June 13, 2013

Bill would woo movie, TV production companies with tax break

Financial incentive sought to augment state's natural beauty, unusual quality of light as lure for production companies

By Bob Keyes bkeyes@pressherald.com
Staff Writer

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click image to enlarge

Eric Matheson is working to convert the South Portland Armory, seen here on May 22, into a movie sound stage.

Maine Sunday Telegram photo by John Patriquin

How the bill would work

The last major movie made in Maine was "Empire Falls," starring Paul Newman, Ed Harris, Philip Seymour Hoffman and Helen Hunt. It was filmed mostly in Skowhegan and released in 2005, two years before Maine enacted its incentive program. The movie generated about $13.5 million in direct spending in Maine, said Karen Carberry Warhola, director of the Maine Film Office.

In testimony before the Legislature's Taxation Committee in April, Carberry Warhola said eight productions qualified for the existing incentive program in 2012. Those productions generated $1.5 million in direct spending in Maine, and the program cost $38,711 to administer. That means that for every dollar paid out by the program, it generated almost $40.

While declining to take sides on the issue, Carberry Warhola told legislators that increasing the incentive program would "put Maine on the map as a location for filming. We don't need to give away the bank. We don't need to provide incentives for the wages of highly compensated actors. The plan can be tailored to make good sense for Maine -- for its workers and its businesses."

As now written, L.D. 1409 would offer a 25 percent tax credit to a film production with a budget greater than $1 million and require an on-screen statement that the film was produced in Maine, which is an industry standard.

The bill would work like this: Pending approval from the Maine Film Office, a company that produces a film in Maine within a stated time frame may submit a final cost report detailing all qualified purchases and payroll to crew. After those expenses have been audited independently and Maine Revenue Services verifies the accuracy of the report, the film company receives 25 percent back for those specific expenses -- not all of the expenses, or all of the money it has brought to the state; just qualified expenditures and wages for workers.

Qualified expenditures are items used to produce the film that are bought in Maine. If the production company buys lumber for its sets from a Maine lumber dealer, it is considered a qualified expenditure. If it purchases lumber in New Hampshire, it is not a qualified expenditure.

On the wage side of the equation, wages paid to set builders, the lighting crew, the camera crew, hair and makeup experts, caterers, production assistants and any other workers considered "below the line" are included in the incentive. Salaries to starring actors, producers, directors and writers are not included.

According to a University of Maine economic study released this spring, Maine film and photography sectors supported 1,698 jobs that provided $19.6 million in labor income in 2010. Maine's existing incentive program generated 354 full- and part-time jobs in 2011 and 2012, according to the study, leading to a statewide economic contribution of $11.6 million over two years.

Carberry Warhola, who has been the director of the Maine Film Office since last July, said it's important to consider more than tax credits when comparing incentive packages. Many cities and states, for instance, require permitting for filming.

With few exceptions -- the city of Portland is one -- Maine does not. Maine has lower production costs and, generally, "Maine does not cost as much to shoot in," said Carberry Warhola, who grew up in Maine and spent almost two decades working in the TV and movie business in Los Angeles.

She cautioned lawmakers not to compare movie-making incentive programs "apples to apples, because they have so many components and vary widely from state to state. The best way to customize an incentive plan is to determine first what types of media projects you would like to attract. By taking a close look at the state's locations, climate, infrastructure, and available crew members and support services, you can identify what type of projects the state is able to accommodate.

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