Plan to phase out Utah film tax credits quickly watered down

By Mariah Noble The Salt Lake Tribune

A proposal to phase out state tax credits for filmmakers who bring their productions to Utah was dumped Friday for a more modest plan to increase legislative oversight of these multimillion-dollar incentives.

Sponsoring Rep. Jeremy Peterson, R-Ogden, had proposed the phase-out because he viewed these tax credits as having too little scrutiny, describing them as a “blind spot” in the state budget. He suggested the incentives could still be awarded, but in the form of grants from a fund appropriated by the Legislature and reviewed annually in its budget-writing process.

He substituted HB162, however, with a measure that requires tax-credit recipients to submit “a report identifying and documenting the dollars left in the state and new state revenues generated by the motion-picture company or digital media company for its state-approved production.”

In its new form, the bill was unanimously approved by the Legislature’s House Revenue and Taxation Committee. It now goes to the full House.

Peterson said he has approached this issue with “a very objective perspective” and without much background on the tax incentive.

A meeting with House leadership made him realize that converting the tax credit into a grant would create uncertainty that would “subvert” the original intent of the legislation by driving away potential business from filmmakers, he said. “But in that meeting, we all agreed that there needs to be some oversight.”

Peterson said he’s happy with the revised proposal and believes it is a “good bill” that would improve the program.

“It’s a very simple bill, but the information that the bill is going to require of the filmmakers will help us move in a direction where there’s more transparency,” Peterson said. He said it will accomplish his goal of stronger oversight without destroying the original intent of the incentive.

Michael Sullivan, communications director for the Governor’s Office of Economic Development (GOED), said the revenue that comes into the state as a result of tax incentives for filmmakers far outweighs the cost.

Between 2011 and 2015, $110 million was spent by filmmakers in Utah who have received state incentives totalling $24 million — translating to some $86 million in economic benefits, according to GOED.

“We never take it out of the pocket of our taxpayers or anybody except the filmmakers themselves,” he said, stressing the credits are given based on performance, not promises.

Virginia Pearce, director of the Utah Film Commission, said Utah has a long history as a hub for filmmaking, and it has taken work to achieve that status.

She said her organization have been working with Peterson as he’s drafted his bills.

HB162S1, the substitute bill, “just adds reporting to our already-rigorous process” for film companies that come to the state, Pearce said.

Peterson hopes the bill will help legislators “find out for every dollar that the state puts out via the tax credit, how much is coming back into economic activity relative to those tax dollars.”

That information will help with discussions between GOED and lawmakers and allow them to evaluate “how effective is the policy, is it doing what we want it to do, could it go better?” he said.

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