NEW: RISC Calls on Chafee to Suspend Film Tax Credit Program
Tuesday, May 22, 2012
The Rhode Island Statewide Coalition is calling on Governor Chafee to order a complete suspension of the state’s Film Tax Credit Program, effective immediately, in the midst of ongoing deliberations between 38 Studios company officials’ request for tax credits from the state and a series of contradictory accounts of whether the company is eligible.
RISC is also recommending a wider inquiry by the Governor of the oversight practices performed by the EDC to recipients of the state loan guarantee program. An audit by the Braverman accounting firm has confirmed that the troubled video game company has already tapped $49 million of the bond proceeds from the state-backed loan and now faces a severe cash flow shortage. It is seeking to access more financing in the form of at least $8 million in state film tax credits.
38 Studios’ pursuit of film tax credits from the state should not be approved and there should be a complete suspension of the tax credit program until there is much more clarity provided about who is qualifying, what is the “pre-selling” policy and how are the credits being used,” said RISC Executive Director Donna Perry. “ There seems to be varying interpretations on whether 38 Studios is even eligible or in good standing at this point to qualify for the tax credits based on contradictory statements between the EDC, the state Film Office, the Governor and the Tax Administrator.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTGovernor Chafee last week announced a proposed overhaul of the tax credit policy which would set caps on tax credit awards going to any one company and which would prohibit any company on a state-backed loan guarantee from qualifying for a tax credit. The Governor claimed that current policy allows companies receiving state loans from also pursuing film tax credits, but that he wants to now change that provision.
RISC backs the Governor’s proposed changes but notes that Film Office Director Steven Feinberg contradicted the Governor’s interpretation of the policy, claiming that a prohibition already exists blocking a company, like 38 Studios, from receiving a tax credit if they are on a state backed loan. Feinberg further asserted that the law on the tax credits requires a company on a state loan to demonstrate it is also receiving private, additional funds and that 38 Studios claimed that it is, in fact, receiving separate private financing and thus should be eligible for the tax credit program.
“The list of questions and contradictory statements seems to be growing longer by the day between 38 Studios, the EDC, the Governor, and now the Film Office,” Perry said. “In light of all the unanswered questions, it seems only reasonable and fair to the taxpayers that the Governor freezes the film tax credit program and orders a full accounting of how the EDC provides oversight to the loan guarantee program across the board.”
