Hawai'i's film and television industry had its fourth-best year in 2008, though spending was down significantly from 2007's record as a writers strike and a slowing economy took its toll on projects.

The state Film Industry Branch said direct expenditures totaled at least $146 million last year as dozens of projects shot here. That included feature films such as "The Tempest" starring Academy Award-winner Helen Mirren and 20 episodes of the television game show "Wheel of Fortune." There were also nearly 50 television commercials shot here.

The total was down 36 percent from 2007's $229 million of expenditures, when the state was able to attract several films that did most of the production work here. But last year a writer's strike cut into the number of 2008 productions, and along with an economic downturn, cut into the amount of work available.

"We took a hit because of the writer's strike," said state Film Commissioner Donne Dawson.

"By the time things got on track for 2008 we were well into March."

Still, the state benefited from the presence of the hit ABC television show "Lost," and was able to attract other projects such as the shooting of the season premiere of HBO's "Entourage" and the television movie "Flirting with 40," which starred Heather Locklear.

A feature film about Princess Ka'iulani was shot mainly here, as was a Japanese film shot mainly in Honoka'a on the Big Island, and a part of an upcoming film starring Matt Damon, "The Informant."

Among the commercials shot here were those for AT&T, Jenny Craig, Shiseido and Max Factor.

Many of the productions were attracted by a state tax credit for motion picture, digital media and film productions that gives a 15 percent tax break for projects on O'ahu and 20 percent break for work on the Neighbor Islands.

Final numbers aren't in yet, but last year 31 projects filed for $13.5 million of the credits. That was on qualified production costs of $93.5 million. (Spending is higher when productions not applying for credits are added.)

Tax credits, particularly the state's 100 percent high-technology investment credit, have come under scrutiny as the state searches for ways to deal with a projected budget shortfall. The technology credit has been scrutinized for its cost and the number of jobs it's creating.

Lowell Kalapa, head of the Tax Foundation of Hawaii, said he has some questions about the production credit, but that concerns about the high-technology credit overshadow the film credit, which could use more transparency when it comes to how salaries of big film stars are paid and whether the 5 percent extra credit for Neighbor Islands is needed.

Other critics say some of the productions would have come here without the credits.

Last year the projects applying for the film credit employed 4,161 Hawai'i residents, or 79 percent of those employed on the sets, according to Film Industry Branch numbers.

"There is a significant amount of economic activity generated because of this," said Dawson, who noted there has been $323 million of work here since the credit went into effect in 2006. "The key thing to remember there is if they're not spending the money (here) they're not getting the incentive."

She said states are competing against each other for productions, dangling credits in front of producers to get them to their locations. She said Hawai'i lost out on the Adam Sandler movie, "The Longest Yard," because its incentives weren't hefty enough at the time, while something like Disney's "Morning Light" documentary would have shifted more filming to California if it were not for the credit.

Moreover, the credit has been largely revenue-neutral to the state, Dawson said. Her figures show that in 2007 the state paid out $22.2 million in tax credits, while the productions generated $22.1 million in direct and indirect taxes.

Others say the credit may generate much more in terms of showcasing Hawai'i's beauty worldwide and attracting more tourists here. An analysis released last month of New Mexico's 25 percent tax credit found that tourist trips increased by 4.3 percent due to the state's exposure in films.

The same report found that the production spending, combined with tourism impacts, returned $1.50 for each $1 of film tax credits.

"What we tell people is that Hollywood is going to spend the money irrespective," said Ricardo Galindez of Island Production Services and Island Film Group.

"The only question is where they are going to spend that money."