MT lawmakers debate raising movie tax credit; supporters say it boosts local businesses |

June 19, 2022

Montana Economy

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Kevin Costner was photographed this week browsing Scheels, a sporting goods store in Missoula, as lawmakers in Helena debated whether to extend and increase a tax credit intended to attract movie moguls like him in the state in the future.

On Friday, the Montana Legislature’s Interim Revenue Committee heard a presentation on the economic impact of Montana’s MEDIA Act tax credits. The law, signed into law in 2019, essentially broke even in terms of the revenue it brought in to the state government. Indeed, while the state distributed approximately $20.3 million in tax credits to film production companies, the state tax revenue generated by all film production companies and their expenses was approximately $20.3 million.

The Montana MEDIA Act tax credit was established by the state legislature in 2019 with a cap of $10 million, then expanded to a total cap of $12 million beginning in the tax year 2022. Because this is an incentive for production companies to film in Montana, eligible companies can get a 20% transferable income tax credit for production and compensation expenses during its stay in the state. Businesses can also earn additional credit for reaching various other thresholds.

An economic impact consultant gave a presentation showing how 195 different productions have shot in Montana since the law was created and spent $192 million in the state. Film industry advocates have urged the committee to consider raising the cap to between $50 million and $150 million to allow Montana to compete with other states. They say it’s necessary to encourage the growth of the industry, which they say supports Montana businesses, creates local jobs and doesn’t pollute the state’s precious outdoor spaces.

Two Republican members of the committee, Sen. Greg Hertz and Sen. Mike Lang, both expressed support for the idea of ​​at least possibly introducing a bill in the next session to raise the cap.

“It’s a tough industry,” Hertz said. “There is a lot of competition across the United States. It’s a good clean industry. It helps Montana, it helps a lot of rural communities. The question here is how do we continue to nurture this industry without becoming too excessive and having a big impact on our cash flow? »

Hertz said he believes lawmakers need to look into the matter and the cap may merit further increases.

Senator Brian Hoven, also a Republican, said he opposed the tax credit because the amount of tax revenue generated for the state by the only film companies that used the tax credit was only $7. .8 million. So, according to him, the state is losing money because the tax credit cost it $20.3 million.

“I think the film industry is very glamorous,” he said. “Movie stars are there, they show up, they bring people to rural communities, there’s a lot of money. It’s exciting, it’s great. But unfortunately, it does not bring money to the public treasury.

Hoven said he read articles in the Wall Street Journal that prove movie tax credits are unprofitable. Hoven said the director of the state Department of Revenue under former Gov. Steve Bullock insisted on having a cap on credit because he “knew it would be a drain on the treasury.”

“To invest in this, we pick winners and losers,” Hoven said. “When we start giving to the film industry, we choose them to win.”

However, the impact on state coffers is not a complete picture of the impact of film production on Montana’s economy. A report from the University of Montana found that a single season of Costner’s hit show “Yellowstone” brought in an additional $70 million to the state economy in one year.

Gina Lavery, a consultant hired by the state to analyze the impact of the movie tax credit, said the movie industry has a big “ripple effect” on rural communities and small businesses in Montana. That’s because highly paid staffers at production companies like Paramount Network, which shoots “Yellowstone” in Missoula and Ravalli counties, spend money even on days off.

Lavery also said that not raising the credit cap has hampered Montana’s economic growth and may continue to do so in the future.

She noted that a film production company was willing to build a $20 million studio in Missoula, but backed down when the legislature only raised the cap by $2 million last session.

“This type of investment, just the initial construction, would have generated $34 million for the state and $1.3 million in tax revenue for local jurisdictions and the state,” Lavery explained.

Allison Whitmer of the Montana Film Office said “Yellowstone” is currently filming its fifth season here and will likely film most of its sixth season in Montana. Combined with Paramount filming a new show called “1932” in Butte next year, Whitmer said those two shows alone will spend an estimated $50 million to $100 million in Montana over the next two years.

Hertz concluded that he thinks the Legislature should consider gradually increasing the cap, and he also noted that there may be ways to ensure it benefits rural communities in Montana. Utah, for example, has a film tax credit that only applies if companies shoot in small, rural towns.

The full presentation and discussion can be found fast forward to 10:25 a.m. online at bit.ly/3y0V1qc.