Malloy reverses limits on film tax credits
Gov. Dannel P. Malloy used last week’s bipartisan jobs bill to partially reverse a change to Connecticut’s film tax credits affecting their use by insurance companies that critics had warned would cripple the entertainment industry.
The legislation also amended the credits to help finance a deal Malloy announced Tuesday to bring NBC Sports to his hometown of Stamford.
The state’s 30 percent credits for film and television productions have lured both visiting, star-studded location shoots and permanent infrastructure projects to Connecticut.
The credits’ appeal is they can be transferred — sold — to in-state companies with a tax liability through brokers like Stamford-based Connecticut Film Center.
The transfers are confidential.
But in January, the state’s Department of Economic and Community Development, which houses the film division, reported the insurance and banking industries claimed a majority of the credits in 2007, 2008 and 2009.
Malloy inherited a $3 billion-plus deficit when he took office in January. As part of his “shared sacrifice” budget, insurance companies that had been able to apply the credits to 70 percent of their tax liability could now only use them toward 30 percent of their taxes.
The governor at the time was also trying to gear the film incentives toward creating permanent studios, limiting the credits’ appeal to non-Connecticut companies interested in filming some scenes and moving on to the next state.
But critics feared Malloy’s limitations on insurers would cripple the market for the credits.
“We’re in the ’insurance capital of the world,’ ” ex-House Speaker James Amann, D-Milford, who spearheaded the creation of the film program in 2006, said at the time. “Why, of all things, limit their ability to do that? It’s a good business transaction.”
The bipartisan jobs legislation passed Wednesday by the General Assembly and signed into law Thursday evening by Malloy allows insurers to apply the credits to 55 percent of their tax liability, at an estimated cost to the state of $16.6 million over the next two years.
“It sort of half-reverses it,” Gian-Carl Casa, spokesman for the governor’s budget office, said. “The insurance companies are really the big market for the tax credits. It enhances the market for them (and) makes Connecticut more attractive to the film industry.”
Asked if the administration had witnessed a significant impact in the change from 70 percent to 30 percent, film division head George Norfleet said, “The productions in discussion with us to come here and film before the talking and negotiations began still came ... We think the program is percolating and doing quite well.”
The Connecticut Film Center’s Kevin Segalla said, “As we become more of a permanent industry here we wanted to make sure we had the appetite for the credits.”
The jobs bill also expanded the types of productions that can qualify for the credits to “relocated television productions” that have filmed prior seasons outside of the state, include some “current events” shows and are created at a Connecticut production facility.
But they must make a minimum $25 million investment of their own to be eligible.
“There was a question about whether NBC could have taken advantage and this clarifies that,” Casa said.
Malloy announced Tuesday NBC Sports Group was leasing studio, production and office space at the former Clairol building in Stamford, bringing 450 jobs to the state.
While it is not uncommon for legislation to be crafted around a specific deal or entity, both Norfleet and Segalla said they believe the language changes will attract additional television productions besides NBC Sports.
“There were several entities curious or desiring of having the clarification so they would not have any issues going forward should they bring television programming here,” Norfleet said.
The clarification is estimated to cost between $10 million and $19 million in revenues over the coming year and between $5 million and $10 million annually thereafter.
Wade Gibson, a staffer with the Connecticut Voices For Children, a nonprofit critical of the tax incentives, said the group continues to call for more accountability of the program to better determine if the credits are paying off.
“With any of these deals, it’s just very hard to tell,” Gibson said.
Staff writer Brian Lockhart can be reached at email@example.com