A few weeks before Season 2 of “House of Cards” debuted online, the show’s production company sent Maryland Gov. Martin O’Malley a letter with this warning: Give us millions more dollars in tax credits, or we will “break down our stage, sets and offices and set up in another state.”
A similar letter went to the speaker of the House of Delegates, Michael E. Busch (D-Anne Arundel), whose wife, Cynthia, briefly appeared in an episode of the Netflix series about an unscrupulous politician — played by Kevin Spacey — who manipulates, threatens and kills to achieve revenge and power.
In recent years, Maryland has spent more than $40 million to reward movie and television production companies that choose to film in the state, and most of that largesse has gone to “House of Cards.”
“This just keeps getting bigger and bigger” Del. Eric G. Luedtke (D-Montgomery), who until now has supported film tax credits, said at a hearing on the issue last Friday. “And my question is: When does it stop?”
Both seasons of “House of Cards” were filmed in Maryland, mostly in Baltimore and Harford County, although the House chamber in Annapolis was used as a set.
In addition to bringing a burst of buzz and excitement, the show created nearly 6,000 jobs and pumped more than $250 million into the state economy, economic development officials say.
In May, O’Malley (D) visited the set to promote film tax credits, exulting that Maryland was becoming “the premier destination in America for film production.”
After each season, Maryland has reimbursed Media Rights Capital, the show’s California-based production company, for a chunk of production expenses. For the first season, that totaled more than $11 million in tax credits. For the second season, reimbursements could reach $15 million.
Maryland economic development officials wanted to promise “House of Cards” another $15 million in credits for the third season, which was supposed to start filming in early spring.
But lawmakers have not agreed to boost the $7.5 million in tax credits the state allocates annually for film and television projects. Two bills that would increase the ceiling — to $11 million or $18.5 million — are in committee. House leaders say some increase is likely, but whether it will be enough to keep the show in town is unclear.
In his letter to O’Malley, Charlie Goldstein, a Media Rights Capital senior vice president, wrote that the filming schedule for Season 3 has been pushed back to June to ensure that a big enough increase has been approved.
“In the meantime I wanted you to be aware that we are required to look at other states in which to film on the off chance that the legislation does not pass, or does not cover the amount of tax credits for which we would qualify,” the letter says.
“I am sure you can understand that we would not be responsible financiers and a successful production company if we did not have viable options available.”
The letter does not specify the amount of tax credits the show is seeking.
Last year, lawmakers increased the total allocation for film tax credits to $25 million, which made the larger credits for the first two seasons of “House of Cards” possible. But lawmakers are divided on whether it is prudent to continue giving away that much tax revenue.
Last Friday’s hearing on the issue was tense, despite jokes at the beginning about how many people in the room had stayed awake until 3 a.m. to catch the debut of Season 2.
“It sounds like you are suggesting that they wouldn’t film Season 3 here after we’ve given them $31 million already,” Del. C. William Frick (D-Montgomery) said to economic development officials. “Is it possible that they would just leave after we gave them $31 million?”
“We hope that they won’t,” said Dominick E. Murray, secretary of the state Department of Business and Economic Development.
Del. Mark N. Fisher (R-Calvert) said, “We’re almost being held for ransom.”
Most states offer film rebates or tax credits, and Maryland officials said their offerings are about in the middle of the range, far behind a handful of states that don’t cap the credits at all. The District does not offer tax credits, one reason that movies and shows about the capital city are often produced elsewhere. Virginia lawmakers, meanwhile, are looking to increase their tax credit cap to $12.5 million a year.
Jack Gerbes of the Maryland Film Office said the first question production crews ask when they consider setting up in a state is: “What tax credits do you have?”
“The film industry is like any industry,” Gerbes said. In other words, it’s the bottom line that counts.