N.Y. state eyes $350 mil for productions

Budget bill includes only limited funding for tax credits

NEW YORK -- New York would free up an additional $350 million for an existing film and TV production tax credit program under a budget agreement reached in Albany over the weekend.

Industry folks said, though, that the funding is a small Band-Aid for the short-term rather than a long-term solution. Their main concern: The new funding won't attract and bind TV shows to the state, and it likely will run out within less than a year.

New York state lawmakers are set to vote on the budget bill by Wednesday, with political observers saying its passage is far from certain given a secretive budgeting process, small majorities in the legislature and a big budget deficit.

Industry observers said the limited tax credit financing for productions in the Empire State could be a blow to New York's hopes to attract new TV shows and maybe even efforts to retain existing shows like "30 Rock."

"We are going to get work but not long-term commitments," said John Johnston, executive director of the New York Production Alliance. "There is no long-term guarantee for TV shows that want to come to the state."

He did say, however, that NYPA is "very grateful that the state recognized the importance of the industry."

Industry reps have been pushing hard to renew funding for the state's popular 30% tax credit on below-the-line production costs that runs through 2013 and had attracted films and TV shows to the Empire State. They have been fighting for unlimited funding, pointing to the financial benefit the program has brought to the state. They have also argued that productions, especially in TV, need planning security when putting together their budgets and deciding on a location.

The new funding provision, however, is capped, and industry observers expect the money to run out quickly. Last year alone, the state allocated $460 million in tax incentives.

The state's previous $690 million tax incentives program ran out of money earlier this year because of its popularity, and Gov. David Paterson's budget draft this year included no new funding. Industry folks have lobbied the State Assembly and Senate to add more funding, pointing to an Ernst & Young study that showed the positive effect of the tax credits on the state's tax revenue and employment.

New York hasn't attracted new TV projects since the incentives program ran out of funding. Also, pilots have moved to neighboring or nearby states such as New Jersey and Rhode Island. ABC moved its pilot for "Empire State" to the latter, for example.

Stuart Suna, president of Silvercup Studios, said he doesn't expect New York to attract any new TV shows this season given the funding cap.

"New York state really lost out on a big opportunity because (film and TV) is one of America's biggest exports, and productions keep people employed and bring in tax revenue," he said.

Johnston and Suna said the industry will continue to push for legislation outside the budget bill that would provide unlimited funding for the production incentives.

"We certainly don't want to wait until next year's budget to talk about this," Johnston said. "This is a short-term fix, not a long-term solution."

Industry folks point out that the incentives get paid out long after the state gets additional tax revenue from productions, which also employ more people. This means the tax credits are a boon for the state at a time of declining tax revenue and gaping budget holes due to the recession.

The Ernst & Young report found that for 2007, New York's incentives program created and retained 7,031 industry jobs in New York, or 19,512 when including other sectors. The study also found that production credits amounting to $184 million for the year led to added state taxes of $209 million. For 2004-10, the study predicted $2 billion in added revenue from incentive-related economic activity in the state.

"This is an economic engine, but it needs fuel," Johnston said.