Connecticut Film & Digital Media Industry Threatened?

Many film and digital media industry executives (including yours truly) see the film and digital media tax credits as providing Connecticut with a competitive advantage in one of the few industries creating quality job and business opportunities.  Suprisingly, despite the potential of the industry and the need for more job creation, these tax credits are coming under threat.  Many state legislators seem to be measuring the success of the tax credits by looking at a very limited set of metrics, ignoring all the direct spending that goes into hotels, restaurants and other buisnesses as well as longer term effects such as accounting firms hiring additional professionals (who pay taxes) to work with the many media and production companies moving in.   It also does not count businesses looking to grow in the state as it becomes more of a media hub - including my public relations firm, The Fortex Group, which is an original backer of CT Digital Media.   Suprisingly, a recent press release by chairmen of the budget committees stated their research into the ROI of the tax credits was incomplete (see it here). 

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CT Bob makes some very good and obvious points about the benefit of the tax credit (isn't 30% tax credit of a $600 million production spend better than taxing 100% of nothing?).

http://ctbob.blogspot.com/2009/01/film-tax-credit-threatened.html

CT News Junkie has done a good job outlining the situation.

http://www.ctnewsjunkie.com/state_capitol/with_amann_out_of_picture_will.php

And Ontario just made their tax credits permament precisely because of the budget crunch and need to create more tax paying jobs:  "In these challenging times, making these enhanced film tax credits permanent would help keep the cameras rolling in Ontario and attract even more projects to Ontario," provincial finance minister Dwight Duncan said Friday.

Read more on Ontario at http://www.hollywoodreporter.com/hr/content_display/television/news/e3ie05a38638979f59e4f4a65ec19dc322b

Key facts and figures from the CT Production Coalition.

Tax Revenues From New and Growing Industry. This Program is bringing in significant tax revenues. While it seems logical that cutting a program that costs $90M would save the state that $90M, this is far from the reality. Offsetting tax revenues are generated through direct expenditures and payroll taxes and substantial indirect tax revenues are created by the increased economic activity.

1. Over the past two years, we went from $750,000 to over $600M in production.
2. This increased production brought estimated $1.5B in economic activity to the state.
3. For every dollar of incentive paid, over $16 of economic activity was generated – translating into significant tax revenues.
4. New York: Tax credit generates 19,500 jobs -- 7,000 direct production jobs and 12,500 from directly related economic activity. State yields $404 million in tax revenue, at a cost of $215 million in credits. [Source: Ernst & Young; January 2009]
5. New Mexico: Tax credit created total employment of 9,210 jobs. State receives $1.50 in tax revenue for every dollar invested in production tax credits. [Source: Ernst & Young; Prepared for the New Mexico State Investment Council; January 2009
6. Massachusetts: $545 million spent on film production yields economic impact of $1.36 billion. Cost to state is five cents for every new dollar of economic activity. [Source: Massachusetts Film Office; www.mafilm.org; January 2009]

See all the key points here.