Photo by Powderhouse Productions in Somerville, Mass.

"Hollywood East" isn't the most imaginative nickname that Massachusetts' burgeoning film and television industry could have been tagged with, but the Bay State media have made it stick. And goofily optimistic though the title may be, Massachusetts has worked hard for it. In 2005, under Gov. Mitt Romney, a Republican, the commonwealth was part of the first wave of states to institute film and television production tax credits. Romney's Democratic successor, Gov. Deval Patrick, expanded the credits two years later. The program now offers a 25 percent tax credit on all in-state spending—more generous than nearby New York, which offers a 30 percent credit only on below-the-line costs, but less generous than competing states such as Michigan, which offers a 40 percent credit.

The result, according to industry insiders, has been a dramatic uptick in the number of productions shot in the state. The most high-profile growth has come in feature film production. Several of Hollywood's recent successes ("Bride Wars," "Paul Blart: Mall Cop," "Shutter Island") and potential future hits (David Fincher's "Social Network," the Christian Bale–Mark Wahlberg feature "The Fighter") have been shot in Hollywood East.

But the tax credits on which the Massachusetts film and TV industry is built are being reconsidered. Faced with a record budget shortfall, Gov. Patrick has proposed restrictions that would cap the program's budget at $50 million. (In 2008, Massachusetts issued $113 million in credits.) Last week, the state Legislature's Joint Committee on Revenue held hearings on a bill by Rep. Steve D'Amico that would create a per-production cap of $7 million—the same cap that was in place during the program's first year, when the state issued only $16 million in credits. Count D'Amico among those who believe that the promise of Hollywood East is too good to be true.

"It makes no sense," D'Amico said. "People are under the delusion here, and in the 44 other states that are paying taxpayer money to lure Hollywood jobs to their state, that somehow we're going to build a sustainable new sector of our economy. Look, that's not true."

Numbers Game

D'Amico argues that with so many states offering incentives, true production hubs are unlikely to sprout anywhere. Instead, casts and crews are becoming "migrant workers" forced to "follow the tax subsidies around." According to D'Amico, Massachusetts, with its $2.75 billion projected budget shortfall, can ill afford to stay in what he calls "a race to the bottom." He pointed to a study last year by the state's Department of Revenue that found that in 2008 Massachusetts earned only 15 cents for every dollar spent on the tax credit, creating a loss of $95 million. D'Amico admits that Patrick's plan to apply a temporary $50 million cap is more likely to pass than his own measure, but he wishes more could be done.

"I would have pushed to eliminate them entirely," he said of the credits, "but I figured it was more politically realistic to go back to the caps we had in place in 2006."

Champions of the tax credit have their own research to back up the argument that Massachusetts can and should make film a permanent presence in the state. In February, a University of Massachusetts Boston study characterized the industry as one of the few bright spots in an otherwise bleak state economy, noting, "Employment in film and television production has increased in Massachusetts during a period when total state employment has been on the decline." The study found that Massachusetts' production industry was one of the fastest growing in the country, ahead of several states that offer more-lucrative incentives. Pacey C. Foster, one of the paper's authors, said his work does not contradict the Department of Revenue study but rather takes a more holistic view of the industry.

"By thinking about the tax credit only as a short-term annual return on investment, we miss the larger questions, which have to do with the long term and whether we think Massachusetts has a long-term potential to have a permanent film and TV industry here or not," Foster said. "If you think that we do, then the question is, 'How do we make that happen?' "

Foster believes it would be "good for the commonwealth to establish the film and TV industry." To do that, he said, Massachusetts will need to do more than just preserve the tax credit. Foster and others note the importance of building a permanent soundstage facility in the area. (Three such projects are in different stages of development, though none is yet a done deal.) But according to the UMass Boston professor, the industry has already taken root in some parts of the state. He cited Powderhouse Productions, a Somerville-based production company started in 1994, as one of the region's success stories.

Tug Yourgrau, president and co-founder of Powderhouse, has advocated for keeping the existing tax credits in place. "That money was like Miracle-Gro to us," Yourgrau said when asked what impact the tax credits have had on his business. "What this tax-credit money allowed us to do was hire development staff to create ideas for future work and to buy equipment." Four years ago, before it had received any incentive money, Powderhouse employed 45 people. Today it employs 125. "That's in the depth of the recession," Yourgrau said.

Acting Up

The recession has been unkind to Americans across all walks of life. Film and television actors, whose industry is being transformed by historic changes in advertising and distribution, have not been spared any pain. Powderhouse is in the business of what Yourgrau calls "nonfiction television"—reality and documentary programming. Actors deal in fiction. But according to Paul Horn, president of the American Federation of Television and Radio Artists' Boston local, actors have benefited from Massachusetts' film and TV growth just as the people behind the cameras have.

"More actors are choosing to stay here instead of fleeing to the West Coast or even to New York," Horn said, adding that some of his members visit New York on a regular basis for audition opportunities. "But that's changing as we nurture more production here."

Horn also spoke of theater schools at Boston University, Brandeis, Emerson, and elsewhere as hotbeds of talent that can help grow a permanent production community in Boston: "As those students see more opportunities here, they may stick around."

Both Horn and Douglas Bowen Flynn, president of the Screen Actors Guild's Boston branch, have seen their rosters swell in recent years. Flynn pointed to his own career as an example of how Massachusetts' acting community has benefited from the increased industry presence—and from the tax incentives he believes help fuel it. He now travels less to New York for auditions. He is working more and working closer to home.

"I am getting ready to put an offer in on a new home, and this incentive is what's making that possible," Flynn said. "It's made a tremendous difference in both my life and in my career."