top of page

What would a higher cap on film tax credits really mean for Pennsylvania creators, studios and fans?

Advocates are campaigning to increase the cap on the state’s film incentive program from $100 million to $300 million.

By: Joshua Axelrod

July 5, 2023

This is part two of a series based on data recently obtained via Right to Know requests regarding Pennsylvania’s film tax credit program from the state’s Department of Community and Economic Development. Sujata Day thought she had done everything right.

It was summer 2019, and the Greensburg native had recently wrapped principal photography on “Definition Please,” her locally shot feature directorial debut. The film, which she also wrote and starred in, playing a former spelling bee champion, debuted on Netflix in January 2022 and has been available to stream there ever since.

Day assumed she would receive financial assistance on “Definition Please” through Pennsylvania’s film tax credit program, which offers a 25% tax credit to productions that spend at least 60% of their total budget in the Keystone State. “Definition Please” spent about $200,000 of its $250,000 budget in Pennsylvania and, in June 2019, Day requested about $49,000 in tax incentives.

After more than a year of uncertainty, she was finally notified by email on Aug. 5, 2020, that the Pennsylvania Film Office — the entity within the state’s Department of Community and Economic Development that doles out film tax credits annually — had rejected her application. All of fiscal year 2019-20’s allotted $70 million in film tax credits had already been distributed.

“This is not worth it to me, this headache,” Day said. “If you’re not going to welcome me when I’m doing my first film, you don’t deserve my next couple of TV shows and movies — even when I want to showcase Pittsburgh and Westmoreland County so badly.”

Day’s experience with Pennsylvania’s film incentive program isn’t unique. Much larger Hollywood projects — with greater potential economic and job-creation capabilities — have inquired about filming in the state and chosen to go elsewhere when their applications were turned down or they received a better deal elsewhere.

What could’ve been

Pennsylvania’s film tax credit program has been capped at $100 million since 2022, though advocates want that increased to $300 million. Those pushing for a more robust film tax credit argue that it sometimes prompts studios and filmmakers who like what they see here to pick a state with more competitive incentives. Some submit film tax credit applications in multiple states to see which one can offer them the best overall package, according to Pittsburgh Film Office director Dawn Keezer.

“If you can’t answer them emphatically and enthusiastically, they start looking at options,” she said. “That’s what happens.”

Just ask Brad Ingelsby, a Berwyn, Chester County, native who made the 2021 HBO miniseries “Mare of Easttown” around his hometown and was recently approved for a film tax credit contract worth more than $34 million to shoot his next project in eastern Pennsylvania. Ingelsby also wanted to film his 2018 mystery “American Woman” near his old stomping grounds.

“We ended up having to shoot it up in Boston because the tax credit had run out in Pennsylvania,” he told MovieMaker magazine.

Keezer cited a lack of available film tax credits in Pennsylvania as the main reasons that projects such as “American Gods,” Starz’s adaptation of Neil Gaiman’s epic 2001 fantasy novel that applied for the credit in July 2015; “Godmothered,” a 2020 Disney+ film that applied in July 2019; and “Judas and the Black Messiah,” the Oscar-winning Fred Hampton biopic that applied in June 2019; didn’t end up filming in the Pittsburgh area.

Both “Judas and the Black Messiah,” which filed for film tax credits in Allegheny County under its working title, “Jesus Was My Homeboy,” and “Little Evil,” a 2017 Netflix horror-comedy that applied in Pennsylvania in July 2016, were shot in Ohio. As of July 1, Ohio began offering up to $75 million in film tax credits per fiscal year to productions that spend at least 30% of their total budgets in the Buckeye State.

Keezer said last year that a lack of available film tax credits prompted Netflix’s “The Piano Lesson” to film in Georgia instead of playwright August Wilson’s hometown.

While the first two “Creed” movies were approved for film tax credit contracts worth more than $25 million to film in the Philadelphia area, 2023’s “Creed III” ended up shooting in Atlanta. Director and star Michael B. Jordan told ArtsATL last year that Georgia’s film incentives “are very strong and lucrative when it comes to making bigger-budget movies.”

Documents obtained by the Post-Gazette under the Right to Know Law

show no Pennsylvania film tax credit applications filed for either “The

Piano Lesson” or “Creed III.”

For Keezer, it stings the most when returning customers who submit film incentive paperwork can’t get the tax breaks they need because the $100 million reserve has already been allocated.

“They utilize our experienced crew and take advantage of our diversity of our locations. They want to return. Because of the way the tax credit works, we don’t have funds to encourage our repeat business,” she said.

Her examples, based on applications filed over the last decade, included “The House with a Clock in Its Walls,” a 2018 Georgia-shot fantasy comedy that featured “Where’d You Go, Bernadette” star Cate Blanchett; “Godmothered,” which was filmed in Massachusetts and produced by Diane L. Sabitni (“Unstoppable”); and “Peppermint,” a 2018 Jennifer Garner action vehicle that was filmed in California and shepherded by Lakeshore Entertainment, producer of “American Pastoral” and “The Mothman Prophecies.” “Mothman” featured Richard Gere and was shot in Pittsburgh and Kittanning in 2001.

