Cast and crew film a scene for the indie movie “Hangdog” at the Eastern Promenade in 2022. Derek Davis/Staff Photographer

The Maine Film Office has poorly run a state program that incentivizes filmmakers to work in Maine, the state’s independent watchdog office found in a new report.

The Office of Program Evaluation and Government Accountability found that “the administration of Maine’s VM (visual media) incentives has been inadequate to create consistent and clear decisions and processes, ensure statutory compliance, provide information needed for oversight, promote the state’s incentives and highlight issues that should be addressed,” the agency wrote to the Legislature’s Government Oversight Committee in a report last month.

Just two weeks earlier, legislators had presented a bill to bolster the state’s VM incentives and make them accessible for smaller productions from Maine companies. But the Legislature’s Taxation Committee chose to carry the bill over into the next year – for the second time – at the suggestion of Sen. Mattie Daughtry, D-Brunswick, who is sponsoring the bill.

“We are going to honor that request in light of ongoing review by OPEGA and the Government Oversight Committee and our committee of that incentive program in general,” Taxation Committee Chair Sen. Nicole Grohoski, D-Hancock, said at a hearing Thursday.

Maine’s film incentives were created in 2006 and put under the oversight of the Maine Film Office, a part of the Maine Office of Tourism under the Department of Economic and Community Development. The state originally offered a 5% tax credit for nonwage production expenses and 10% to 12% wage reimbursement for productions estimated to cost over $250,000. Over the last 17 years, the spending requirements were reduced and caps for wage reimbursement were introduced.

But, OPEGA wrote in its report, “relatively few changes have been made to the VM incentives,” while “the media industry has evolved dramatically” over the course of nearly two decades.

In that time, there have only been nine tax credit claims and 95 wage reimbursements through the incentive program, while just 54 certified productions have been completed in Maine since 2013.

Some of those productions include the “Maine Cabin Masters” reality TV show, a MaineHealth commercial, a handful of L.L. Bean ads and the Disney Channel’s “Bug Juice.”

Compared to the 37 other states that offer film production incentives, Maine offers the lowest tax credit in the country, 5%, with what OPEGA calls benefits that don’t compete with the rest of the country.

Low use of the incentives has kept program costs low. But even so, the Maine Revenue Services estimates the incentives will cost the state $860,000 in 2024 and 2025. Meanwhile, the Maine Film Office has taken 46 out-of-state trips since 2013 costing the state $86,000 in the last four years alone.

‘LIMITED EFFECT’

Those figures don’t necessarily mean Maine’s film industry is nonexistent or insignificant. According to a study by the Maine Film Association, the film production industry has directly brought $29.3 million to Maine’s economy and indirectly sparked $64.3 million in output.

But, OPEGA asserts, the incentives and how the Maine Film Office operates them are not the driving force that is bringing these productions in. OPEGA has concluded the main issues lie with how the visual media incentives are structured and how they are administered.

“Maine’s incentives have had limited effect and are unlikely to become effective without a concerted revisioning and redesign aimed at achievement of specific goals,” OPEGA wrote. “They are not widely used, in part because the tax credit is inaccessible to many taxpayers and the incentive amounts are not competitive with other states’.”

But perhaps more damning, the Maine Film Office has not done its job to effectively administer the program.

“The Maine Film Office has not ensured statutory compliance, clarity about program requirements and confidentiality of data, or consistent treatment of program participants,” OPEGA writes, adding that the reporting process was slow because Maine Film Office struggled to produce its basic records.

Alongside identifying the issues, the Government Oversight Committee also tasked OPEGA with providing some guidance to resolve them.

Throughout the report, OPEGA repeatedly notes that the incentives are behind the times. As a result, OPEGA recommends legislators modernize the incentives statute with a clear purpose, goals, stronger data collection and streamlined process for production companies who want to use the incentives.

Whether or not that happens, OPEGA asserts that something needs to change with how Maine Film Office administers the program.

“DECD should ensure full statutory compliance and that Maine Film Office is a good steward of state resources,” the agency concludes.

Whether the Maine Film Office and DECD could face any repercussions remains to be seen.

OPEGA Director Peter Schleck said that both the Government Oversight and Taxation committees will determine how to act on the report in upcoming work sessions.

In a letter to the Government Oversight Committee, DECD Commissioner Heather Johnson and Deputy Commissioner Denise Garland said the Maine Film Office will be taking action steps to address some of the issues and challenges OPEGA outlined in its report.

Rules for program oversight, a better database are to come and a study on Maine’s film industry are also to come by the end of the summer, they wrote.

But with Director Karen Carberry Warhola as the one and only person in the Maine Film Office, Johnson and Garland said, “it is a very small program that has some well-documented challenges.”

“We are confident that no misappropriation of funds has resulted from this program,” they wrote.