House Bill 1914 - Motion Picture Competitiveness Program (State of Washington, 2022 Regular Session)

Summary

House Bill 1914, State of Washington 67th Legislature, 2022 Regular Session, with Representative Riccelli listed first among the sponsors. It was read first time 01/11/22 and referred to the Committee on Community & Economic Development. The bill relates to updating and expanding the motion picture competitiveness program and amends RCW 43.365.005, 43.365.030, 43.365.020, 82.04.4489, 43.365.040 and 43.365.050. Section 1 states legislative findings on the motion picture industry, including a drastic decline in motion picture production and the emergence of tax incentives in other states. Section 7 repeals an uncodified section.

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Full text

     H-2036.1

                                 HOUSE BILL 1914


     State of Washington        67th Legislature         2022 Regular Session

     By Representatives Riccelli, Orcutt, Berry, Leavitt, McEntire, Ryu,
     Santos, Walen, Wicks, Ortiz-Self, Stonier, Robertson, Peterson, Rule,
     Vick, Goodman, Dolan, Orwall, Eslick, Barkis, Graham, Berg, Dent,
     Bateman, and Macri

     Read first time 01/11/22.     Referred   to   Committee   on   Community   &
     Economic Development.




1        AN ACT Relating to updating and expanding the motion picture
2    competitiveness   program;   amending  RCW 43.365.005, 43.365.030,
3    43.365.020, 82.04.4489, 43.365.040, and 43.365.050; and repealing
4    2017 3rd sp.s. c 37 s 1101 (uncodified).


5    BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:


 6       Sec. 1.   RCW 43.365.005 and 2006 c 247 s 1 are each amended to
 7   read as follows:
 8       The legislature recognizes the motion picture industry in
 9   Washington as a valuable commodity contributing greatly to the
10   economic vitality of the state and the cultural integrity of our
11   communities. The legislature further recognizes the production of in-
12   state   motion   pictures,   television   programs,    and   television
13   commercials creates a marked increase in tourism, family-wage jobs,
14   and the sale of local goods and services generating revenue for the
15   state.   Furthermore,   with  captive   national    and   international
16   audiences, the world is introduced to the state's pristine scenic
17   venues and reminded that the Pacific Northwest is a great place to
18   live and raise a family. The legislature also recognizes the inherent
19   educational value of promoting arts and culture as well as the
20   benefits of training young motion picture professionals who will
21   build a fruitful industry for years to come.
                                      p. 1                              HB 1914
 1       The legislature finds in recent years that the state has realized
 2   a drastic decline in motion picture production that precludes
 3   economic expansion and threatens the state's reputation as a
 4   production destination. With the emergence of tax incentives in
 5   ((thirty)) other states nationwide, in-state producers are taking
 6   their projects to more competitive economic climates, such as Oregon
 7   and Vancouver, British Columbia, where compelling tax incentive
 8   packages and subsidies are already in effect.
 9       The legislature also finds that in recent years increasingly
10   workers in Washington state are without health insurance coverage and
11   retirement income protections, causing hardships on workers and their
12   families and higher costs to the state.
13       The legislature also finds that more investment in the film
14   industry will increase revenue with Washington state businesses and
15   create family-wage jobs that pay health and retirement benefits for
16   Washington workers. With more investment in the film industry,
17   Washington state would attract bigger budget productions, which would
18   drive the formation of more film support businesses and significantly
19   increase the labor force as the state builds capacity.
20       Therefore, it is the intent of the legislature to recognize both
21   national and international competition in the motion picture
22   production marketplace. The legislature is committed to leveling the
23   competitive playing field and interested in a partnership with the
24   private sector to regain Washington's place as a premier destination
25   to make motion pictures, television, and television commercials.
26   While at the same time the legislature is committed to ensuring that
27   workers in the motion picture and television industry are covered
28   under health insurance and retirement income plans.

