Tax credit keeps Md. on Hollywood's radar

Daily Record, The (Baltimore), Aug 14, 2006 by Dori Berman

A film production tax credit approved by the General Assembly in 2005 helped boost the economic impact of filmmaking in Maryland to an all-time high in fiscal year 2006, prompting officials to call for an increase in the funds allocated for the tax credit program.

Movies and television shows shot in Maryland between July 2005 and June 2006 generated $158 million in economic impact, topping the previous record of $125 in fiscal year 2003, according to the Maryland Film Office. About $72 million of that money can be attributed to productions that took advantage of the tax credit, said Dennis Castleman, the office's director.

After the Walt Disney Co. decided in 2004 to film Annapolis, a film about the Naval Academy, in Philadelphia to take advantage of Pennsylvania's film tax credit, Gov. Robert L. Ehrlich Jr. and other officials realized Maryland needed one of its own in order to stay competitive.

Ehrlich proposed, and lawmakers approved, the film wage rebate tax credit in 2005. The program, available to productions spending at least $500,000 in the state, allows them to claim a partial rebate on the wages paid to employees earning less than $1 million. The $4 million allocated for fiscal year 2006 was used up almost immediately.

It's because of the film wage rebate that we stayed on the radar in the film industry and actually had a record year, Castleman said.

Indeed, upon the enactment of the legislation in 2005, producers of the hit HBO drama The Wire announced they would go forward with another season, in part because of the credit's availability. The producers of the recently released Step Up, also filmed in Baltimore, told The Daily Record that the tax credit played a role in their decision to locate here.

Creating a tax credit to attract films follows a trend seen elsewhere.

A lot of different states and a lot of entities around the globe have been working to attract the movie industry to their regions because of the obvious economic impact it brings in terms of the resources that it uses, the people it employs, the retail establishments that are frequented by the influx of people working on the movies, said Kori Bernards, a spokeswoman for the California- based Motion Picture Association.

Last year's record economic impact is good news for the film industry in Maryland, especially after the announcement earlier this year that the musical remake of John Waters' 1988 Baltimore-based film Hairspray will actually be shot in Toronto.

The producers of the remake attributed their decision partly to Maryland's lack of a soundstage large enough for the production.

Castleman noted that the production company shot its last four movies in Toronto as well, including the musical Chicago.

The film office is working on identifying a site near Baltimore for a soundstage, which Castleman said would likely be built as a public-private partnership.

Baltimore City film office Director Hannah Byron said a high quality soundstage is just one more aspect necessary to help Maryland remain competitive.

I think there's going to be a need to keep up with other states, and I think there's going to be a need to keep up with other countries, Byron said. The competition is greater than ever. In order to compete we have to have an incentive program. That's what production companies are looking for now.

Kayla Thames-Berge, president of the Location Managers Guild of America, wrote in an e-mail that incentives programs have become vital tools for attracting filmmakers.

Unless a region has something unique and critical to a script that cannot be created on a soundstage or rendered digitally-the lack of an incentive program these days will cripple a state's ability to win business, Thames-Berge wrote. And even the mighty can fall. Case in point: California, which currently has no incentive programs.

Their film landscape has changed as other state and countries became more competitive in building their programs and infrastructures.

And, in order to keep pace with those other places, Maryland film officials said lawmakers should consider an increase in the funding available for the program.

Ehrlich proposed appropriating $8 million for the program during the current fiscal year, which began in July. Lawmakers approved $6.8 million.

In addition to more available funds, Castleman said lawmakers should also look at increasing the amount allowed for each individual production, which is currently capped at $2 million. Castleman said $2 million doesn't appear to be enough.

Both Castleman and Byron said the return on investment is worth spending more on the program.

Oftentimes people don't realize the depth and the breadth of the industry. [It impacts] everything from lumber companies to florists to food service to care rental and dry cleaners, Byron said. It's a significant economic impact, and that's on top of just the hotels, restaurants and crews.