Resumption of tax credit means cameras can roll again in Pennsylvania

HARRISBURG - After a week in an unnerving limbo - with thousands of jobs and multimillion-dollar movie productions at stake - the state's film industry is rolling again.

Film industry officials were notified last week that tax credit applications approved by former Gov. Ed Rendell were being held up for review by Gov. Corbett's administration.

On Thursday, Corbett spokeswoman Kelli Roberts told The Inquirer that roughly $49 million in tax credits for 60 film, television, and commercial productions will be granted.

"All have been released," she said. "We will honor the tax credits."

A total of $60 million in tax credits for the industry was appropriated in the 2010-11 state budget, of which $11 million is left, Roberts said.

Final approvals of the applications were delayed as part of Corbett's examination of Rendell-approved expenditures, she said.

Roberts would not say whether Corbett will recommend continued funding for the Pennsylvania program in his budget address on March 8.

During the gubernatorial campaign last year, Corbett said he supported the film tax credit.

Filmmakers across the state Thursday breathed a sigh of relief with word that the $49 million in credits had been released.

"That's really good news. There is hundreds of millions in business at stake in an industry that is expanding because of the film tax credit," said Ray Carballada, cochair of the Pennsylvania Film Industry Association and president of Shooters Inc., a Philadelphia-based production house.

Sharon Pinkenson, executive director of the Greater Philadelphia Film Office, learned of Corbett's decision to reinstate the tax credits from a reporter Thursday. She said she was relieved and would begin calling film staff she said were temporarily out of work as a result.

She said the Corbett administration needed to start approving new applications as well.

"Honoring applications that have been approved by the Rendell administration is a relief," she said. "However, no new jobs can be created until new applications can be reviewed and accepted."

Philadelphia, for instance, could still lose big-budget pictures such as the Brad Pitt zombie movie, World War Z, and the next episode of the Bourne franchise, which have yet to be approved for tax-credit status. Pittsburgh could lose the next Batman film from Christopher Nolan, The Dark Knight Rises.

Still, for a nail-biting 10 days it looked as if current productions across the state would be halted.

"Production work is at a standstill," Dawn Keezer, executive director of the Pittsburgh Film Office, said Thursday. "Producers are actively seeking alternative locations during the freeze."

In jeopardy were 10,000 jobs in film-related businesses, from electricians to teamsters to special-effects artists.

With a $4 billion state budget hole to plug, the long-term future of the film tax program remains in question.

The tax credit has been a political hot potato since its creation under Rendell in 2007. At the time, wrangling between Democrats and Republicans over the program's size held up passage of the $27 billion state budget.

The legislature and Rendell finally agreed on a $75 million figure that has since been scaled back to $60 million as part of recent budget cuts. The agreement called for the funding to be restored to $75 million next fiscal year.

The program is credited with bringing thousands of jobs and major motion pictures to Pennsylvania, including the recently released Denzel Washington thriller Unstoppable.

Many Republicans have continued to fight to reduce or scrap the program, viewing it as a corporate handout by the Democratic governor.

Other critics have now become supporters.

Rep. Steve Barrar (R., Delaware) was among the early naysayers, but he changed his position after seeing what the program's benefits, including the creation of the Sun Center film studio just outside his district in Chester Township.

"That was an $80 million private investment that was made knowing the tax credit would be there," said Barrar. "I'd be very concerned about the future of the industry if it wasn't."

Carballada said his company had doubled in size since the inception of the tax-credit program. He now employs 170 full-time or full-time equivalents.

"It's an economic-stimulus program that incentivizes an industry that is expanding," he said. "There's a misconception that the money goes to Hollywood; it goes to Pennsylvania companies."

Forty-four states have adopted film tax credits, but some with deficits to close, such as Michigan, are considering dropping the programs.

In New Jersey, Gov. Christie's administration is recommending eliminating film tax credits, created in 2005 and suspended last year to close a budget gap.

Barrar said he understood tough economic times might mean a reduction in Pennsylvania's appropriation for the tax credits, but he insisted the program was worth fighting for.

Ending it would "wreak havoc on the industry," he said.