Economy drain or boost?

Some would argue that even having a film tax credit program, let alone raising it by $200 million, is a waste of statewide funding. Michael Thom, an associate professor in the University of Southern California’s Sol Price School of Public Policy, has done extensive research on the effectiveness of film incentives in stimulating economic development and creating jobs.

Thom said via email that, generally, such programs offer “no employment

impact” and serve as “a large drain from the state’s budget that will have to

be made up with spending cuts, tax increases or both.”

“The only thing they seem to bolster are studio profits and lobbyists’ careers,” Thom said. “We live in the ‘follow the science’ era. Pennsylvania policymakers should, too!”

While there is bipartisan support among state lawmakers when it comes to bolstering Pennsylvania’s film incentive, not all are convinced. Last year, state Rep. John Lawrence, R-Chester County, bemoaned the “giant sausage” of a tax code bill that would’ve increased the film tax credit program’s cap to $150 million.

“$50 million [more] for film studios on top of the tens of millions already set aside for that — I frankly do not see that as a top priority for the people of Pennsylvania,” Lawrence said.

The best counterpoint to these arguments is probably Georgia, which has an uncapped film incentive that offers studios willing to spend at least $500,000 in the Peach State a 20% base tax credit on its eligible in-state expenditures.

The Georgia Screen Entertainment Coalition, a nonprofit film industry advocacy group, touts a study that determined Georgia’s film incentive in 2022 alone helped support almost 60,000 jobs and generate a total statewide economic output of more than $8.5 billion. That study, released in November, also found that every $1 invested through Georgia’s film tax credit program returns $6.30 to the state economy through a combination of direct spending, the production patronizing local businesses and individual film workers “spending their wages in the local economy.”

“The numbers speak for themselves,” Georgia Screen Entertainment Coalition executive director Kelsey Moore said. “You’ve seen it in other states. You’ve seen how quickly you can grow an industry, and how quickly you can lose an industry.

“If you have strong partners and an industry that’s interested ... you can look at Georgia as an example of what a strong, job-creating industry you can build in 15 years.”

Other states have taken notice of Georgia’s success. Nearly 10 years ago, Michigan lawmakers ended a $500 million film tax credit program. Critics “argued the state saw little return on investment,” according to Grand Rapids-based WOOD-TV. Now there is a push to revive the state’s film tax credit program.

Gov. Josh Shapiro’s administration “recognizes the economic boost that comes from utilizing the film tax credit program to aggressively attract productions to Pennsylvania,” according to the Department of Community and Economic Development. The agency reiterated that it has no control over the state film incentive’s cap and “any changes would have to be passed by the General Assembly.”

“We support and encourage stakeholders to have discussions with their legislators regarding the appropriateness of an increase to the film tax credit’s cap,” DCED continued, “and would welcome further [discussions] with legislators if they consider making changes to the program.”

Extenuating circumstances

Being denied a Pennsylvania film tax credit contract isn’t always the main

obstacle to a production setting up shop in Pennsylvania.

Both an untitled Sammy Davis Jr. project by Lee Daniels — who madeNetflix’s upcoming horror flick “The Deliverance” in Pittsburgh — and season 2 of the locally shot baseball dramedy “A League of Their Own” had their tax credit applications withdrawn once those projects were canceled by Hulu and Prime Video, respectively.

The full “A League of Their Own” season 2 application, obtained through the Post-Gazette’s Right to Know request, asked for a nearly $12 million film tax credit contract. Its shoot was projected to spend almost $40 million in Pennsylvania and create 236 full-time jobs, bring on 1,449 local extras and require 6,929 hotel room nights in the commonwealth.

“This television series established tenancy in Pittsburgh in season 1, and we are very excited to return to the Pittsburgh region for season 2,” reads the application, which also revealed that season 2 would have picked up a year after season 1 ended as “Carson [Abbi Jacobson] and Max [Chante Adams] return to Rockford” and explore “the struggles of fame and the complexity of embracing your sexuality in the 1940s.”

There were a handful of projects that applied for a film tax credit to shoot in Allegheny County since 2022 whose applications were listed as “under review,” which means the application has not yet been approved or withdrawn. Among the notable ones listed in the DCED data were the AppleTV+ limited series “Before,” the upcoming Carole King biopic “Beautiful” and “Victory Boulevard,” which may be the working title for the next “Karate Kid” movie.

The folks behind “Before” and “Victory Boulevard” chose New Jersey and Canada, respectively, over their other filming options, including Western Pennsylvania.

A DCED spokesperson said via email that, as of June 12, the Pennsylvania Film Office had awarded fiscal year 2023-24 tax credits to “more than 50 films and television projects that are in production or set for production in 23 counties.” The state agency declined to confirm that it had distributed all of the available tax credits for the fiscal year that just ended.

Quirks of the system

David Haddad, the founder and owner of Pleasant Hills-based entertainment equipment rental company Haddad’s Inc. and chairman of the Pennsylvania Film Industry Association advocacy group, sees a film incentive as “a jobs bill” that helps to attract a steady stream of Hollywood-provided employment for local film workers.