29       Sec. 2.   RCW 43.365.030 and 2012 c 189 s 3 are each amended to
30   read as follows:
31       (1) A Washington motion picture competitiveness program under
32   this chapter must be administered by a board of directors appointed
33   by the governor, and the appointments must be made within sixty days
34   following enactment. The department, after consulting with the board,
35   must adopt rules for the standards that shall be used to evaluate the
36   applications for funding assistance prior to June 30, 2006.
37       (2) The board must evaluate and award financial assistance to
38   motion picture projects under rules set forth under RCW 43.365.020.
39       (3) The board must consist of the following members:
                                     p. 2                          HB 1914
 1       (a) ((One member)) Two members representing the Washington motion
 2   picture production industry, one of whom must demonstrate expertise
 3   in the financing of motion picture projects;
 4       (b) One member representing the Washington ((motion picture
 5   postproduction)) interactive entertainment industry who does not
 6   represent any aspect of that industry involved in gambling, as that
 7   term is defined in RCW 9.46.0237;
 8       (c) One member representing technologies impacting the Washington
 9   ((interactive media or)) emerging motion picture industry;
10       (d) Two members representing labor unions affiliated with
11   Washington motion picture production;
12       (e) ((One member representing the Washington visitors and
13   convention bureaus;
14       (f) One member representing the Washington tourism industry;
15       (g) One member representing the Washington restaurant, hotel, and
16   airline   industry))  Three   members   representing  industries   and
17   businesses impacted by motion picture production, one of whom must
18   represent industries or businesses located east of the crest of the
19   Cascade mountain range and one of whom must represent industries or
20   businesses located west of the crest of the Cascade mountain range;
21       (f) One cochair of the board's equity committee, not already
22   serving on the board, recommended by the board to the governor;
23       (g) One cochair of the board's advisory committee, also known as
24   the film leadership council, not already serving on the board,
25   recommended by the board to the governor; and
26       (h) A chairperson, chosen at large, must serve at the pleasure of
27   the governor.
28       (4) The term of the board members, other than the chair, is four
29   years, except as provided in subsection (5) of this section.
30       (5) The governor must appoint board members ((in 2010)) to ((two-
31   year or)) four-year staggered terms((. Once the initial two-year or
32   four-year terms expire, all subsequent terms are for four years. The
33   terms of the initial board members are as follows:
34       (a) The board positions in subsection (3)(b), (e), and (g) of
35   this section, and one position from subsection (3)(d) of this section
36   must be appointed to two-year terms; and
37       (b) The remaining board positions in subsection (3) of this
38   section shall be appointed to four-year terms)), except the board
39   member initially appointed to the position in subsection (3)(c) of
40   this section and the board member initially appointed to the position
                                     p. 3                          HB 1914
 1   in subsection (3)(g) of this section must each be appointed to a two-
 2   year term. Once those initial two-year terms expire, all subsequent
 3   terms are for four years.
 4       (6) A board member appointed by the governor may be removed by
 5   the governor for cause under RCW 43.06.070 and 43.06.080.
 6       (7) ((Five)) Seven members of the board constitute a quorum.
 7       (8) The board must elect a treasurer and secretary annually, and
 8   other officers as the board members determine necessary, and may
 9   adopt bylaws or rules for its own government.
10       (9) The board must make any information available at the request
11   of the department to administer this chapter.
12       (10) Contributions received by a board must be deposited into the
13   account described in RCW 43.365.020(2).


14       Sec. 3.   RCW 43.365.020 and 2012 c 189 s 2 are each amended to
15   read as follows:
16       (1) The department must adopt criteria for the approved motion
17   picture competitiveness program with the sole purpose of revitalizing
18   the state's economic, cultural, and educational standing in the
19   national and international market of motion picture production. Rules
20   adopted by the department shall allow the program, within the
21   established criteria, to provide funding assistance only when it
22   captures economic opportunities for Washington's communities and
23   businesses and shall only be provided under a contractual arrangement
24   with a private entity. In establishing the criteria, the department
25   shall consider:
26       (a) The additional income and tax revenue to be retained in the
27   state for general purposes;
28       (b) The creation and retention of family-wage jobs which provide
29   health insurance and payments into a retirement plan;
30       (c) The impact of motion picture projects to maximize in-state
31   labor and the use of in-state film production and film postproduction
32   companies;
33       (d) The impact upon the local economies and the state economy as
34   a whole, including multiplier effects;
35       (e) The intangible impact on the state and local communities that
36   comes with motion picture projects;
37       (f) The regional, national, and international competitiveness of
38   the motion picture filming industry;


