PROVIDENCE, R.I. (WPRI) - Gubernatorial hopefuls Joe Trillo and Matt Brown are calling for the state to abolish its tax credit for movies and TV shows after the release of a critical report on the program, while others say it should be kept but improved.
Eyewitness News reported Monday that a new study commissioned by lawmakers shows the 13-year-old credit has lost taxpayers an average of $1.8 million in revenue a year and generated few permanent jobs, while giving a small boost to GDP. The report also showed most productions are violating state law by failing to disclose information.
The program offers to have taxpayers cover up to 25% of the cost of a movie or TV show filmed in Rhode Island, and more than $84 million has been awarded since 2005. Democratic Gov. Gina Raimondo’s top economic adviser, Commerce Secretary Stefan Pryor, said in comments included in the study that lawmakers should consider changes such as incentivizing multi-year productions or only providing the credits if they are necessary to finance the project.
In a statement Tuesday, Raimondo spokesman Josh Block indicated the governor wants to keep the tax credit but is open to changes.
“Any time a movie is filmed in our state, it’s a great opportunity to showcase our history, our architecture, our beaches, and all that makes us proud to be Rhode Islanders,” he said. “The governor believes any tax credit should be reviewed regularly and encourages the legislature to consider both the economic and cultural value of this program.”
Raimondo’s leading rival, Republican Allan Fung, indicated he is open to keeping the tax credit in place but only if changes are made.
“It is obvious from the report that the current film tax credit program is not working properly,” Fung said. “We need to dramatically reform the current program so that there is more of a benefit to the Rhode Island economy while holding the recipients of our tax dollars accountable. If these stronger safeguards are not put in place, then we should discontinue the program.”
He added, “While we all recognize that Rhode Island is a beautiful backdrop for filming, we want to showcase these talents in a way that is responsible to the taxpayers.”
Calling for the end of the film tax credit was former state Rep. Joe Trillo, who left the Republican primary earlier this year and is now running for governor as an independent. On Tuesday, he called the program “another example of corporate welfare in our state which was enacted to build up a local industry and, after 13 years, has failed miserably by all counts.”
“As I have said many times in my campaign for governor, we need to make Rhode Island competitive for business and finally account for the tremendous waste in our budget, something neither party has done,” Trillo said. “We over-regulate business and then waste millions on government handouts to attract it, with zero accountability.”
Former Democratic Secretary of State Matt Brown, who is exploring a run for governor as an independent, joined Morgan and Trillo in calling for the end of the tax credit.
"I oppose the tax credit for the same reason I oppose the millions in tax breaks and corporate handouts Governor Raimondo gives to corporations every year - because the state either refuses to track the jobs those handouts create, or because the return to taxpayers is so paltry, we end up losing millions in much-needed tax revenue that could instead help fix our schools, rebuild our roads, invest in our local small businesses and create good jobs in the process," Brown said in an email.
Another Republican candidate, former Alex and Ani CEO Giovanni Feroce, thinks the tax credit should be changed to “focus the dollars on infrastructure support, like production facilities,” which “will be what provides real benefits to the movie industry,” spokeswoman Sarah Hale Folger said in an email. The state should “move away from inconsistent giveaways which create a false sense of economic gain,” she said.
Former state Rep. Spencer Dickinson, who has filed to challenge Raimondo in the Democratic primary, said he is “a tax credit skeptic.”
“I can tell you that one of the reasons we even have tax credits is to provide a brokerable commodity,” Dickinson said in an email. “They serve the purpose of inserting money into the system for the use of some well-connected lawyers and their friends. Under my administration, they will be minimized, or phased out and go away entirely.”
“That doesn't mean that I would rule out subsidies,” he added. “But we should put them in the budget and call them what they are.”
Paul Roselli, another Democratic candidate, noted he has worked in the film business for more than 30 years, and said the tax credit “is overdue for an overhaul.” He suggested reducing the value of the incentive from 25% of a production’s budget to between 12% and 15%.
“I’m in favor of keeping the tax credit but only if we use the incentive to get the film production company to shoot footage our state can use, hire local talent, laborers and crew during production, and use Rhode Island locations, seashore and history to promote Rhode Island,” Roselli said.
Luis Daniel Munoz, an independent candidate, said he was concerned by the study’s findings, and described the ability of production companies to sell their credits to non-film taxpayers as “unethical.” He suggested setting up an oversight committee “to evaluate the credits’ cultural, education and economic impact.”
Ted Nesi (firstname.lastname@example.org) covers politics and the economy for WPRI.com. He is a weekly panelist on Newsmakers and hosts Executive Suite.