Massachusetts doled out $171m in tax credits

June 5, 2012
By Todd Wallack

Massachusetts used millions of dollars in taxpayer money last year to subsidize everything from cleaning polluted land in Quincy to filming the upcoming Mark Wahlberg movie “Ted,” according to a new report by the Massachusetts Department of Revenue.

Overall, the state gave companies and individuals more than $171 million in 2011 in refundable or transferable tax credits for making films, rehabilitating old historic buildings, redeveloping contaminated land, creating life sciences jobs, and other activities. These special types of tax credits can be bought, sold, or exchanged for cash.

The report, mandated under a 2011 budget amendment, is the first ever detailing all recipients of the tax credits, which are pushed as ways to attract new investment and economic activity to the state. But the report showed that some of the film tax credits, praised for bringing major motion pictures to the state, went to local companies producing television shows and ads, some of which probably would have been produced here without the subsidy.

For instance, WGBH, Boston’s public television station, received $4.2 million for programs like “Frontline,” “Nova,” and “Antiques Roadshow,” which have been produced at least partly in Boston for many years. The station also received $76,199 for a high school quiz show, even though the law bars game shows from qualifying. State officials said they were unable to explain why WGBH received aid for the quiz show.

A WGBH spokesman defended the subsidies Monday.

“We have to make decisions on where to produce our programs, and these credits allow us to do extensive production work in Massachusetts — creating and supporting local jobs,” said Jake Messier.

He said WGBH does not consider the high school quiz show a game show, “but a celebration of academic achievement.” Messier said students do not receive prizes.

The biggest tax credit recipient in 2011 was Columbia Pictures Industries, which received $11.6 million to film the movie “Here Comes The Boom” — featuring comedian Kevin James as a high school teacher trying to raise money to save the school’s music program by moonlighting as a mixed martial arts fighter. Columbia’s corporate parent, Sony Corp., collected $79 billion in revenues last fiscal year.

Other major beneficiaries include the Los Angeles production company that made “Ted,” which received $9 million; an affiliate of Boston real estate developer The Congress Group, which received $8 million in brownfields tax credits for an apartment complex on a polluted site in Quincy; and Partners HealthCare System Inc., which received $6.8 million in brownfields credits to clean a Charlestown site where it is moving Spaulding Rehabilitation Hospital from its current location near TD Garden.

Congress Group president Dean F. Stratouly said the tax credits were helpful because the firm had to spend $40 million on cleanup costs alone for the $260 million Quincy project, which will eventually include more than 1,000 units. The site was polluted by landfill from the urban renewal project that razed much of Boston’s West End decades ago.

The brownfields program offers developers a rebate of a portion of expenses for cleaning up and redeveloping contaminated property.

The film subsidies have been credited with creating hundreds of jobs, but have drawn fire over their cost. The Revenue Department has estimated that the program, which offers producers $1 in tax credits for every $4 they spend making movies, television programs, or commercials, costs the state more than $142,000 per local job for local residents.

The film program also helped underwrite television commercials for local banks, restaurants, nonprofits, and other businesses. For instance, ad agency Allen Roche Group Inc. received more than $384,000 in tax credits for auto dealer ads, including more than $100,000 for Lexus of Watertown alone.

Vincent Liuzzi, general manager for Lexus of Watertown, said he was not even aware that local television commercials qualified for the credits. Liuzzi, who was filming a commercial Monday, said he did not recall the ad agency passing along the rebate or dropping its rates when the film tax credit went into effect. No one from Allen Roche could be reached for comment.

The report covers 13 tax credit programs. The state has in the past disclosed recipients in a few of the programs, including life sciences awards, but considered the rest confidential.

But Governor Deval Patrick and the Legislature agreed to change the law two years ago because companies typically trade them back to the state for cash — or sell them to corporations and wealthy individuals seeking to lower their tax bills.

The new report did not detail who bought the tax credits. The state also said it planned to continue to treat as confidential most of the tax credits awarded before 2011.

Still, some watchdogs and lawmakers praised the increased disclosure. State Senator Jamie Eldridge, an Acton Democrat who has pushed for greater disclosure of corporate subsidies for years, said: “I think it’s a good step forward.”

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