Arizona passes new $125 million film credit bill

In an effort to lure productions that have recently relocated to New Mexico and other states, Arizona has established a new tax credit for film and television production. On Wednesday, Republican governor Doug Ducey let HB 2156 take effect without his signature but his administration declined to comment on the peculiar action. According to Variety, the initiative will offer a refundable credit worth 15% to 20% of eligible production expenses, with extra benefits for fulfilling specified requirements. Two substantial soundstage facilities are expected to be built in the Phoenix area as a result of the credit.

Bipartisan backing helped the law pass both houses of the legislature last month. Rusty Bowers, the speaker of the House, was among the Republicans who opposed the measure. On June 23, a few Republicans voiced their worries about enticing “woke” Hollywood celebrities to the state during the House floor discussion. Travis Grantham, the Republican speaker pro tem, disagreed with the proposal, claiming that it was a gift to businesses that violated the Constitution. Grantham said that the bill’s sponsor in the state Senate held the house “hostage” by delaying the passage of other bills until the tax credit was brought up for a vote. Democratic state Rep. Mitzi Epstein of Tempe stated, “It’ll be good to put Arizona on the map again. We have some beautiful places here that make stunning backdrops.”

The bill was approved by a vote of 39-18 in the House. Republicans were 17-13 against the measure, while Democrats voted 26-1 in support. Similar divisions existed in the state Senate, where Democrats backed the measure 11 to 1 and Republicans were split 8 to 8. The credit’s maximum amount will be $75 million in the first year, $100 million in the second year, and $125 million in the third year and all following years. The program will expire in 20 years.

From 2005 to 2010, Arizona had a film incentive but it was allowed to expire after the state revealed that it was losing millions of dollars annually. Long-term taxpayer benefits are cited by supporters of the new incentive. However, research from the Rounds Consulting Group showed that tax revenues linked to increased output would exceed the cost of the credit after seven years.

Tax incentives have increasingly come to dominate location selections in recent years, as production companies cannot afford to miss out on a 20% reduction in costs. Over the past ten years, numerous states have gradually phased out their programs as a result of the Great Recession but several states have renewed or increased their incentives as a result of the surpluses they have had in recent years.

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