                                     p. 4                          HB 1914
 1       (g) The revitalization of the state as a premier venue for motion
 2   picture production and national television commercial campaigns;
 3       (h) Partnerships with the private sector to bolster film
 4   production in the state and serve as an educational and cultural
 5   purpose for its citizens;
 6       (i) The vitality of the state's motion picture industry as a
 7   necessary and critical factor in promoting the state as a premier
 8   tourist and cultural destination;
 9       (j) Giving preference to additional seasons of television series
10   that have previously qualified;
11       (k) Other factors the department may deem appropriate for the
12   implementation of this chapter.
13       (2) The board of directors created under RCW 43.365.030 shall
14   create and administer an account for carrying out the purposes of
15   subsection (3) of this section.
16        (3) Money received by the approved motion picture competitiveness
17   program shall be used only for:
18        (a) Health insurance and payments into a retirement plan, and
19   other costs associated with film production; ((and))
20        (b) Staff and related expenses to maintain the program's proper
21   administration and operation; and
22       (c) Supporting the growth and development of the Washington state
23   film    industry   through  career   connected   learning,   workforce
24   development, and business development with a focus on better
25   supporting people from marginalized or rural communities.
26       (4) Except as provided otherwise in subsection (7) of this
27   section, maximum funding assistance from the approved motion picture
28   competitiveness program is limited to an amount up to thirty percent
29   of the total actual investment in the state of at least:
30        (a) Five hundred thousand dollars for a single motion picture
31   produced in Washington state; or
32        (b) One hundred fifty thousand dollars for a television
33   commercial associated with a national or regional advertisement
34   campaign produced in Washington state.
35        (5) Except as provided otherwise in subsection (7) of this
36   section, maximum funding assistance from the approved motion picture
37   competitiveness program is limited to an amount up to thirty-five
38   percent of the total actual investment of at least three hundred
39   thousand dollars per episode produced in Washington state. A minimum
40   of six episodes of a series must be produced to qualify under this
                                     p. 5                          HB 1914
 1   subsection. A maximum of up to thirty percent of the total actual
 2   investment from the approved motion picture competitiveness program
 3   may be awarded to an episodic series of less than six episodes.
 4       (6) With respect to costs associated with nonstate labor for
 5   motion pictures and episodic services, funding assistance from the
 6   approved motion picture competitiveness program is limited to an
 7   amount up to fifteen percent of the total actual investment used for
 8   costs associated with nonstate labor. To qualify under this
 9   subsection, the production must have a labor force of at least
10   eighty-five percent of Washington residents. The board may establish
11   additional criteria to maximize the use of in-state labor.
12       (7)(a) The approved motion picture competitiveness program may
13   allocate an annual aggregate of no more than ten percent of the
14   qualifying contributions by the program under RCW 82.04.4489 to
15   provide funding support for filmmakers who are Washington residents,
16   new forms of production, and emerging technologies.
17       (i) Up to thirty percent of the actual investment for a motion
18   picture with an actual investment lower than that of motion pictures
19   under subsection (4)(a) of this section; or
20       (ii) Up to thirty percent of the actual investment of an
21   interactive motion picture intended for multiplatform exhibition and
22   distribution.
23       (b) Subsections (4) and (5) of this section do not apply to this
24   subsection.
25       (8) Funding assistance approval must be determined by the
26   approved motion picture competitiveness program within a maximum of
27   thirty calendar days from when the application is received, if the
28   application is submitted after August 15, 2006.

