Rhode Island lawmakers are hoping that increased funding for the state’s motion picture tax credit program will be the lure needed to reel in big-name productions, but quantifying the benefits from having the Providence skyline or Newport coastline in a blockbuster film remains elusive.
This was a key source of contention between House Republicans and Democrats during the hourslong budget debate last month. The $13.1 billion budget proposal ultimately approved by the House included an extra $10 million for tax breaks that can be awarded to production companies, for a total of $30 million.
The extra funding is intended to entice major companies looking to film in Rhode Island. Exactly who those companies are is still under wraps, though HBO is expected to return to Newport for the filming of the second season of its Downton Abbey-esque historical drama “The Guilded Age,” according to Steven Feinberg, executive director for the R.I. Film & Television Office.
Production has also begun in North Kingstown on a sci-fi film titled "Space Oddity," being co-produced and directed by actress Kyra Sedgwick. The production company is seeking $1.5 million in tax credits.
Feinberg said the tax incentive program, which gives eligible companies tax breaks of up to 30% of production expenditures made within the state, is crucial to helping Rhode Island compete against other states with their own financial incentives. Massachusetts and Connecticut, for example, don’t cap the total funding for film tax credits at all, and they also give companies a break on sales taxes, Feinberg said.
What’s at stake is more than just vanity; the productions create jobs, hire state vendors and spend money in the cities and towns where they film.
But quantifying that flow – beyond the direct jobs created or vendors hired – can be difficult. Studies in 2008 and 2018 attempted to put a number on the benefits but with very different findings.
A 2008 report for the R.I. Film & Television Office by Edward M. Mazze, a University of Rhode Island distinguished professor of business administration, found that every dollar spent on the tax credit yielded $8 in “economic activity.” By contrast, an R.I. Office of Revenue Analysis report published in 2018 said the state gets back 27 cents for every dollar spent on the tax credit.
While naysayers pointed to the 2018 report as evidence that the program was not worthy of more funding, advocates for the tax credits said the benefits simply cannot be quantified in an economic model.
“We could do ‘Cooler and Warmer’ till the cows come in and not get the benefits we get from Rhode Island being featured in film and television,” said Rep. Gregg Amore, D-East Providence, referring to the state’s ill-fated marketing slogan unveiled in 2016.
Amore named as an example a catering company that gets paid to provide meals for a film crew during a shoot. That contract could also lead to other customers, allowing the company to expand its entire business.
Evan Smith, CEO and president of Discover Newport, also spoke to the host of less-obvious economic benefits, including the tourism angle.
“As a tourism office, we very proudly promote films filmed in Newport,” Smith said, adding that name-dropping the filming of well-known productions such as “The Great Gatsby” and “Amistad” is a part of the portfolio used to market the city as a destination.
Smith said he finds reports or data analyzing tourism’s economic impact fail to include the full “flow of dollars.” In the case of film productions, that flow can be huge.
That the state has no recent or comprehensive analysis of these benefits is a problem, Amore acknowledged. But he still supports increasing funding for the film tax credits.
“One of the reasons we know this works is that 39 other states do it,” he said.
House Speaker K. Joseph Shekarchi did not answer a question on his concern over the lack of data but said in an emailed statement, “The film tax credits were increased in the budget, only for this year, because there is an increase in the number of film and TV productions potentially committed to Rhode Island.”
(SUBS 8th paragraph to CORRECT that the state gets back 27 cents for every dollar spent on the motion picture tax credit.)
This is one of the 39 dumbest statements I have ever seen:
“One of the reasons we know this works is that 39 other states do it,” he said.
It implies that without tax credits no movies would be filmed in the USA, which is implausible.