“If you want film work, you have to have a program, and the program has to

be competitive,” Haddad said.

DCED tracking indicates that between fiscal years 2007-08 and 2019-20,509 productions were awarded Pennsylvania film tax credit contracts worth almost $818 million. Those projects “supported an estimated 30,650 full-time equivalent PA jobs” and “directly injected nearly $3.3 billion into the state’s economy,” according to DCED.

The documents provided to the Post-Gazette show that 100% of each fiscal year’s film tax credit allotments were given out between fiscal years 2013-14 and 2019-20. It did not provide comparable data for the following fiscal years.

Film tax credits can be parceled out over multiple fiscal years, which means allocation cycles that generally begin after lawmakers in Harrisburg ratify a new state budget can start with pots lower than $100 million. Currently, no project can be given more than 20% of a given fiscal year’s film tax credit allotment.

The multiyear allocation provision has been in place since 2012 and was designed to help projects “that might exceed the current per annual project cap” gain and retain a foothold in the commonwealth, according to DCED.

This system seems to incentivize multi-season TV production in Pennsylvania, but filmmakers sometimes benefit, too. DCED’s 2020-21 and 2021-22 film tax credit program reports show that the 2024-25 fiscal year includes at least $7 million in credits already promised to “A League of Their Own” season 1 and locally shot films “A Man Called Otto,” “Cha Cha Real Smooth,” “Rustin,” “Sprung” and “The Pale Blue Eye.”

“This system has provided our regions with the ability to retain productions that might have gone elsewhere, creating more job opportunities for local residents and direct economic impact for area businesses,” DCED said.

A $5 million reserve for “Pennsylvania film producers” was added to the film tax credit’s language in the state tax code during the 2022-23 fiscal year. Soon after, that money was part of $7.4 million given to director-producer M. Night Shyamalan, who grew up in suburban Philadelphia, for the 2023 film “Knock at the Cabin.”

Seventeen projects received tax incentives through that reserve in fiscal year 2023-24, “as opposed to just one project the prior fiscal year,” according to DCED.

DCED touted this “legislatively mandated program” as a means of nurturing local filmmaking talent and “providing producers a path to create their projects at home here in Pennsylvania.”

Others, however, feel this $5 million reserve is not working as it should.

Marc Lhormer, producer and co-writer of locally shot teen drama “Dear Zoe,” believes the best way to grow a regional entertainment sector is “to have films of all budget levels going at the same time.” He’s not sure how much the $5 million reserve benefits Pennsylvania producers given the state’s current film incentive structure.

“You’ve got a bigger pot. That’s great,” Lhormer said. “Nothing’s going to change if they don’t change the incentives. It just means more bigger projects will be choosing to come to Pennsylvania. ... It isn’t helping the independent sector.”

There are additional barriers in place for smaller productions to receive film tax credits, including the stipulation that only projects with 70% of their financing already secured will be considered.

Melissa Martin, a Ross resident who applied for and received a film tax

credit contract for her upcoming thriller “Basic Psych,” believes that this

program is more about job creation and economic benefits than “the state

of Pennsylvania caring at all about whether a film is made here.”

“The film tax credit is an amazing thing and has done an amazing thing for us and our community,” Martin said. ”But it wasn’t constructed for small filmmakers.”

Then there’s QVC, the home shopping network based in Chester County that has been approved for film tax credit contracts worth just shy of $40 million between 2014 and its most recent $3 million allocation in 2023. A QVC spokesperson said via email that the company has used its film tax credit allocations to make “substantial capital investments to our Studio Park facility” and help “create and maintain permanent Pennsylvania jobs.” DCED’s 2020-21 film tax credit program report indicated that QVC racked up final in-state production costs of nearly $55 million and employed more than 1,900 Pennsylvanians during that fiscal year.

Yet some say a shopping channel shouldn’t receive film tax credits.

“It's a thorn in our sides,” said Sharon Pinkenson, executive director of the Greater Philadelphia Film Office. “In our opinion, they shouldn't be getting tax credits at all because they're in the business of TV sales marketing, which has nothing to do with the film industry.”

‘Knife to the heart’

For Day, when her home state didn’t award her tax credits for “Definition Please,” it felt like a “knife to the heart.”

“It just behooves the Pittsburgh, Allegheny and Westmoreland economies to support these filmmakers at the beginning of their careers,” she said.

“We’ll keep coming back and bring the economy in. But if on our first experience you don’t support us, it causes us to think, ‘Well, we’re not welcome here and I’m going to start writing projects that aren’t set in Western Pennsylvania.’”

Brian Hartman, lead producer and screenwriter of the Titanic film “Unsinkable,” has filed at least 12 film tax credit applications in Pennsylvania and has almost always gotten an amount close to what was requested. Still, he said, raising the cap on the state’s film incentive is “desperately needed.”

“It’s a terrific program, and it’s allowed me to do what I do here in Pittsburgh,” he said. “The only thing that could make it better is for that cap to be larger.”

2 views0 comments


bottom of page