,000 and $500,000 in expenses qualify for an up to 10% tax credit; $500,000 to $1 million in expenses qualify for a 15% tax credit; and $1 million or more in expenses qualify for a 30% tax credit.

What’s at stake:

States have competed with each other over the years with generous tax credit programs to recruit film and media companies to operate within their borders.

According to data from the state, Connecticut’s film production tax credit has awarded over $1.5 billion to production companies since its inception in 2007.

Who opposes the tax credit:

State Rep. Jason Rojas (D-East Hartford) said that while the tax credit is one of the most expensive in terms of tax credit awards, it “repeatedly fails to provide the state with positive returns.” 

Rojas said the film tax credit program has had a negative net impact of more than $500 million since it began, including an $11.5 million loss in fiscal 2023.

“The end of the Film Tax Credit would release $100 million of state funding annually. These dollars could be used to strengthen countless community services, not limited to further developing youth services, sports programs, and educational opportunities throughout Connecticut, particularly in historically underfunded municipalities,” Rojas said. “These programs would provide immense benefit to our state, particularly by encouraging positive outcomes for our children regardless of background.”

Progressive advocacy group Connecticut Voices for Children on Wednesday released a study that said all three of the state’s film industry tax credits — the film and digital media production tax credit, film production infrastructure tax credit, and digital animation tax credit — have cost the state net revenue since they were introduced. 

From 2007 to 2023, the state lost an average of more than $60 million a year in net revenue, and a total of nearly $900 million, according to the group, which is asking lawmakers to repeal the film tax credit program.

Instead, Connecticut Voices wants legislators to redirect those funds to a new state-level child tax credit.

Who supports the tax credit:

Several members of the Connecticut Film and TV Alliance testified during Wednesday’s hearing to urge legislators to kill the bill and preserve the tax credit. 

Edward Cohen, director and co-founder of the nonprofit business organization, said the bill would “obliterate” approximately 30,000 jobs both directly and indirectly such as hospitality, restaurant and retail employees who are used during productions.

Andrew Gernhard, owner of Rocky Hill-based production company Synthetic Cinema International LLC, videoed-in from Iceland where his company is currently working on two productions. Synthetic Cinema, which is celebrating its 20th year in business, has worked on several productions in the state, including “Mystic Christmas,” which debuted last year on Hallmark.

He said the tax credit program has helped him make movies in his home state.

“If the tax credit is eliminated, there will be absolutely no work in the state of Connecticut,” Gernhard said. “My company has been here since the beginning — I’ll be forced to relocate my business, probably end up moving out of Connecticut because there will be no point for me to stay in Connecticut, which is a shame since I was born here, started this business here and actually brought movies from almost every major studio here.”

What’s next:

The Finance, Revenue and Bonding Committee held a public hearing Wednesday on the proposal. They will likely vote on it in the coming weeks.

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