Senate Bill Report — SB 5640, Motion Picture Competitiveness Program (January 16, 2022)

Summary

A Senate Bill Report on SB 5640, as of January 16, 2022, an act updating the motion picture competitiveness program to enhance funding and encourage productions in rural communities. The bill increases the total amount of Business and Occupation tax credits taken annually for the program from $3.5 million to $25 million per year and requires an annual aggregate of at least $6.5 million in funding assistance for projects in rural communities. The bill also exempts entities that contribute to Washington Filmworks and receive a tax credit, and receive no other funding assistance under the program, from the annual reporting requirements of the Department of Revenue and the Department of Commerce. The report states that the program was created by the Legislature in 2002.

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Full text

                            SENATE BILL REPORT
                                  SB 5640

                                      As of January 16, 2022

Title: An act relating to updating the motion picture competitiveness program to enhance
     funding and encourage productions in rural communities.

Brief Description: Updating the motion picture competitiveness program to enhance funding
     and encourage productions in rural communities.

Sponsors: Senators Short, Frockt, Conway, Holy, Lovelett, Nguyen, Rolfes, Wagoner and
    Wilson, L..

Brief History:
     Committee Activity: Business, Financial Services & Trade: 1/18/22.


                                     Brief Summary of Bill
           • Increases the total amount of Business and Occupation tax credits that
             may be taken annually for the Motion Picture Competitiveness Program
             (Program) from $3.5 million to $25 million per year.
           • Expands Program funding support to rural communities and educational
             opportunities for students in the arts.
           • Requires an annual aggregate of at least $6.5 million to fund projects in
             rural communities.
           • Exempts certain entities contributing to the Program and receiving a tax
             credit from certain annual reporting requirements.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

     Staff: Kellee Gunn (786-7429)

     Background: Motion Picture Competitiveness Program and Washington Filmworks. The




     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

Senate Bill Report                              -1-                                             SB 5640
     Motion Picture Competitiveness Program (Program) was created by the Legislature in 2002
     to help maintain Washington as a competitive location to film motion pictures, television,
     and commercials. In return for contributing to the Program's incentive fund, a business may
     receive a credit against their Business and Occupations (B&O) tax liability up to $750,000
     per year. The total amount that may be credited any calendar year for the Program is $3.5
     million.

     The Program is overseen by a nonprofit corporation, Washington Filmworks (Filmworks),
     with a board of nine directors, appointed by the Governor.

     The Department of Commerce (Commerce) is responsible for adopting criteria for the
     Program, along with other rules. Money for the program may only be used for:
        • benefits for employees, and other costs associated with film production; and
        • operating and administrative costs.

     Maximum funding assistance is limited depending on the type of filming, the number of
     episodes, if in-state spending thresholds are met, and how much of a resident labor force is
     used.

     Reporting Requirements. Those who contribute to the Program are subject to the annual
     reporting requirement for tax preferences, collected by the Department of Revenue (DOR),
     and an annual survey by Filmworks, and reported by Commerce. Both reports require
     employment and wage data, among other information.

     Summary of Bill: The total amount of B&O tax credits taken annually is increased to $25
     million.

     The program may use funding to support the growth and development of the Washington
     State film industry in rural communities as well as for educational opportunities for students
     in the arts.

     An annual aggregate of at least $6.5 million in funding assistance must go to fund projects
     in rural communities. A rural community has the same meaning as rural county and means
     a county with a population density of less than 100 persons per square mile or a county
     smaller than 225 square miles as determined by the Office of Financial Management.

     Entities contributing to Filmworks and receiving a tax credit, and not otherwise receiving
     funding assistance under the program, are exempt from DOR's and Commerce's annual
     reporting requirements.

     Appropriation: None.

     Fiscal Note: Available.



Senate Bill Report                             -2-                                         SB 5640
     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: Ninety days after adjournment of session in which bill is passed.




Senate Bill Report                            -3-                                        SB 5640


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