Film tax cuts get re-take in some states

TEXT OF STORY

Bob Moon: It's become part of the script for states around the country to use deep tax breaks to lure film and TV productions. Now that budgets are tight, some critics are raising new questions about the wisdom of that strategy. One such tax incentive in Pennsylvania may be on the chopping block, as Joel Rose reports.


JOEL ROSE: The movie "The Best and the Brightest" stars Neil Patrick Harris as a guy who lives in a posh townhouse on New York's upper-east side.

BEHIND THE SCENES FROM "THE BEST AND THE BRIGHTEST:" All right here we go. Set. Background. And action.

This tree-lined block certainly looks the part. The thing is it's not in New York.

Patti Weiser: We're thrilled to be making this movie in Philly in our backyards. And the reason we're doing it is because of the tax credit.

Philadelphia lawyer Patti Weiser is one of the movie's producers. She's counting on a $750,000 tax credit from Pennsylvania. That's more than 20 percent of the film's budget.

Plenty of other states have big incentives for film production, including Michigan, New Mexico, and Louisiana. But not everyone thinks they're paying off.

Robert Orr: It makes no sense for the states to be competing against each other in this sort of bland auction.

Robert Orr directs the North Carolina Institute for Constitutional Law.

Orr: State and local revenues are way down, and yet we're going to subsidize Hollywood film producers by giving these large tax credits to them.

In Pennsylvania, lawmakers are trying to close a $3.2 billion budget deficit, which is why state Senator Pat Vance wants to put the film tax credit on hold.

Pat Vance: We need every dollar that we can scrape up, and we have $75 million sitting out there that perhaps can be utilized to avoid a tax increase.

According to a recent study, the state gave out more in tax credits than it got back in direct film-related revenues. But if you count all the jobs that are supported by the industry, the study found that the credit does pay for itself and then some. Many of those jobs are at risk of leaving Pennsylvania, says Sharon Pinkenson of the Greater Philadelphia Film Office.

Sharon Pinkenson: It's over. Just like that. It will be a sudden loss, to not just the film industry, but to all the support industries. I know that the car rental companies, the hotels, the restaurants, are going to take a gigantic hit.

Pinkenson and other tax credit supporters can only watch while the drama plays out this summer in the state capital.

In Philadelphia, I'm Joel Rose for Marketplace.

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