29       Sec. 4. RCW 82.04.4489 and 2017 3rd sp.s. c 37 s 1102 are each
30   amended to read as follows:
31       (1) Subject to the limitations in this section, a credit is
32   allowed against the tax imposed under this chapter for contributions
33   made by a person to a Washington motion picture competitiveness
34   program.
35       (2) The person must make the contribution before claiming a
36   credit authorized under this section. Credits earned under this
37   section may be claimed against taxes due for the calendar year in
38   which the contribution is made. The amount of credit claimed for a
39   reporting period may not exceed the tax otherwise due under this
                                     p. 6                         HB 1914
 1   chapter for that reporting period. No person may claim more than
 2   ((seven hundred fifty thousand dollars)) $1,000,000 of credit in any
 3   calendar year, including credit carried over from a previous calendar
 4   year. No refunds may be granted for any unused credits.
 5       (3) The maximum credit that may be earned for each calendar year
 6   under this section for a person is limited to the lesser of ((seven
 7   hundred fifty thousand dollars)) $1,000,000 or an amount equal to one
 8   hundred percent of the contributions made by the person to a program
 9   during the calendar year.
10       (4) Except as provided under subsection (5) of this section, a
11   tax credit claimed under this section may not be carried over to
12   another year.
13       (5) Any amount of tax credit otherwise allowable under this
14   section not claimed by the person in any calendar year may be carried
15   over and claimed against the person's tax liability for the next
16   succeeding calendar year. Any credit remaining unused in the next
17   succeeding calendar year may be carried forward and claimed against
18   the person's tax liability for the second succeeding calendar year;
19   and any credit not used in that second succeeding calendar year may
20   be carried over and claimed against the person's tax liability for
21   the third succeeding calendar year, but may not be carried over for
22   any calendar year thereafter.
23       (6) Credits are available on a first-in-time basis. The
24   department must disallow any credits, or portion thereof, that would
25   cause the total amount of credits claimed under this section during
26   any calendar year to exceed ((three million five hundred thousand
27   dollars)) $20,000,000. If this limitation is reached, the department
28   must notify all Washington motion picture competitiveness programs
29   that the annual statewide limit has been met. In addition, the
30   department must provide written notice to any person who has claimed
31   tax credits in excess of the limitation in this subsection. The
32   notice must indicate the amount of tax due and provide that the tax
33   be paid within thirty days from the date of the notice. The
34   department may not assess penalties and interest as provided in
35   chapter 82.32 RCW on the amount due in the initial notice if the
36   amount due is paid by the due date specified in the notice, or any
37   extension thereof.
38       (7) To claim a credit under this section, a person must
39   electronically file with the department all returns, forms, and any
40   other information required by the department, in an electronic format
                                     p. 7                          HB 1914
 1   as provided or approved by the department. Any return, form, or
 2   information required to be filed in an electronic format under this
 3   section is not filed until received by the department in an
 4   electronic format. As used in this subsection, "returns" has the same
 5   meaning as "return" in RCW 82.32.050.
 6       (8) No application is necessary for the tax credit. The person
 7   must keep records necessary for the department to verify eligibility
 8   under this section.
 9       (9) A Washington motion picture competitiveness program must
10   provide to the department, upon request, such information needed to
11   verify   eligibility  for   credit  under   this  section,   including
12   information regarding contributions received by the program.
13       (10) The department may not allow any credit under this section
14   before July 1, 2006.
15       (11) For the purposes of this section, "Washington motion picture
16   competitiveness   program"   or  "program"    means   an   organization
17   established pursuant to chapter 43.365 RCW.
18       (12) Persons claiming a credit against the tax imposed under this
19   chapter for contributions made to a Washington motion picture
20   competitiveness   program   and  not   otherwise    receiving   funding
21   assistance under RCW 43.365.020 are exempt from the annual reporting
22   requirements in RCW 82.32.534 and 43.365.040.
23       (13) No credit may be earned for contributions made on or after
24   July 1, 2027.


25       Sec. 5.   RCW 43.365.040 and 2012 c 189 s 5 are each amended to
26   read as follows:
27       (1) The legislature finds that accountability and effectiveness
28   are important aspects of setting tax policy. In order to make policy
29   choices regarding the best use of limited state resources the
30   legislature needs information on how incentives are used.
31       (2) Each motion picture production receiving funding assistance
32   under RCW 43.365.020 must report information to the department by
33   filing a complete annual survey. The survey is due by March 31st of
34   the year following any calendar year in which funding assistance
35   under RCW 43.365.020 is taken. The department may extend the due date
36   for timely filing of annual surveys under this section if failure to
37   file was the result of circumstances beyond the control of the motion
38   picture production receiving the funding assistance.


