Let the movie cameras roll, and the cash will follow

Posted: July 06, 2007

The entertainment industry is one of the United States' most lucrative exports. Based on the economic value of this industry, Pennsylvania legislators are being urged by film offices, industry professionals and statewide supporters to expand the state's incentives to draw a bit more of Tinseltown to Pennsylvania.

Currently, a 20 percent production grant is available for the making of films, television pilots, and each episode of a television series when at least 60 percent of the total production budget is spent within the commonwealth. However, the $10 million allocated for the grant was claimed within 21 days after becoming available in 2006. Given the obvious interest, supporters are hoping to expand and revise the existing incentives.

The competition for entertainment-industry dollars is fierce, and many states throughout the country have already enacted legislation to lure productions to within their borders. New Mexico, for example, provides a 25 percent refundable tax credit to all productions, with no annual cap on the credits awarded. As a result, the number of projects in New Mexico and the number of employees working in the entertainment industry increased by 15 times between 2002 and 2006. Most importantly, the financial impact on the state went from $8.8 million to $428 million in the same time frame.

To lure the cost-conscious entertainment industry out of Hollywood, Pennsylvania has now proposed competitive programs. State Rep. P. Michael Sturla (D., Lancaster) is the prime sponsor of House Bills 1528 and 1529, and Sen. Jim Ferlo (D., Allegheny) has introduced companion legislation in the Senate. House Bill 1528 is intended to create Pennsylvania's Film Production Tax Credit Program, which would provide a fully refundable 25 percent tax credit for all projects budgeted in excess of $2 million. More importantly, there is no annual cap, and it targets major feature films, television series and national commercials.

House Bill 1529 is aimed at projects with budgets under $2 million. It would expand the annual cap of the current grant from $10 million to $15 million. To be eligible under either legislative program, the production must spend at least 60 percent of its entire budget in the state.

The potential benefits are tremendous. Upon passage of the legislation, it is expected that about 40 films would begin production in the Philadelphia area alone.Projections indicate that more than $500 million in "new" money would be generated statewide by the end of 2007, but that is just the start.

Every business in the commonwealth could benefit from this legislation, from the smallest of businesses to the largest of corporations. There would be more work for local dry cleaners, retailers, restaurants and professional service providers, up to the medium-sized advertising, marketing and public relations firms, to the largest of financial institutions, law firms and universities.

The increase in the entertainment industry would result in high-wage work and activities that would not harm the environment.

To support the expected growth, Pennsylvania's infrastructure would require long-term development. Soundstages and production facilities would necessarily be developed to accommodate the increased business.

The glitz and glamour of filmmaking would increase the visibility and importance of the state to the entertainment industry, thereby boosting tourism and enhancing public relations. Just as tourists flock to Hollywood to see where the magic is created, tourism would increase here, too.

There is broad bipartisan support for this legislation in both the House and the Senate. Both bills have been introduced and are making their way through the legislative process but, ultimately, the passage will come down to a political decision.

Gov. Rendell unequivocally supports both measures publicly, but the commonwealth has a difficult budget to balance. Hopefully, when setting the budget, the legislators will make adequate appropriations to ensure that the proposed legislation is passed. We can only hope that revenue, jobs and development, along with a little bit of Tinseltown, will be coming to your area soon.

Justin B. Wineburgh (jwineburgh@cozen.com) is an entertainment attorney with Cozen O'Connor in Philadelphia and represents clients in the film, television, music, new media and sports industries.

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