Hartford Business Journal

HARTFORDBUSINESS.COM | APRIL 15, 2024 17 production companies often aren't structured in ways to utilize the tax credits — mainly because they're not set up as C-corps that pay corporate business taxes — they sell the credits, typically through brokers, to other companies that can benefit from them. "In a lot of instances, film tax credits that are generated in the state of Connecticut are transferred to insurance companies in the state of Connecticut," Lanza said. "It's going from one Connecticut entity that doesn't pay any corporate tax or insurance premiums tax, and then it's transferred, because the law allows that, to another entity that does pay that tax." Peter Downing, a national principal-in-charge of tax credits and incentives at accounting and advisory firm Marcum, said there are exchange marketplaces where film production tax credits can be sold for cash. "It reduces their investment," Downing said of film production companies. "We're dealing with millions of dollars here of spent costs (for a production), so if I can get $300,000 or $400,000 back in the sale of credits, then that helps the production company, because they go on, sell the movie off to an investor group … and then these guys run their next sprint." Downing said the film tax credit has been a positive for film production companies and insurers, but he also acknowledged it's costing the state roughly $100 million a year. "$100 million is a big number, and if you're having budget issues or you've got to balance a budget, these programs can get chopped," Downing said. Tax credit's benefits Lawmakers have been debating adjustments to the state's two-year, $26 billion budget that was passed last June. And their ability to spend more money is constrained by spending and borrowing caps that were adopted in 2017. That's led some lawmakers to target the film production tax credit for elimination, so more money can be funneled to other areas like education and health care. But Downing said that, because the state is home to major media production companies, getting rid of the tax credit isn't simple. A 2022 study published by the DECD concluded that the state's three film incentive programs have led to job and personal income growth, as well as a rise in the state's economic output. Sports media giant ESPN, which employs thousands of people at its main campus in Bristol, received more than $15.3 million in film tax credits in fiscal year 2023, according to DECD. The company ranks behind NBC's four subsidiaries that were issued $38.7 million in credits last year, and just ahead of the $15 million collected by Stamford-based World Wrestling Entertainment. Downing said that while companies such as ESPN probably wouldn't fully leave the state if production tax credits were eliminated, they would likely be more reluctant to expand in Connecticut in the future. Downing and CohnReznick's Lanza also said that without these film tax credits, insurance companies would have to search for other eligible tax credits to buy, or simply pay more in state taxes, hurting Connecticut's economic competitiveness. Bristol-based sports media giant ESPN is a major beneficiary of the state's film production tax credit. HBJ FILE PHOTO Film production tax credits claimed to offset insurance premiums taxes in CT FISCAL NO. OF AMOUNT OF YEAR CREDITS CREDITS 2013 27 $22.3M 2014 35 $36.2M 2015 36 $26.6M 2016 31 $28.1M 2017 50 $47.6M 2018 54 $44M 2019 74 $62.2M 2020 62 $44.3M 2021 45 $44.5M 2022 40 $40.5M Total 454 $396.5M MAY 2ND | AQUA TURF CLUB JOIN US IN CELEBRATING THESE INCREDIBLE INDIVIDUALS SCAN HERE TOP 25 hear THEM roar Source: CT Dept. of Revenue Services

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