The Massachusetts House voted unanimously Monday to make permanent the state’s controversial film tax credit, strongly endorsing a tax break recently panned by a government commission and teeing up a dispute with the Senate, which takes a dimmer view of the program.
In the past, supporters have extended the program for a few years at a time, but this week’s amendment by Representative Tackey Chan, a Democrat from Quincy, would extend it indefinitely. The 15-year-old program has survived many attempts to end it, including two by Governor Charlie Baker, and it faces skepticism from Democratic leaders in the Senate.
Without Senate support, the program would “sunset” at the end of 2022. Chan said it was important to guarantee its funding well ahead of that deadline so that film executives can plan future projects in the state. And he said the program has helped the industry — and the state — so much that it should be permanent.
“At this stage, this is no longer an experiment,” Chan said. “This is now real and part of our lives. To take the sunset off makes perfect sense . . . This is going to be a big part of our post-pandemic recovery.”
A recent government report said the credit costs the state $56 million to $80 million each year, an expense analysts said was not justified by the benefits.
The program offers a 25 percent payroll credit for projects that spend more than $50,000 in Massachusetts. Sales tax exemptions and a 25 percent production credit are also available for productions that film at least half the time in the state or spend more than half of their budget here.
Senate Democrats, including Michael Rodrigues, who chairs the Senate’s budget-writing Ways and Means Committee, have questioned why Massachusetts is “supplementing the salaries of Hollywood stars.” In 2016, the most recent year for which data are available, the law generated $25 million in wages for residents, but $35.5 million in wages for millionaires who live out of state.
Supporters such as Chan and House Speaker Ronald Mariano say the credit is a critical jobs creator and that assessments of its financial payoff miss major points. Outdated accounting methods used by state analysts miss the full scope of the tax break’s benefits, Chan said.
He pointed to Chloé Zhao, whose film “Nomadland” won a number of Academy Awards this week, as an example of the need for the tax credit: She graduated from Mount Holyoke College in South Hadley but “had to leave” the state to succeed in the film industry, he said. Further investment in the industry could help keep talents like Zhao in Massachusetts, he said.
The 160-0 vote came during the first day of House deliberations on its $47.7 billion proposal for the annual state budget, introduced earlier this month without any major new tax breaks or hikes. It was one of three tax-credit amendments adopted Monday.
Mariano celebrated the House’s vote to keep the program intact.
“By making the film tax credit permanent, Massachusetts will become a true competitor and an attractive location as the film industry continues to grow and evolve,” he said in a statement. “The level of impact and the amount of benefits the film tax credit brings to Massachusetts is immeasurable, creating local jobs and boosting overall economic activity in our cities and towns.”