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Tax incentives for filmmaking are getting critical reviews

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BOSTON - A new "Ghostbusters" movie filmed in Boston two years ago with the hopes of rebooting a beloved franchise. Instead, the box office dud has unintentionally played a role in giving new life to efforts to rid Massachusetts of its film industry subsidies.

The state Senate has proposed a budget paring back what's considered among the most generous of the 36 states currently offering tax incentives to film companies.

And some critics of the program have pointed to recent big budget Hollywood films like "Ghostbusters" --which scored one of largest tax benefits in the program's history at $26.7 million -- as prime examples of why the benefit needs to go.

"There is no reason to believe that the tax credits the state reportedly gave to the producers of this film were the most effective way to promote jobs and economic development," said Noah Berger, president of the Massachusetts Budget and Policy Center that's long called for scrapping the program.

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David Hartman, head of the Massachusetts Production Coalition that advocates for the local film industry, countered that the economic impact of major movie productions like "Ghostbusters" are felt many times over, not just from the hundreds of temporary production jobs they create but the spending of that crew on local goods and services.

He wasn't able to readily quantify the economic impact of "Ghostbusters," and the film's producers didn't immediately comment.

Featuring Melissa McCarthy and Kristen Wiig, "Ghostbusters" was among 61 productions issued more than $61 million in credits last year. Others included "Central Intelligence" ($11.3 million), "The Finest Hours" ($14.4 million) and "Live By Night" ($1.1 million), preliminary state Department of Revenue data shows.

Sen. Michael Rodrigues, the Westport Democrat who proposed curtailing the credit, says his qualm isn't with "Ghostbusters" specifically.

Too much of the program's benefit, he says, is flowing to out-of-state companies and being used to supplement the salaries of high-paid actors. The film tax credit is equal to 25 percent of a production's in-state payroll and production costs.

"It's hard to look into the face of a single mother and tell them that we cannot afford to provide them with the child care voucher, but we can afford to pay 25 percent of the salary of Tom Hanks or Will Ferrell," Rodrigues said.

His proposal is part of a Senate budget that will need to be reconciled with the House's spending plan, which doesn't include the provision.

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Rodrigues calls for preventing film companies from claiming salaries worth $1 million or more as an eligible expense. (There currently isn't a salary limit.) The proposal would also increase the minimum thresholds for spending or time spent filming in Massachusetts from 50 percent to 75 percent of the production.

Hartman, of the Massachusetts Production Coalition, complains the proposal would "cripple" the local industry.

Prominent recent films like "American Hustle," ''Black Mass," ''Joy" and "Patriots Day" would likely have bypassed Massachusetts if not for the credit's current structure, he contended.

Rodrigues countered that even with his proposed limits -- projected to trim $14 million from the roughly $80 million a year the state budgets -- Massachusetts still has one of the more generous film subsidies in the country.

The proposed $1 million salary cap is roughly in line with what other states have imposed in recent years as they seek to rein in film credit programs, said John Bails, executive vice president at Film Production Capital, a Shreveport, Louisiana-based film tax credit consulting firm.

Alabama, Kentucky and North Carolina all have some form of $1 million cap, while Mississippi has a $5 million cap, and New Mexico imposes a $20 million spending cap on all performers, he said.

Higher thresholds for spending and time spent filming in-state are also increasingly common, though a 75 percent minimum would be an outlier, Bails added.

And local policymakers are looking at other ways to revamp the programs.

A bill approved by the Louisiana House of Representatives this year, for example, offered greater incentives for production companies that chose to headquarter in the state and also called for the state to get a share of a film's profits.

Bails predicts the Louisiana bill, which ultimately didn't clear the state Senate, is a harbinger of things to come: "States will eventually have to evolve in order to start getting a direct return on investment."

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