Are Boston Video Production Companies Affected by the New State Budget?

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Massachusetts Film Tax Credit

As of January 2006, Massachusetts has granted a 25% tax credit on payroll and production to video production companies. This credit only applies to companies that have an in-state spending budget of over $50,000. The program also grants sales tax exemption to production companies.This tax credit applies to all types of film production companies in Massachusetts. This includes companies working with television, digital media, commercials, and streaming projects. Many Boston video production companies thrive because of this tax credit.

The tax credit program was an incentive for video production companies to move their productions to Massachusetts cities, especially Boston. These incentives helped Boston video productions gain momentum over the past fifteen years. Since 2006, it has been estimated that film production companies have spent over $2.8 billion in Massachusetts, according to the Massachusetts Production Coalition.

A wide range of businesses benefit from the program. This includes costume shops, prop houses, hotels, and more. People who are not in favor of the tax credit program have claimed that Hollywood productions with large budgets don’t need financial breaks. However, it’s impossible to ignore the benefits that come with bringing Hollywood film productions to Boston.

Boston video production companies

Hollywood East

Boston film production has often been referred to as “Hollywood East”. This is due to the surplus of video production companies wanting to establish themselves in Massachusetts. Film production has always played a role in Boston’s culture. However, the film tax credit program attracted more Hollywood production companies than ever before. The financial incentives currently in place make Massachusetts’ capital city an ideal place for production companies to settle.

 

A Threat to the Film Tax Credit Program

The film tax credit program was projected to expire in January 2023. Last spring, state representatives and senators came together to vote on whether the program should be extended. State representatives came up with a unanimous vote to continue the program, while state senators voted to propose amendments to the current bill.

The amendments aim to cut incentives because the film tax credit program did not supply enough revenue to the state. The Senate’s budget proposed to raise the mandatory in-state budget spending and shooting schedule from 50% to 75% of the entire production. The budget also intended to cut tax credit transferability and limit payroll salaries to $1 million.

The community feared that removing these tax incentives would harm the video production industry in Boston and all over Massachusetts. Without the film tax credit program, it is not financially feasible for film production companies to continue their work in Boston. These proposed amendments would negatively impact video production companies and companies that profit from business with video production companies.

The New State Budget 

On the week of July 9, state House and Senate negotiators could compromise to pass a new state budget deal. There has been much debate over whether the film tax credit was a proper use of budget money. Negotiators finally agreed to maintain the tax credit for film production companies permanently. Although the bill extended the tax credit, the mandatory in-state budget spending and shooting schedule was increased from 50% to 75%. This increase may affect Boston video production companies. The latest negotiations led to the $48.1B budget passed unanimously by both the House and Senate.

Even though the House and Senate approved the budget, it is still awaiting approval from Massachusetts Governor Charlie Baker. If the governor approves the budget, this would be a massive relief for Boston video production companies. The loss of the film tax credit program would have been financially devastating for video production companies in Massachusetts. Economically, Massachusetts benefits from the current program. Especially with Hollywood celebrities working in the state and spending copious amounts of money.

The public waits with anticipation as Governor Charlie Baker decides, but he will likely approve the bill with the unanimous vote from the state House and Senate. He has until July 19 to issue vetoes against the budget. There is a lot on the line with this budget proposal, and whatever the outcome is, there will be a significant effect on Boston video production companies.

How The State Budget Affects Boston Video Production Companies

If the proposed budget is passed, then the film tax credit program will remain in place. Video production companies will still have an incentive to work in places like Boston. However, the budget includes a 25% increase for the required in-state budget spending and shooting schedule. Although this is the only change to the film tax credit program, it is a significant one.Boston video production companies

At this point, it’s hard to say what effect that will have on Boston video production companies. Worst case scenario, this change could hinder production companies’ desires to operate within the state. Still, with tax credits possibly remaining in place, there are high hopes that video production companies will continue to thrive in Massachusetts cities like Boston. Making this tax credit program permanent could help encourage more video production companies to relocate to Boston.

 

In Conclusion

So, to answer the big question: YES, the new state budget will affect Boston video production companies. However, if the governor approves the current budget proposal, then changes to the film tax credit program will be minimal. Although an increase in requirements for in-state budget spending and shooting schedules is in place, the permanence of the tax credit incentives should be enough to keep Boston video production companies alive. If Baker decides to veto the budget for any reason, the state House and Senate will need to negotiate a new deal. This new deal could come with unfavorable outcomes if the budget reevaluation leads to tax credit cuts.

The film tax credit program included in the current state budget plays a significant role in the finances of Boston film production companies. The outcome of Governor Charlie Baker’s decision will decide if the tax incentives currently in place will become a permanent addition to the Massachusetts state budget.

 

 

 

 

 

 

 

 

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