Hawai'i has seen a surge in film and TV projects in the 12 months since the state began offering producers a refundable tax credit of up to 20 percent of expenses.

Twenty-seven productions — including Universal Picture's "Forgetting Sarah Marshall" and DreamWorks SKG's "Tropic Thunder" — have applied to take advantage of the new credits since they took effect July 1, 2006.

The productions plan to spend $126.7 million in Hawai'i, according to the Hawaii Film Office.

"I think this is easily going to be a record year," said Dean Des Jarlais, treasurer for Hawaii Media Inc., a Halawa lighting and camera equipment rental company. "The credits have lit a fire, and we now are competing with other states and countries."

The new law gives producers a refundable tax credit of 15 percent on O'ahu and 20 percent on the Neighbor Islands. That's up from 4 percent under the old law. Because the credits are refundable, productions can get that money from the state regardless of whether they have a tax liability.

Lawmakers boosted the credit to attract film and television productions to Hawai'i and compete effectively against other states that offer similar incentives, such as New Mexico and Louisiana.

So far the credits are working as planned and were key to landing "Forgetting Sarah Marshall" and "Tropic Thunder," said state Film Commissioner Donne Dawson.

"This is the busiest summer we've had in a long time," she said. The credits "are doing what we intended. ... It is increasing the level of activity. It's been a success."

The tax credits are available to commercial projects with budgets of $200,000 or more. The amount of credit is capped at $8 million per production. The 27 productions that applied for the credits during the program's first year could qualify for $22.3 million in state production tax credits. The film office discloses the project and production company identities but keeps financial data for individual projects confidential.

Proponents for the tax credits contend the program's cost is more than offset by the economic activity, tax receipts and publicity for the state that are generated. For example, the 27 projects planned to hire 5,323 people, mostly part-time, including 4,276 residents, according to the film office. Those budget and job figures are partially based on preliminary estimates and could change once final expense reports are filed with the state.

"It's great for business and it brings in money from outside the state," said Carol O'Leary, owner of O'Leary's Catering, which provides catering services on O'ahu and Maui.

Tax credit critics question whether the state needs to stimulate the film and TV industry when the economy already is booming. There's also concern the credits are a bonus for companies that may shoot films and commercials in Hawai'i anyway.

Among the upcoming films that intend to utilize state tax credits: