R.I. issued $13.8M in film tax credits in fiscal 2022

Updated at 1:45 p.m. Aug. 16

PROVIDENCE – Rhode Island issued more than $13 million in motion picture tax credits in fiscal 2022, a significant jump from the previous year.

The state issued $13.8 million to nine production companies in the fiscal year ending June 30, 2022, according to a report published by the R.I. Division of Taxation on Monday. In fiscal 2021, the state distributed just $521,377 to six production companies.

The jump is the sign of a recovering industry, but can also be attributed to a production process made more expensive by the pandemic in fiscal 2021, said Steven Feinberg, executive director of the R.I. Film & Television Office.

“When a production was navigating through the pandemic, certain health and safety protocols were created between the various guilds and unions in cooperation with the studios and networks as well as Departments of Health, to ensure a safe work environment for the talent and crew,” Feinberg said.

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Allocations for the motion picture tax credit in 2017, 2018 and 2019 were $3.1 million, $1.96 million and $3.2 million respectively. But they dipped in 2020, when the state only allocated $361,796 to two production companies, a change that can be attributed to the effects of the COVID-19 pandemic.

“Due to the strictly enforced health regulations and unknown circumstances of this once-in- a-generation attack on our population and economy, production companies were forced to limit the size and scope of their films in order to proceed,” he said.

But production companies quickly adapted and found a “new way to continue making movies and series,” Feinberg said, which included a new set of protocols such as daily testing, cleaning and quarantine plans. This resulted in more expenses for production companies and, as a consequence, an increase in credits issuance.

“On one show in particular, 100 local extras from Rhode Island had to be put up in hotel rooms for five days rather than go home in order to avoid any potential COVID-19 exposure,” Feinberg said. “It was an added expenditure for the production, but certainly helped local hotels, especially during the shoulder season and when a lack of tourism devastated their businesses.”

The motion picture production tax credit gives eligible production companies an incentive to film in Rhode Island by offering tax breaks of up to 30% on their production costs. While supporters of the tax credit argue that it makes Rhode Island more competitive and appealing to production companies, others have questioned its effectiveness.

Reports over the years have also highlighted different benefits and shortcomings of the tax credit, making it difficult to determine its real impact.

For example, a February 2022 report by the Office of Revenue analyzing the financial impact of the tax credit program for tax years 2016 through 2018, showed how the majority of the recipients failed to meet the state’s data reporting requirements and concluded that the program failed to “break-even” and generate enough revenue for the state.

On the other side, a March 2022 study conducted by The Greater Newport Chamber of Commerce and Connect Greater Newport with Industrial Economics Incorporated found that the local production of television series “NOS4A2,” which received $17 million in tax credit, generated approximately $93 million in economic activity between 2018 and 2020. This means that for every dollar of tax credit invested in the production of “NOS4AS2” it generated $5.44 in revenue.

But despite the conflicting opinions, state legislators have not hesitated to boost the program in recent years. Rhode Island has been increasing the annual cap for the film tax credit annually since 2021, boosting it from $20 million to $30 million for fiscal year 2022 and then again to $40 million for fiscal years 2023 and 2024.

Feinberg, a big supporter of increasing the annual cap and eventually removing it altogether, said he remains optimist about the program. He said the last two years have been “beyond busy,” to the point that he had to turn production companies away.

“I am hoping that we are beginning to put the COVID pandemic behind us,” Feinberg said. “I do know that protocols will continue in place until the fall – when guilds, unions, studios and networks will reconvene to discuss the need for the strict protocols.”

In 2022, the largest recipient of film tax credit was NOS4A2 Productions I LLC, which received a total of over $11 million in tax credit. It is followed by Johnny Clyde LLC, which received $844,458, and Space Oddity Movie LLC, with $642,313. Other production companies listed as recipients include Ask Athena LLC, Barry Birtenday LLC, Kellie Productions LLC, Ali Productions LLC, and Jungle Room LLC.

(UPDATED throughout, corrects that fiscal 2022 data was released on Monday.)