Director's Cut

Will more tax breaks for moviemakers bring Hollywood to Philly?

by Doron Taussig

CITY OF ANGLES: On Tuesday, a busload of locals headed to Harrisburg and lobbied legislators to draw potential film projects here. Photo By: Michael T. Regan (CLICK IMAGE FOR LARGER VERSION)

economic development

The overheated homeless men and coffee-breaking cubicle jockeys who typically populate Love Park weekday mid-mornings were joined last Thursday by a crowd that was slickly dressed, hyper-chatty and uncharacteristically cool. These were Movie People, and they were here to convince Philadelphia that it could be a Movie Town.

After a better-than-average sound system finished playing notable local movie themes ("Streets of Philadelphia," "Gonna Fly Now"), the perfectly-permed Sharon Pinkenson of the Greater Philadelphia Film Office stepped onto a stage to drum up support for two Pennsylvania House bills which would grant financial incentives to filmmakers who do their work here.

No matter that the only "star power" produced for this press event was the invincible Vince Papale; Pinkenson predicted the legislation would "vastly change the way the film industry looks at Philadelphia and Pennsylvania."

Movies are, generally, a good thing to have made in your town. They inject money into the economy by hiring local staff and putting out-of-towners in hotels; they provide free promotion. And, of course, it's fun to recognize the familiar on screen ("Hey, I know that trash-strewn corner!").

But Pennsylvania already has an incentive program � a highly touted one, in fact. In 2004, the state launched the Film Production Grant Program, which provides $10 million annually to pay up to 20 percent of the costs of films that spend the bulk of their budgets here. An article in Variety just last year heralded the fact that the "economic impact" of filming in Pennsylvania jumped from $93 million in 2002 to $249 million in 2005.

Problem is, other states are now working to seduce the film industry, too. A majority offer some financial incentive for moviemaking; the most oft-mentioned include Louisiana and New Mexico, which last year stepped up an existing tax credit program.

"Tax-incentive programs are like an arms race," says Mike Barnes, a local representative for the International Alliance of Theatrical Stage Employees.

Movie industry proponents like Barnes and Pinkenson want Pennsylvania to keep pace. The proposal they're advocating, introduced by Rep. Mike Sturla of Lancaster, would lift the $10 million cap on incentives, which presently only benefit a few films a year, and which last year ran out of money in 21 days. It would provide a 25 percent refundable tax credit to films with budgets greater than $2 million (a companion bill sets aside $15 million for smaller films).

There's good reason to believe this would succeed in attracting filmmakers. The first thing a producer looks for in a location, according to Josh Karan, a location scout in New York City, is the right setting for the film. Pennsylvania has a leg up in that department.

"Within the perimeters of a state as large as Pennsylvania," Karan says, "most locations could be satisfactorily found."

After that, the bottom line is a major consideration, and history suggests that tax breaks can be a make-or-break factor. New Mexico built a film industry in a year after expanding its program, while California and New York have seen their market shares decrease. Already filmmakers are eyeing Pennsylvania for new business. A developer named Hal Katersky is considering building a studio facility near Philadelphia International Airport ... if the incentives are passed.

Of course, it may seem ill-advised for states to let the already-lucrative film industry manipulate them. Won't New Mexico just offer an even bigger break now? How long should municipalities play this game?

Sharon Ward of the progressive Pennsylvania Budget and Policy Center thinks we should exercise "caution when it comes to tax incentives." Revenues can be used to attract business in other ways, she says, like building an educated workforce or improving transportation.

But, while this is true, businesses interested in workforce or transportation aren't really in film. The movie industry is not like traditional incentive recipients such as Comcast or sports teams, says tax reform advocate Brett Mandel, because it's "hyper-mobile. They really can be someplace else."

In other words, if a state is going to put its foot down about tax incentives, the film industry is probably the wrong place to do it.

This past Tuesday, a busload of Phila-delphians headed to Harrisburg to lobby in favor of the expanded program. Their bills have already secured the support of Gov. Ed Rendell, and now need to pass the House and Senate. Should they succeed, Pennsylvania may very well enjoy the increased attentions of the film industry. Then it will be your move, New Mexico.

(doron@citypaper.net)