Industry Report: Financing
What New York Can Buy With $2.1B
- The New York State Senate recently passed legislature agreeing to extend New York’s production tax credit until 2015 and it is expected that the state governor will sign the new legislature into law
The recession has taken a toll on nearly every trade, and New York's film and TV industry hasn't been spared any fiscal grief. But the Empire State's actors have reason to breathe easier this month. On Aug. 3, the state Legislature passed a measure extending New York's film and TV tax-credit program, allotting $2.1 billion in incentives over a five-year period ($420 million per year) to projects that complete a percentage of their shooting and postproduction work inside state lines. The tax credit comes, at long last, as part of the newly passed state budget, due by April 1 but delayed this year for four interminable months.
The tax incentive, which offers a 30 percent rebate on below-the-line expenditures for qualified projects, as well as a 10 percent rebate on postproduction work completed in New York, is nothing new: Funding for the program has been renewed yearly since 2004. But the five-year extension, which guarantees the credits until 2015, is an unprecedented commitment from Gov. David Paterson and the lawmakers in Albany. By most accounts, this is a very good thing.
"We are absolutely thrilled," said Nancy Fox, the Screen Actors Guild's national director of government relations and policy. "This tax incentive, frankly, is a win-win for the New York entertainment industry as well as New York taxpayers. It is the smartest thing for the New York Legislature to do. We've all worked very hard to get this passed."
Assemblyman David I. Weprin, a Queens Democrat who helped pass New York City's own production tax-credit program as a City Council member in 2005, was likewise pleased that the extension made it into the final budget. "This is exactly the kind of expansion of an industry that creates jobs," he said. "It's not just the people involved in the film production directly. There's a secondary and tertiary effect. There are so many different businesses, like the food service industry and the car service industry, especially during tough fiscal times, that really benefit from additional filming."
Weprin has the numbers to back him up. A study released by the state comptroller in March revealed that the state tax-credit program, along with the 5 percent rebate offered by New York City's Made in NY program to productions that film within city limits, drove $7 billion into the state's economy between 2004 and 2008. The accounting firm Ernst & Young estimated in January 2009 that the tax credits would cost the city and state $215 million yet generate $404 million in tax revenue and help keep or create 19,500 jobs. In a prime example of the program's success in luring productions eastward, ABC's "Ugly Betty" famously quit Los Angeles for New York in 2008—a move that was oft cited in California's successful campaign to launch its own tax-credit program last year.
"It's been a phenomenal program," Weprin said of the New York version. "It's brought tremendous revenue and expanded a major industry in New York City as well as throughout the state. It enables us to compete with other jurisdictions. New York City and New York state, for that matter, are places that people want to film."
Worry, Worry, Worry
But despite its proven track record, things were looking dire for the state tax credit this summer, due in part to the ailing state economy and in part to dysfunction in Albany. In May, with progress on the state budget stalled, NBC announced it had canceled its long-running drama "Law & Order," a TV series that—as the Mayor's Office of Film, Theatre & Broadcasting told The New York Times—provided 4,000 jobs per year to actors and other workers in New York City.
"You're dealing with a tough legislative situation, where you have a very close majority in the state Senate," Weprin said. "For a while it was very hard for them to get 32 votes to pass anything. So yeah, I was worried."
At the time, members of the New York acting community, including Mike Hodge, president of SAG's New York division, and Holter Graham, president of the American Federation of Television and Radio Artists' New York local, expressed apprehension that a holdup in the tax program's renewal would lead to further job loss. "Speaking officially as the president of the American Federation of Television and Radio Artists for New York, the tax incentive plan that should be built into the state budget for New York film and television is the single most important factor in the health of the industry and a large percentage of the city's economy for the near future," Graham told Back Stage in May.
There have already been apparent casualties. In 2009, the Fox series "Fringe," which originally filmed in New York, packed up for Canada amid uncertainties over the future of the state's tax credits. In May of this year, New York Production Alliance executive director John Johnston told Back Stage the television industry "really expects and needs reassurance that there's going to be a multiyear commitment" and blamed the lack of such a commitment for the declining number of TV pilots being shot in New York—from more than 20 in 2008 to fewer than 10 in each of the last two years.
Aware of how important a long-term commitment would be to creating work for actors, SAG teamed up with a coalition of industry organizations—including AFTRA, the Motion Picture Association of America, the Teamsters union, the New York Production Alliance, Silvercup Studios in Queens, and Steiner Studios in Brooklyn—to push Albany on the issue.
"There were a considerable amount of lobbying days up in Albany," said SAG's Fox. "I think the most important thing we were trying to get across is that this very much affects working people and their families. This is not a Hollywood giveaway to producers. This actually creates jobs for middle-class New Yorkers."
Five Good Years
According to Fox, New York actors will see considerable benefits from the tax-credit program come next pilot season. "What producers need to know more than anything is that there is some stability to the tax credit," she said. "A television show that can see that they could possibly be located in New York City for at least a period of a few years is going to be invested in New York and really take advantage of all the things New York has to offer, including the fantastic creative base."
According the Mayor's Office of Film, Theatre and Broadcasting, four new shows for the fall season that have taken advantage of that creative base and filmed in the city are "Blue Bloods" (CBS), "Boardwalk Empire" (HBO), "Rubicon" (AMC), and "Big Lake" (Comedy Central).
It's too early to cite examples of projects that will come to New York as a result of this new stability. But Ed Lammi, executive vice president of production for Sony Pictures Television—which produces New York–based series such as "Rescue Me" and "Damages"—asserted that such security factors heavily when choosing production sites.
"Waiting year by year is very difficult for us," Lammi said. "It makes it less likely that we would look at that venue. The fact that you can count on this for multiple years is important, because in television we generally have to look at the finances over at least a five-year horizon. Without the tax credits having been passed, there would have been projects that we would have looked at and said, 'Well, maybe we should think of other locations.' Now we can say, 'We'll look at New York.' "
There is, of course, the quite likely possibility that the program will be so successful in attracting projects to the state that it will run out of money. It happened with California's tax-incentive program this year, leaving it broke until at least 2011. But given the considerable return on investment that the tax credits have generated in New York, it's a scenario that Weprin welcomes with open arms.
"I'd be happy if it's used up quickly," he said. "It just shows that it's working, and it's an incentive to go back to the Legislature and to say that we need to expand it."
Did you enjoy reading this article? Please subscribe to our newsletter to receive more stories like this directly in your inbox.