HARRISBURG – The $65 million in film tax credits Pennsylvania offers each year may not be enough to convince many film producers to bring their business to the state, but it does likely help keep productions in Pennsylvania that might otherwise leave, the state Independent Fiscal Office reports.
“Unless Pennsylvania increases the tax credit by a substantial amount, it will be difficult to entice production firms to relocate from states where they have already invested significant resources and established a long-term presence,” the IFO reported in an analysis provided to lawmakers last week.
The IFO found that 32 states provide film tax credits. Pennsylvania’s allocation for the tax credits is far less than some other states, including Georgia, which offers $533 million in film tax credits; New York, which offers $420 million and California which offers $330 millions. That new report was the subject of a hearing at the Capitol on Thursday, held as part of an effort to review programs under a “performance-based” review.
Conservative groups have targeted the film tax credits as a form of “corporate welfare.”
In a statement provided Thursday, Bob Dick, senior policy analyst at the right-leaning Commonwealth Foundation, said that while “lowering a company’s tax bill to encourage job growth is a sound economic solution,” it ought to be done for all businesses not just those in favored industries.
The IFO analysis found that the net return on investment for the film incentives is 13.1 cents of state tax revenue for each tax credit dollar.
“The return on investment seems low, but we’re making progress,” Scott Dunkelberger, executive deputy secretary for the Department of Community and Economic Development, told lawmakers.
Carrie Lepore, Department of Community and Economic Development deputy secretary, added that the return on investment doesn’t capture all of the benefits that come from attracting films to the state.
She pointed to the production of “Pickle” a comedy starring Seth Rogen that is filming in Pittsburgh.
Rogen has 6.4 million followers on Instagram, she said, noting that while in the state for the film, Rogen posted on his social media account about visits to Pennsylvania landmarks including Fallingwater, the Frank Lloyd Wright-designed house in Fayette County.
“We can’t afford (to buy) that kind of exposure,” Lepore told lawmakers.
The state has approved $11.3 million tax credit for “Pickle,” according to DCED.
Other notable film tax credits approved last year included a $16.7 million credit for Creed II, filmed in Delaware County; a $22.7 million tax credit for Season One of the Netflix program, Mindhunter and a $26 million credit for the show’s second season.
Lepore said that state plans to try to further capitalize on films and television programs attracted to the state by developing a “Film Trail” to guide tourists to locations around the state that have been featured on screen.
Dunkelberger said that while most of the film production activity is concentrated in Pittsburgh and Philadelphia, there are a handful of productions that have benefited other areas of the state.
He pointed to the cable program Friends in Wild Places, which filmed in Elk County. The program has provided free advertising to the Elk County Visitor Center, helping draw attention to an attraction that gets 400,000 visitors a year, Dunkelberger said.