Filmmakers applaud Ohio movie tax credits, while critics pan them

“American Factory,” the local documentary that won an Academy Award on Sunday night, benefited from an Ohio tax credit program that has both its fans and critics.

The Ohio Motion Picture Tax Credit, started in 2009, delivered a $119,500 tax break to the producers of “American Factory” — a film made by Julia Reichert and Steven Bognar of Yellow Springs. In April, Barack and Michelle Obama’s production company, Higher Ground, and Netflix acquired the film, which follows the creation of a Chinese-owned auto glass factory in the same plant that once housed a General Motors assembly operation in Moraine.

Bognar said the tax credit was crucial to the film.

“The story just went past the budget and so at that point, we said, wow, we should apply for the Ohio tax credit. And that made a big difference in that it allowed us to keep following the story until its logical, organic conclusion as opposed to some arbitrary cut off based on running out of money,” said Bognar. The program helped Bognar and Reichert hire more than 15 Wright State University film school alumni, he said.

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"Hillbilly Elegy," a feature film by Netflix Productions set in Middletown, also applied for a state tax credit.

The tax credit program is undergoing a major remake this year after lawmakers agreed to expand the credit to include live theater productions, the cost of post-production work and promotional expenses and implement competitive criteria.

Ohio lawmakers also decided to axe a feature that allowed movie producers to “transfer” or sell the tax credit to someone else. And projects will be evaluated and ranked based on competitive criteria twice a year. Previously credits were assigned according to who applied first and when money was available.

Lisa Grigsby, executive director of FilmDayton, said expanding the credit to apply to live theater productions dilutes it but other changes strengthen the program.

The credit allows up to $40 million a year in tax breaks. It refunds 30 percent of what is spent in Ohio. Since its inception, $120.7 million has been refunded, though $250 million had been authorized.

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A Cleveland State University study found that between 2011 and 2015, Ohio spent $32.6 million on the tax credit, applied to 31 projects that generated $22 million in tax revenues but also helped sustain 1,729 part- or full-time jobs with a labor income impact of $70.6 million. The study was paid for by the Greater Cleveland Film Commission.

While the tax credit has helped 119 projects since 2009, including four Dayton-focused films, Ohio is competing against more than 30 other states that offer similar tax breaks. California, New York and Georgia land 75 percent of the projects, according to a study by Pennsylvania's Independent Fiscal Office.

Bognar said “Will we surpass Georgia or California? You know, I don’t even know that that’s the point. The point is to bring films and economic development to Ohio and train our workforce to be competitive on a national level for top-shelf jobs. And that is happening.”

Grigsby agreed, saying that local film school graduates are able to quickly gain solid experience on Ohio projects, which helps launch their careers.

Moviemaker magazine recently named Cincinnati and Cleveland as two of the best cities in the country to make movies.

“Ohio’s 30% tax credit has cemented its spot as a thriving film destination for the foreseeable future,” the magazine said.

Policy Matter Ohio says the motion picture tax credit is an expensive, inefficient subsidy. In Ohio, it’s a refundable tax credit — meaning if the value of the credit exceeds the tax bill, the state writes a check to the awardee. Until this year, Ohio’s tax credit was also transferable — something lawmakers decided to cancel.

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Wendy Patton, a Policy Matters Ohio researcher, said getting rid of transferability was a good move but overall, the tax credit remains a bad deal for taxpayers because it fails to move the needle on Ohio’s share of the movie production industry. “These tax credits are just gravy for movie production companies going where they’d go anyway,” Patton said. “We would suggest a very close review of the tax credit.”

She added that Ohio should give close scrutiny to all 134 tax breaks in state law because they cost almost $10 billion a year in foregone revenue.

By the Numbers: Ohio Motion Picture Tax Credit

2009 — inception of the program

119 — completed projects

$120.7 million — value of the credits awarded

4 — Dayton area projects completed and awarded tax credit

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