BILL REQ. #:  H-3763.2 

Read first time 01/13/2006.   Referred to Committee on Economic Development, Agriculture & Trade.

     AN ACT Relating to the state of Washington's economic, cultural, and educational standing in the motion picture industry; adding a new section to chapter 82.04 RCW; and adding a new chapter to Title 43 RCW.

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

NEW SECTION.  Sec. 1   The legislature recognizes the motion picture industry in Washington as a valuable commodity contributing greatly to the economic vitality of the state and the cultural integrity of our communities. The legislature further recognizes the production of in-state motion pictures, television programs, and television commercials creates a marked increase in tourism, family wage jobs, and the sale of local goods and services generating revenue for the state. Furthermore, with captive national and international audiences, the world is introduced to the state's pristine scenic venues and reminded that the Pacific Northwest is a great place to live and raise a family. The legislature also recognizes the inherent educational value of promoting arts and culture as well as the benefits of training young motion picture professionals who will build a fruitful industry for years to come.
     The legislature finds in recent years that the state has realized a drastic decline in motion picture production that precludes economic expansion and threatens the state's reputation as a production destination. With the emergence of tax incentives in thirty states nationwide, in-state producers are taking their projects to more competitive economic climates, such as Oregon and Vancouver, British Columbia, where compelling tax incentive packages and subsidies are already in effect.
     The legislature also finds that in recent years increasingly workers in Washington state are without health insurance coverage and retirement income protections, causing hardships on workers and their families and higher costs to the state.
     Therefore, it is the intent of the legislature to recognize both national and international competition in the motion picture production marketplace. The legislature is committed to leveling the competitive playing field and interested in a partnership with the private sector to regain Washington's place as a premier destination to make motion pictures, television, and television commercials. While at the same time the legislature is committed to ensuring that workers in the motion picture and television industry are covered under health insurance and retirement income plans.

NEW SECTION.  Sec. 2   The following definitions apply to this chapter, unless the context clearly requires otherwise.
     (1) "Approved contribution" means cash contributions.
     (2) "Approved motion picture competitiveness program" means a nonprofit organization under the internal revenue code, section 501(c)(6), with the sole purpose of revitalizing the state's economic, cultural, and educational standing in the national and international market of motion picture production by recommending and awarding financial assistance for costs associated with motion pictures in the state of Washington.
     (3) "Costs" means actual expenses of production and postproduction expended in Washington state for the production of motion pictures, including but not limited to payments made for salaries, wages, and health insurance and retirement benefits, the rental costs of machinery and equipment and the purchase of services, food, property, lodging, and permits for work conducted in Washington state.
     (4) "Department" means the department of community, trade, and economic development.
     (5) "Motion picture" means a recorded audio-visual production intended for distribution to theaters, DVD, video, or the internet, or television, or one or more episodes of a single television series, or a commercial. "Motion picture" does not mean production of a television commercial of an amount less than two hundred fifty thousand dollars in actual total investment or one or more segments of a newscast or sporting event.
     (6) "Funding assistance" means cash expenditures from an approved motion picture competitiveness program.
     (7) "Person" has the same meaning as provided in RCW 82.04.030.

NEW SECTION.  Sec. 3   (1) The department shall adopt criteria for an approved motion picture competitiveness program with the sole purpose of revitalizing the state's economic, cultural, and educational standing in the national and international market of motion picture production. Rules adopted by the department shall allow the program, within the established criteria, to provide funding assistance only when it captures economic opportunities for Washington's communities and businesses and shall only be provided under a contractual arrangement with a private entity. In establishing the criteria, the department shall consider:
     (a) The additional income and tax revenue to be retained in the state for general purposes;
     (b) The creation and retention of family wage jobs which provide health insurance and payments into a retirement plan;
     (c) The impact of motion picture projects to maximize in-state labor and the use of in-state film production and film postproduction companies;
     (d) The impact upon the local economies and the state economy as a whole, including multiplier effects;
     (e) The intangible impact on the state and local communities that comes with motion picture projects;
     (f) The regional, national, and international competitiveness of the motion picture filming industry;
     (g) The revitalization of the state as a premier venue for motion picture production and national television commercial campaigns;
     (h) Partnerships with the private sector to bolster film production in the state and serve as an educational and cultural purpose for its citizens;
     (i) The vitality of the state's motion picture industry as a necessary and critical factor in promoting the state as a premier tourist and cultural destination;
     (j) Other factors the department may deem appropriate for the implementation of this chapter.
     (2) The board of directors created under section 4 of this act shall create and administer an account for carrying out the purposes of subsection (3) of this section.
     (3) Money received by an approved motion picture competitiveness program shall be used only for: (a) Health insurance and payments into a retirement plan, and other costs associated with film production; (b) a tax credit marketer to market the tax credits authorized under section 6 of this act; and (c) staff and related expenses to maintain the program's proper administration and operation.
     (4) Maximum funding assistance from an approved motion picture competitiveness program is limited to:
     (a) Twenty percent of a total actual investment in the state of at least five hundred thousand dollars, for a single feature film produced in Washington state;
     (b) Twenty percent of a total actual investment in the state of at least three hundred thousand dollars per television episode produced in Washington state; or
     (c) Twenty percent of a total actual investment in the state of at least two hundred fifty thousand dollars for an infomercial or television commercial associated with a national or regional advertisement campaign produced in Washington state.
     (5) No single motion picture production or episodic television project may be awarded an amount greater than one million dollars from an approved motion picture competitiveness program.