                                      p. 8                          HB 1914
 1       (3) The Washington motion picture competitiveness program
 2   established in RCW 43.365.030, in collaboration with the department
 3   and the department of revenue, and in consultation with the joint
 4   legislative audit and review committee, must develop a survey form
 5   and instructions that accompany the survey form by November 1, 2012.
 6   The instructions must provide sufficient detail to ensure consistent
 7   reporting. The survey must be designed to acquire data to allow the
 8   state to better measure the effectiveness of the program and to
 9   provide transparency of the motion picture competitiveness program.
10   The survey must include:
11       (a) The total amount of taxes paid;
12       (b) The amount of taxes paid classified by type, which may
13   include, but is not limited to, sales taxes, use taxes, business and
14   occupation   taxes,  unemployment   insurance taxes,   and  workers'
15   compensation premiums;
16       (c) The amount of funding assistance received; and
17       (d) The following information for employment positions in
18   Washington by the motion picture production receiving funding
19   assistance, including indirect employment by contractors or other
20   affiliates:
21       (i) The number of total employment positions;
22       (ii) The average number of hours worked by employed individuals;
23       (iii) The average base pay of individuals employed by motion
24   picture companies, including contributions to health care benefits
25   and retirement plans;
26       (iv) The number of employment positions that have employer-
27   provided medical, dental, and retirement benefits; and
28       (v) The number of employment positions filled by Washington state
29   residents, and residency information for employment positions filled
30   by people from other locations.
31       (4) The department may request additional information necessary
32   to measure the results of the funding assistance program, to be
33   submitted at the same time as the survey.
34       (5) If a person fails to submit an annual survey under subsection
35   (2) of this section by the due date of the report or any extension
36   the department must declare the amount of funding assistance for the
37   previous calendar year to be immediately due and payable. The
38   department must assess interest, but not penalties, on the amounts
39   due under this section. The interest is assessed at the rate provided
40   for delinquent taxes under chapter 82.32 RCW, retroactively to the
                                     p. 9                          HB 1914
 1   date the funding assistance was received, and accrues until the
 2   funding assistance is repaid.
 3       (6) The department must use the information from this section to
 4   prepare summary descriptive statistics. The department must report
 5   these statistics to the legislature each even-numbered year by
 6   September 1st. The department must provide the complete annual
 7   surveys to the joint legislative audit and review committee, which
 8   shall perform a review as required under RCW 43.365.050.
 9       (7) The motion picture competitiveness program must periodically
10   audit and generally monitor the survey information submitted by
11   production companies for completeness and accuracy.

12       Sec. 6.   RCW 43.365.050 and 2006 c 247 s 7 are each amended to
13   read as follows:
14       ((The provisions of RCW 82.04.4489 are subject to review by the
15   joint legislative audit and review committee.)) (1) It is the
16   legislature's specific public policy objective to increase the
17   viability of the motion picture and film industry and associated
18   creative industries in Washington state. It is the legislature's
19   intent to increase the credit available under RCW 82.04.4489 in order
20   to attract additional motion picture and film projects, thereby
21   increasing family-wage jobs.
22       (2) The joint legislative audit and review committee ((will))
23   must review and make a recommendation to the ((house finance
24   committee and the senate ways and means committee)) fiscal committees
25   of the legislature by December 1, ((2010)) 2026, regarding the
26   effectiveness   of   the  motion   picture   competitiveness  program
27   including, but not limited to, the amount of state revenue generated,
28   the amount and number of family ((wages [wage])) -wage jobs with
29   benefits created, adherence to the criteria in RCW 43.365.020,
30   changes in Washington's share of the film employment market, and any
31   other factors deemed appropriate by the joint legislative audit and
32   review committee.
33       (3) In order to obtain the data necessary to perform the review
34   in subsection (2) of this section, the joint legislative audit and
35   review committee may refer to tax data provided to the department of
36   revenue and the annual survey required under RCW 43.365.040.




                                     p. 10                         HB 1914
1       NEW SECTION.   Sec. 7.   2017 3rd sp.s. c 37 s 1101 (uncodified) is
2   repealed.

                                   --- END ---




                                      p. 11                         HB 1914


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