Budget Hawks Scoff at Hochul Plan To Boost New York’s Film Tax Credit

Taxpayers in New York state can be forgiven if they never heard that Warner Brothers in 2018 made a reboot of a 1980s sitcom, “Murphy Brown.” That’s because few people watched the 13-episode season on CBS, and it was quickly cancelled.Regardless of whether they watched the show, though, New York’s taxpayers paid a hefty portion of its budget — more than $22 million, in fact, in the form of state tax credits for the show’s producers and backers.Now, Governor Hochul wants to throw even more state money at the film and television industry. The governor included an additional $280 million in tax credits for the film and entertainment industry in her proposed budget this year, adding to an existing $420 million in credits for the industry.For individual employees, including actors and directors, the proposed program would apply to the first $500,000 of their salaries. According to the state, the full $420 million in tax credits are routinely claimed.Recent productions besides “Murphy Brown” that have claimed a tax credit include Comedy Central and Paramount’s “Emily in Paris,” which took about $537,000, and “Gemini Man,” at $3.8 million in tax credits.If passed, this new $700 million tax credit would be the single largest tax credit that the state offers to any industry, a fact that has already drawn criticism from budget hawks.A founding senior fellow at the Empire Center, E.J. McMahon, said that the proposal to expand the “already enormous Film Tax Credit subsidy would be sufficient to expand the Empire State Child Credit by 50 percent.”It is not the first time this tax credit has inspired outrage. In 2020, the Citizens Budget Commission published a report questioning the value of the tax incentive in making New York more competitive for the film industry.The commission found that “despite sustained and growing investment, the film tax credit has not produced enough value for New Yorkers, and should be eliminated.”It also found that the tax credit did not help to make wages in New York more competitive than in other top states, like California.California, which capped its tax credit at $330 million a year in 2020, reported wages twice as high as New York in the film and television industry, while making nearly two times as many movies and nearly two-and-a-half times as many television shows.According to Ms. Hochul and her administration, the program is critical in competing with New Jersey and keeping jobs in New York. She also wants to include an additional 5 percent tax credit for projects that relocate to New York state.The governor has also rebutted claims that the motivation for expanding the tax credit was political, as she received donations from some big names in Hollywood for her election, including director Steven Spielberg.“Nothing I do in a budget is driven by politics, election outcomes. I’m guided by what’s best for New Yorkers,” Ms. Hochul told reporters last week.“The proposed enhancement of the film tax credit will grow the film industry and keep New York competitive in this very important sector of our economy,” a spokeswoman for Empire State Development, Kristin Devoe, said.Empire State Development, the state entity that oversees the current tax credit program, also claims that the credit “has generated over $20 billion in spending and created 57,300 direct and indirect jobs in the Empire State.”According to a third-party review mandated by state law, the tax credit, as it exists now, turns a modest profit for the state and its municipalities, with every $1 in credits generating $1.03 in revenue.Other states, however, have come to different conclusions on their own programs, with the California Legislative Analyst’s Office finding “that the costs exceeded the benefits” in terms of the state’s bottom line.The Pennsylvania Independent Fiscal Office also found that the effects on state revenues were negative, reporting that the state made “13.1 cents of state tax revenue for each tax credit dollar,” a finding it says is more in line with other state reports and academic findings than New York’s findings.While there are still two months until the budget needs to be finalized and eventually passed by the state legislature, observers are already beginning to question the film tax credit as a budgetary priority.

Budget Hawks Scoff at Hochul Plan To Boost New York’s Film Tax Credit

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