Sen. Al Melvin, R-SaddleBrook, wants to allow production companies to claim a 20 percent tax credit on expenditures of at least $250,000.
Under his Senate Bill 1242, the companies can get an additional 5 percent if they heavily used a production facility in the state.
They could also claim a credit for wages paid to workers who are Arizona residents and are directly involved in the production.
The proposal is not new.
The film industry has been trying to persuade lawmakers to pass the incentives ever since an older tax credit program expired in 2010, arguing the incentives would help Arizona compete with other states.
But already, the proposal is facing some stiff opposition.
Sen. Steve Yarbrough, R-Chandler, said he won’t hear the bill if it is assigned to the Senate Finance Committee, which he chairs.
Yarbrough is balking at the bill’s refundable tax credit provision, which would allow a company to get a refund if the credit exceeded its tax liability or if it has no tax liability.
Additionally, Yarbrough doesn’t think the program would create lasting jobs.
“It is quite one thing to say that if you have a tax liability, you’re going to get some relief because you’re doing some otherwise really positive economic development aspects, but the fact that you could get money back from the state without actually having had a tax liability – to me I just think is really poor public policy,” Yarbrough said.
But Barry Aarons, who is lobbying for the bill’s passage, said the refundable provision would help a company reduce its production costs.
“And that’s the incentive that brings you here,” Aarons told the Arizona Capitol Times, lamenting that Arizona has failed to snag several TV series and film productions because other states offered incentives.
Aarons said states are engaged in a fierce competition to attract businesses and Arizona has the option to compete and bring in jobs and investments here.
He also rejected Yarbrough’s assertion that the jobs won’t be permanent, envisioning a growing multimedia workforce as film, TV and other productions come to Arizona.
Just like last year’s bill, Melvin’s proposal would have created a non-refundable tax credit capped at $70 million a year.
To qualify, a company must invest at least $250,000. Also, certain additional investments would allow a company to get more in tax credits.