NY proposes $420 mil for film, TV tax credits
Production incentives boosting New York's tax revenueNEW YORK -- New York film and TV industry executives on Tuesday lauded Gov. David Paterson's budget proposal that includes $420 million per year in state money for the continuation of a 30% tax credit for productions in the Empire State through 2014.
The governor’s 2010-11 budget proposal calls for spending cuts in various areas but for production incentives worth $420 million per year for the tax years 2010-14, or $2.1 billion over five years, up from the $350 million allocation made last year that is nearly used up.
Paterson's budget proposal envisions not only a funding boost but also meets the industry's demands for a longer-term commitment that is key to attracting TV shows. Industry folks point to New York's loss of "Fringe" last year as evidence that another short-term extension would be harmful to the state.
Paterson's budget also contains some fine-tuning of the current program of tax credits on below-the-line costs. Experts say the tweaks could provide a boost to New York's postproduction industry and are designed to help businesses in the state. Budget materials from the governor's office say the tweaks should "enhance the state's return on investment."
For example, tax credit recipients must conduct at least 10% of shooting days at a qualified New York facility, at least 75% of postproduction costs must be incurred in the state to be considered a qualified cost, and only purchases of taxable property and services from registered sales tax vendors are eligible in the credit calculation.
Plus, productions must either use an end-credit acknowledging financial support from New York state or provide a promotional video for New York as part of the film or DVD release.
These new provisions may provide a boost to New York postproduction businesses and keep productions in the state for a few extra days. Following Paterson's budget proposal Tuesday, the New York State Assembly and Senate must now weigh in on the budget, and the state is supposed to adopt a final bill for the new budget year by April 1. In the past, the budget adoption process has sometimes in effect run into the summer, though.
While populist critics have argued that state money shouldn't go to Hollywood at a time of big budget holes, the entertainment industry has pointed to an Ernst & Young study that has shown the production incentives have boosted New York's tax revenue and led to job creation. They also highlight that the state doesn't have to shell out money ahead of time to attract productions.
"This is really fantastic," New York Production Alliance executive director John Johnston said, arguing that the New York incentives program would be "substantially funded" with this. "It will mean a lot for the New York production community, job creation (especially for the below-the-line community) and the state because the industry is bringing in money. ... Film is working for New York. Let's keep New Yorkers working in film."
According to industry research, the state not only creates jobs but also gets $1.90 in tax revenue for every dollar of tax credits, which generally get redeemed only one or two years after film or TV money flows into the state.
The governor's office seemed to validate the importance of tax revenue contributions from productions, detailing the incentives extension in a section of the budget proposal titled "Revenue Actions." Like other states, New York has faced various budget holes amid the recession and stimulus efforts.
An extension of the state incentives could also lead to a new tax credit program for New York City. The city's previous 5% tax credit program ran out of money last year, and city officials then proposed slightly lower credits. The city is reviewing the impact of the proposed state budget and a potential future NYC tax credits program.
"We are thrilled," Kaufman Astoria Studios president Hal Rosenbluth said about the governor's incentives plan. "I couldn't be happier."
Silvercup Studios boss Stuart Suna told The Hollywood Reporter that "this is really great for the film and TV industry here." Given that the new incentives program will not be in place for at least a majority of TV pilot season, Suna expressed for a speedy adoption of the budget in Albany, which in the past has sometimes dragged into the summer.
Rosenbluth called the incentives "crucial" to narrowing the gap of production costs between New York and other states with weaker film and TV infrastucture. With his studio set to open a new stage next month, he pointed to the loss of "Fringe" last year as a key loss to New York state, arguing the new incentives provision would particularly allow TV shows, such as "Nurse Jackie," which films at Kaufman, to make a long-term New York commitment.
He also lauded the budget proposal as a validation of the financial benefits of the incentives for the Empire State. "The governor has recognized how well the program has played out," Rosenbluth said.