As Sylvester Stallone, Michael B. Jordan, and familiar Philadelphia scenery return to the big screen this week, moviegoers can thank Pennsylvania tax breaks for helping to make that happen.
Creed II was approved for $16.7 million in tax credits, according to state records, to conduct a majority of its filming in Pennsylvania.
Film tax credits, offered by a majority of states, are seen as crucial to attracting major motion pictures. Advocates say that films bring jobs and an economic boost to an area, but others question if it pays off to give multimillion-dollar breaks to the film industry.
In Pennsylvania, the credit is capped at $60 million annually — an amount that the film industry and some lawmakers would like to increase.
New Jersey, meanwhile, reinstated its film tax credit program this year, and it is more generous than Pennsylvania's. Former Gov. Chris Christie froze a smaller-scale version of the program in fiscal year 2011. It then ran out of money to give in credits before it expired in 2016 — after which Christie vetoed bills that would have brought it back.
The launch of a $75 million-per-year film tax credit program in New Jersey has "opened the floodgates," said Steven Gorelick, executive director of the New Jersey Motion Picture and Television Commission, with many productions interested in credits and already filming. Gov. Murphy signed the bill into law in July, and Gorelick said filming of productions has begun even before the new application for tax credits is available. He anticipates opening applications in December.
"We had gotten inquiries for many months prior to the passage of the program because the industry had been on high alert that this was a strong possibility," Gorelick said. "The production companies sort of hit the ground running. We're off to a pretty good start and next year will be extremely busy."
Both states offer a credit that can cover a percentage of production expenses; up to 25 percent in Pennsylvania and as much as 30 percent in New Jersey, with an added incentive of 35 percent to film in South Jersey. Recipients of the credits can use them to offset state taxes — in Pennsylvania, that includes the income tax and corporate net income tax.
Creed II was approved for credits spanning three fiscal years, according to Pennsylvania state records. Although some of the film is set in Los Angeles, the film had to incur at least 60 percent of its production expenses in Pennsylvania to qualify for the state tax credit.
While the Rocky brand may be inseparable from Philadelphia, but the city should not take for granted that the series will film on its streets, said Sharon Pinkenson, executive director of the Greater Philadelphia Film Office.
"They can't afford to go to a place unless they're able to get the tax credit," Pinkenson said.
Critics of the tax credits say they do not pay for themselves or spur enough economic development. A 2013 report by Pennsylvania's Independent Fiscal Office found that the state would receive about 14 cents back for every dollar of film tax credits awarded if the credits had no cap. The report found that the tax revenue generated by economic activity from film productions bring would total between $7.5 million and $14.9 million, but the net fiscal impact to state government would range from a loss of $46 million to a loss of $93 million.
Some movies set in Philadelphia are filmed elsewhere, Pinkenson said, and come to town only to capture a few scenes at Philadelphia landmarks.
The movie 17 Bridges, scheduled to come out next year, did the opposite — it was filmed in Philadelphia but is set in New York City.
"After they did all of their work in Philadelphia, they went four days to pick up iconic locations in New York," Pinkenson said.
In recent years, Gorelick said, major movies typically would film in New Jersey only for a few days due to the lack of credits. Since July, he said, he's heard from many major studios and streaming services that want to base their productions in the state. The Joker, starring Joaquin Phoenix, is already filming in Newark and Jersey City, and The Enemy Within, a NBC series, is filming scenes in the Meadowlands Arena.
Productions typically choose North Jersey, Gorelick said, in part because they do not need to pay travel fees for Manhattan-based staff. But the added incentive to film in South Jersey is meant to attract more productions to the southern half of the state.
Pinkenson hopes that will be good for Philadelphia as well.
"South Jersey doesn't have a big city," she said. "The only big city they have is Philadelphia."
Among the movies that have recently received tax credits in Pennsylvania is M. Night Shyamalan's Glass, filmed in Philadelphia and scheduled for release early next year. It was approved for nearly $7 million in tax credits. You Are My Friend, the movie about Fred Rogers starring Tom Hanks and set in Pittsburgh, was approved for more than $10 million.
State Rep. Steve Barrar (R., Delaware) was one of several co-sponsors of a bill introduced in the last legislative session in Harrisburg that would have uncapped film tax credits, allowing an unlimited amount annually rather than only $60 million. The bill did not make it to a committee vote, but Barrar said he would consider sponsoring a similar bill again in the next session.
Several states have no cap on film tax credits, making it hard for Pennsylvania to compete. Many movies have been filmed in Georgia in recent years, for example, because there is no cap there on tax breaks for films.
"It's a highly competitive area, all the states are competing for these films," Barrar said. "It's been a proven job generator."