CHARLESTON, W.Va. — The House of Delegates engaged in a vigorous debate about the value of West Virginia’s film tax credit and then left off on a cliffhanger.

Daryl Cowles

As debate roiled in the House, Majority Leader Daryl Cowles defended the bill that would do away with the film tax credit and then moved to postpone action one day.

The bill was up for a passage vote on Thursday in the House.

The bill had already passed the Senate. And the state Legislative Auditor concluded a month ago that the state should do away with the credit, saying it’s not getting enough bang for the buck.

State Tourism Director Chelsea Ruby has spoken before several committees as accepting of doing away with the credit. She has described it as a “race to the bottom,” saying such credits are only paying off with states like Georgia that are willing to put forth significant resources.

“We simply don’t have the infrastructure. The credit isn’t large enough to build that infrastructure. And we’re just throwing money away,” Cowles said before his motion to postpone action until Friday.

Democrats spoke up in favor of keeping the credit, contending there’s enough economic impact to merit its continuation.

Dianna Graves

A Republican, Delegate Dianna Graves of Kanawha County, also spoke in favor of keeping the tax credit. Graves said one of her prior jobs was as a production assistant on “Super 8,” a Steven Spielberg-produced film with a West Virginia backdrop.

“How about instead of eliminating the film tax credit completely, we tighten up the loopholes and make the film tax credit better?” asked Graves.

The House took up and rejected a similar bill last year. The Legislature did eliminate the Film Tax Office, folding in its responsibilities with the Division of Tourism.

The West Virginia Film Industry Investment Act was established in 2007 to encourage economic development through motion picture and other commercial film and audio projects.

The act allows eligible film production companies to receive nonrefundable tax credits for direct and
postproduction expenditures made in West Virginia or incurred with a West Virginia vendor. The credits also may be transferrable.

During last month’s interim meetings, the Legislative Auditor’s staff recommended doing away with the credits. “The film tax credit has produced minimal economic benefit to West Virginia,” the Legislative Auditor’s report concluded.

The economic impact of the film tax credit program has been about $8.6 million over its 10-year existence, or less than $1 million annually on average, auditors wrote.

Furthermore, auditors wrote, right now West Virginia lacks a strong incentive program, a skilled workforce, and the infrastructure needed to attract large film productions.

Legislative Auditor staff cited some questionable expenditures that were allowed to count as qualifying expenditures. Some egregious examples include the depreciation of paint and paper towel holders.

House Finance Chairman Eric Nelson, explaining the bill on the floor Thursday, said credits have totaled between $3 million and $5 million a year.

Tim Miley

Minority Leader Tim Miley contended the economic benefit has been significant. He proposed fixing the tax credit, rather than doing away with it.

“I’m not sure why we’re getting rid of something that brings positive results, rather than closing up loopholes,” Miley said on the floor.

“We certainly know how much it’ll grow if we get rid of it, and that will be zero.”

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