The state’s film industry is breathing a little easier these days.
That’s because after months of intense lobbying and debate, state lawmakers have agreed not to put a cap on the state’s film tax credits, a move that was supported by Gov. M Jodi Rell as a way to close the state’s $8.5 billion budget deficit.
Instead, Democratic lawmakers, as part of their $37.5 billion spending plan for the next two fiscal years, tweaked the credits to ensure that film companies that use them spend more of their money in Connecticut.
Industry supporters say the move will lead to further growth of a budding Hollywood East in the Nutmeg State.
“I think it’s great that the legislature understands that the entertainment industry is growing in our state and creating jobs,” said Kevin Segalla, founder of the Stamford-based Connecticut Film Center. “It’s times like these that we need job creation programs.”
The state offers three film tax credit programs for production, infrastructure and digital animation.
Segalla said the legislature’s decision gives the state’s film and TV industry clarity on the state’s support of the program. That in turn will make it easier for it to convince companies to come here.
For months, Rell proposed capping the production credits, first at $30 million then at $25 million, in an effort to shore up the state’s budget deficit.
But many Democratic heavyweights, including former House Speaker James Amann and state Sen. Gary LeBeau, of East Hartford, fought against the cap, saying it would halt growth of the industry and prevent large film studios, which could produce big payoffs to the state, from coming to Connecticut because they would not have the ability to attract major productions.
“I think the legislature struck a good balance on the credits,” said LeBeau, co-chair of the state’s commerce committee and a 2010 Democratic gubernatorial candidate. “We were able to get rid of a lot of the waste in the credits, which will allow the citizens of Connecticut to get more bang for their buck.”
“I think this means those who are thinking about film development projects can be reassured that they have a partner in the state of Connecticut,” LeBeau added
The Democrats’ budget does include some changes to the tax credits, including shifting oversight over them to the Department of Economic and Community Development from the Connecticut Commission on Culture and Tourism.
Lawmakers also increased from $50,000 to $100,000 the minimum amount film and digital animation productions must spend to qualify for the credits. Additionally, no out-of-state expenses will count towards the film production credit and the credit amount will vary based on the production’s total expenses or costs.
Production companies incurring in-state expenses or costs between $100,000 and $500,000 are eligible for a 10 percent credit; between $500,000 and $1 million are eligible for a 15 percent credit; over $1 million continue to be eligible for a 30 percent credit.
Lawmakers also changed the infrastructure tax credit to a flat 20 percent credit that is available only to companies that spend a minimum of $3 million. Infomercials will also no longer qualify for the film production tax credit.
Shelley Geballe, a distinguished senior fellow at Connecticut Voices for Children, an advocacy group that supported capping the tax credit, said she has mixed feelings about the legislature’s decisions.
“I think that they tightened the credit in some ways we hoped would occur, but it’s still too much investment in one industry,” Geballe said. “It still seems disproportionate.”
Geballe said the biggest problem is that it is unclear how the film industry fits into the overall economic development plan for the state.
Geballe said Rell’s office and the DECD were supposed to make public by Sept. 1 a state economic development strategy plan that was supposed to articulate a vision for where Connecticut should be in five, 10, 15, and 20 years and establish clear and measurable goals for the state.
But that plan, which was mandated by the state legislature two years ago, has not been made public and is now overdue.
LeBeau also said he wants to see the report and recently wrote a letter to Rell and DECD Commissioner Joan McDonald inquiring about its status.
Geballe said it can be risky dumping too much money into a single industry without having a complete picture of where the state’s economy is going to be in the future.