NEW SECTION.  Sec. 4   (1) A Washington motion picture competitiveness program under this chapter shall be administered by a board of directors appointed by the governor.
     (2) The board shall evaluate and award financial assistance to motion picture projects under rules set forth under section 3 of this act.
     (3) The board shall consist of the following members:
     (a) One member representing the Washington motion picture production industry;
     (b) One member representing the Washington motion picture postproduction industry;
     (c) Two members representing labor unions affiliated with Washington motion picture production;
     (d) One member representing the Washington visitors and convention bureaus;
     (e) One member representing the Washington tourism industry;
     (f) One member representing the Washington restaurant, hotel, and airline industry; and
     (g) A chairperson, chosen at large, shall serve at the pleasure of the governor.
     (4) The term of the board members, other than the chair, is four years. A board member appointed by the governor may be removed by the governor for cause under RCW 43.06.070 and 43.06.080.
     (5) Five members of the board constitute a quorum.
     (6) The board shall elect a treasurer and secretary annually, and other officers as the board members determine necessary, and may adopt bylaws or rules for its own government.
     (7) The board shall make any information available at the request of the department to administer this chapter.
     (8) Contributions received by a board shall be deposited into the account described in section 3(2) of this act.

NEW SECTION.  Sec. 5   Notwithstanding amounts previously committed by a Washington motion picture competitiveness program board of directors for financial assistance, upon a determination by the department by July 1, 2009, any approved motion picture competitiveness program with funds greater than one million five hundred thousand dollars to be used for the purposes under section 3(3) of this act, shall transfer amounts in excess of one million five hundred thousand dollars to the state treasurer for deposit into the state general fund.

NEW SECTION.  Sec. 6   A new section is added to chapter 82.04 RCW to read as follows:
     (1) Subject to the limitations in this section, a credit is allowed against the tax imposed under this chapter for contributions made by a person to a Washington motion picture competitiveness program.
     (2) The person must make the contribution described in the application required under subsection (9) of this section by the end of the calendar year in which the application is approved to claim a credit authorized under this section.
     (3) The maximum credit allowed for a person is limited to an amount equal to the approved contribution made by the person to a program, not to exceed one million dollars. The amount of credit specified in the application cannot be increased after the contribution is approved by the department.
     (4) The department shall determine the cumulative total of all credits approved for each fiscal year. The department shall not approve any credits under this section that would cause the total amount of approved credits statewide to exceed five million dollars in any fiscal year.
     (5) Except as provided under subsection (6) of this section, a tax credit claimed under this section shall not exceed the tax liability of the person and may not be carried over to another year.
     (6) Any amount of tax credit otherwise allowable under this section not taken by the person in any calendar year may be carried over and taken against the person's tax liability for the next succeeding calendar year. Any credit remaining unused in the next succeeding calendar year may be carried forward and used in the second succeeding calendar year; and any credit not used in that second succeeding calendar year may be carried over and used in the third succeeding calendar year, but may not be carried over for any calendar year thereafter.
     (7) Credits are available on a first in-time basis. The department shall disallow any credits, or portion thereof, that would cause the total amount of credits claimed during the current fiscal year to exceed five million dollars. If this limitation is reached or exceeded, the department shall notify those persons who have not claimed their entire approved credit amount that no more credits may be claimed during the remainder of the fiscal year. In addition, the department shall provide written notice to any person who has claimed tax credits in excess of the five million dollar limitation in this subsection. The notice shall indicate the amount of tax due and shall provide that the tax be paid within thirty days from the date of such notice. The department may require the person to report the credits taken and credits deferred in a form and manner necessary to determine the amount of credits approved, claimed, and deferred.
     (8) When claiming a credit, unless the credit is a carry-forward, the person shall include a letter of verification from the program of the contribution.
     (9) Application for tax credits under this section must be made to the department in a manner prescribed by the department. The department shall rule on the application within forty-five days from when it is received.
     (10) This section applies to calendar years beginning on or after January 1, 2006. The department shall not accept any applications for the credit under this section before June 30, 2006. The department shall not approve any credit under this section before August 15, 2006.
     (11) For the purposes of this section, "Washington motion picture competitiveness program" or "program" means an organization established pursuant to chapter 43.-- RCW (sections 1 through 5 of this act).

NEW SECTION.  Sec. 7   Sections 1 through 5 of this act constitute a new chapter in Title 43 RCW.