(The Center Square) – A legislative panel has rejected a plan to expand Maine's film tax credit program, which gives movie studios tax breaks to offset production costs.
The proposal called for dramatically expanding the tax credit program by allowing up to 30% of non-wage costs – such as set construction, security and food – to be reimbursed by the state for the production of movies, TV shows, documentaries and commercials filmed on location in Maine.
It also would have lowered the required spending threshold to make a project eligible for the tax credits from the current $75,000 to $25,000 and sought to increase the state's reimbursement for wages from the current 10 to 12% up to 25%, among other changes.
But the Legislature's Taxation Committee voted the bill "ought not to pass" during a work session last week, spelling its likely demise.
Critics argued the plan would be a giveaway to Hollywood studios while supporters say it would spur a film industry that is creating jobs and contributing revenue to the state’s economy.
The proposal's primary sponsor, Rep. Amy Roeder, D-Bangor, said while the state may lose tax revenue local businesses would benefit greatly from expanding the program.
"Film tax incentives are an economic development program that shows dramatic benefits to the private sector," Roeder, an actor, said in recent testimony on the bill. "To put it bluntly, the state might not see a good return on investment, but countless Maine businesses and citizens will."
Under the plan, the total film tax credits available for any production would be capped at $500,000 until 2023, but that would increase to $1 million in the 2026 tax year.
The credits would also have been made redeemable up to 95% of their value, meaning that movie production studios could effectively cash in the credits for real money.
Karen Carberry Warhola, director of the Maine Film Office, said fostering a movie production industry helps attract investment and a highly trained workforce that has myriad benefits for the state's economy.
"They buy houses, enroll their children in school, and pay taxes; and their consumer spending stimulates increased growth across all business sectors in Maine," she said. "An investment in the growth of this industry can help existing business and fuel new business development, and is an investment in the recovery, economic development, and growth of the Maine economy."
Fiscal watchdogs argued that expanding the tax credits won't turn Maine into the "Hollywood of the East" but will siphon away much-needed tax revenue from the state's coffers.
"Tax credits that cover the production costs for filming are just another way to maximize profits, insulate against risk, and lower taxes, all while having little evidence to support significant new economic activity created by these credits," said Sarah Austin, a tax analyst at the Maine Center for Economic Policy, which opposes expanding the credits.
Austin said film production studios are forcing states into bidding wars in an effort to attract blockbuster movies but said the financial benefits for the state are negligible.
"The film business is risky. Jobs are often short term and lack benefits," she said. "And with the fickle nature of the film industry and the willingness of many states to offer enormous subsidies to attract film production, Maine will always be faced with pressure to increase this credit to sustain interest in Maine as a filming location."
Other states are debating whether to scrap or adopt film tax credits. In some cases, the issue has been framed around “Hollywood handouts” with the advocacy group Americans for Prosperity funding efforts to eliminate credits mostly in states led by Republican governors, including Maryland, North Carolina and Florida.