Tax credits for film industry get closer look

Tax incentives to attract the filmmaking industry are expected to receive close scrutiny in 2011 by legislatures and newly elected governors in at least three Midwestern states.

Stateline Midwest, Volume 19, No. 11- December 2010

Tax incentives to attract the filmmaking industry are expected to receive close scrutiny in 2011 by legislatures and newly elected governors in at least three Midwestern states.

In Michigan, incoming Gov. Rick Snyder has said his state’s incentives — the most generous in the nation — need to be scaled back. A recent analysis done by the state’s Senate Fiscal Agencyfound that in FY 2010, Michigan spent an estimated $100 million in film tax credits to generate $59.5 million in private sector activity and an additional $10.3 million in state tax revenue.

Last year in Wisconsin, the state cut back on its film incentive program, but incoming Gov. Scott Walker has said he would like to find ways of luring more film projects — and the jobs and economic activity that come with them — to the state. In contrast, newly elected Iowa Gov. Terry Branstad told the Sioux City Journal that he plans to eliminate his state’s incentive program. The Iowa program was suspended in 2009 after reports of abuse in how the tax credits were being used. A subsequent report by the state auditor found that $25.6 million in film tax credits were improperly issued by the state.

According to a November report by the Center on Budget and Policy Priorities, 43 states now have tax incentives in place for television and film production. Those incentives cost states about $1.5 billion last year, the center found.