Economic Development Tax Incentives Evaluation Act: Evaluation of “Motion Picture Production Tax Credits” – Tax Years 2013 through 2015

Source: State of Rhode Island, Office of Revenue Analysis, March 16, 2018

Part I: Introduction

Pursuant to Rhode Island General Laws § 44-48.2-4, titled Rhode Island Economic Development Tax Incentives Evaluation Act of 2013, the Chief of the Office of Revenue Analysis (ORA) is required to produce, in consultation with the Director of the Economic Development Corporation, the Director of the Office of Management and Budget, and the Director of the Department of Labor and Training, a report that contains analyses of economic development tax incentives as listed in R.I. Gen. Laws § 44-48.2-3(1). According to R.I. Gen. Laws § 44-48.2-4(1), the report “[s]hall be completed at least once between July 1, 2014, and June 30, 2017, and no less than once every three (3) years thereafter”. ….

Part II: Benchmarking Motion Picture Activity in Rhode Island, Selected Comparison States, and Nationwide

An understanding of current and historical motion picture production activity in Rhode Island as well as in comparison states and the nation provides context to the economic environment in which the MPPTC program operates. First, the benchmarking analysis contained within this part presents information on the availability of tax benefits targeting the motion picture industry in Rhode Island and in comparison states. Next, this part presents data highlighting current levels and long-term trends in motion picture production activity and employment and evaluate Rhode Island’s relative performance and on key economic indices.

ORA focused its investigation of motion picture activity, employment, and availability of tax incentives targeting motion picture production in four comparison states. The selected states are two neighbors, Massachusetts and Connecticut, in addition to two national leaders in motion picture production, New York and California. Additionally, this report includes selected comparisons to national data to allow the reader to consider the state-level data in the context of national levels, trends, and cycles. ….

Part III: Report Data Description

Part IV: Evaluation of the Economic Impact of the Tax Credit

Part V: Discussion and Recommendations

ORA Recommendations
Finding #1: The statutory goals of the MPPTC are poorly defined and performance measured against statutory objectives is relatively poor. ….
Finding #2: Current data reporting requirements lead to inconsistent and unreliable data on program performance. ….
Finding #3: MPPTC program fails to breakeven; program has negative return on investment. ….
Finding #4: Credit usage is low relative to the annual aggregate cap of $15.0 million, suggesting that the program is out-of-touch with the motion picture industry, and making revenue impacts difficult to predict. ….
Finding #5: MPPTC does contain a sunset provision, representing a best practice of tax incentive design. ….

Related:
Study: RI taxpayers lost $1.8 million a year on film tax credits
Source: Ted Nesi and Steve Nielsen, WPRI, April 16, 2018

State Study Finds RI Film/TV Incentives Generate Only 27 Cents For Every Dollar Spent
Source: Ian Donnis, Rhode Island Public Radio, April 18, 2018

A Macro Analysis of the Return on Investment of the Rhode Island Motion Picture Production Tax Credits
Source: State of Rhode Island, Office of Revenue Analysis, Discussion Paper, July 24, 2008