There’s a blockbuster battle brewing over a small tax credit that was cut in the House version of the budget.
Speaker Larry Householder (R-Glenford) led the charge to cut the $40 million film tax credit, saying that money would be better spent on reducing income taxes across the board, including eliminating them for people making under $22,000 a year.
And Householder said after the House budget passed that it was determined to cut what he called “special deals for certain people”.
“We said, you know, it’s special enough to be a citizen of the state of Ohio. It’s like that movie credit – I care more about Bob Buckeye in Beverly, Ohio, than I do about Bob DeNiro in Beverly Hills. And so we want to make our investment in Ohioans,” Householder said.
“With all respect to the Speaker, that's silly and shortsighted,” said Sen. Matt Dolan (R-Chagrin Falls), who chairs the Senate Finance Committee, where the House budget now is headed.
Dolan said he’s extremely disappointed that the tax credit was cut – and frustrated that there wasn’t more outcry over it. And he says it sends a bad message.
“Even when we get it back - and notice I said when, because it's imperative we get it back - we now have to reassure investors, reassure that someone who wants to come out of the film studios, film school, that Ohio is still going to be a great place to work and the investments you make will be backed up,” Dolan said.
Criticism about the film tax credit goes back years.
In 2012, conservative Republican Rep. Lynn Wachtmann (R-Napoleon) said the bottom line for him is that Ohio money is leaving to support an industry in another state.
“God bless the Hollywood folks, but I don’t believe the taxpayers of Ohio should be subsidizing Hollywood with this tax credit,” Wachtmann said.
And in 2016 and way on the other side of political perspective, Wendy Patton with the progressive leaning research group Policy Matters Ohio called the film tax credit a bad deal for the state.
“The leakiness of this financial mechanism is unparalleled and a waste of taxpayer money," Patton said.
Patton cites a study showing the credit encourages mostly temporary jobs, and she says it would have to be dramatically increased to be more effective.
That’s ok by Dolan, who says those who cut the credit didn’t add up the income and sales tax that Ohio would lose if it’s permanently erased.
“I think once we got the mechanics and improvements in place then I think we should be looking to increase the investment all within the context of a budget because there's lots of really good things that the governor is trying to do but I think we need to have a discussion in the Senate about whether we should increase that,” Dolan said.
And it appears the Senate may agree. The day that the House committee unanimously passed the budget cutting the credit, the Senate unanimously passed a bill making some changes to the credit and expanding it to theatrical productions, some of which stay in residence in communities for months to retool and finalize the show before it goes to Broadway.
Sen. Kirk Schuring (R-Canton) also said the bill would score applications based on economic development, and not just be first-come-first-served, as the process is now.
“It clarifies that the economic impact is divined by the total expenditures made in Ohio, and also puts an emphasis on the jobs that are hired as a result of these projects,” Schuring said.
After that unanimous vote, Senate President Larry Obhof said he’s confident the credit has spurred economic development: “I believe that it has, and I think the legislature has consistently believed that it has.”
Dolan can’t say where the money would come from to restore the movie tax credit, but he said his preliminary view is that he has concerns about some of the changes the House made and whether they’ll be a priority in the Senate.