Producers say NY tax credit extension is good news, if a temporary fix

New York State has unveiled a Budget that extends the state’s 30% film and TV production tax credit. The state has now set aside $350m for the extension of the incentive, as part of the $132bn budget presented by Governor David Paterson (given final approval by the state Senate on April 4).

The production community said the extension was something of a temporary fix, but it was still welcome news. ‘Considering the state of the global economy and the ongoing issues with SAG, the fact that a New York tax incentive still exists should be considered good news,’ said Allen Bain of production company The 7th Floor (Manito, The Missing Person). ‘I don’t believe the amount allocated is adequate but the independent film community is far better off with this decision than a total elimination of the incentive.’

New York State’s Film Production Tax Credit Program started offering a 10% tax cut to local productions in 2004, which was increased to 30% in April 2008 to lure productions away from more financially attractive neighbors like Connecticut. Yet New York’s incentive was so popular that funding ran dry too quickly — the $460m in funding allocated for the programme had been projected to last until 2013 but it ran out in less than a year, causing uproar in the local film and TV industries when it ran out in February 2009.

The film community lobbied to save New York’s tax incentives, creating a Facebook group and an online petition to Governor Paterson that had been signed by more than 14,000 people. New Yorkhad already lost some productions that went elsewhere for more stable tax breaks — for example TV shows like Warner Bros’ Fringe had moved to Vancouver and there were no TV pilots due to shoot in New York in 2009 (compared to 19 pilots in 2008.)

The industry had been lobbying for a permanent or at least a multi-year extension to the incentive programme, to give more stability and security. Most predict that the $350m will be a very temporary stopgap, likely to run out before the end of the year. Still, experts agree this measure is better than no incentive at all.

IFP executive director Michelle Byrd said: ‘It’s definitely good news. Everybody’s well aware of the economic challenges. So yes, most people would argue that [the $350m] won’t last the whole year but something is better than nothing.’

Producer Josh Braun of Submarine Entertainment added: ‘I see any movement in the right direction as good news even though it may feel like a short term fix. Better to have something in place than nothing.’

Film is likely to be better served than TV — one-off feature films are now being ramped up to go into production more quickly to take advantage of this new pot of funding before it runs out; TV shows would be more likely to want stability over several years for a long-running series.

Economic development agency Empire State Development said in a statement to Screen: ‘We are thrilled that the Budget agreement includes $350 million in new authorizations for the New York State Film Production Credit Program. This demonstrates the Governor and Legislators’ recognition of the vital role that the film and television industry plays in the state’s economy. We look forward to continuing to welcome production to all areas of New York State.’

A recent Ernst and Young report about film and TV industry in the state predicted thatfrom 2005-2010, production and related business would generate about $2.7bn in state and city tax revenues, with the estimated tax credits claimed tallying about $690m. That report said that there were 7,031 direct jobs and 12,481 indirect jobs because of film and TV in the state in 2007.

New York City also has its own additional 5% production tax credit, created in 2005 with a $30m per year budget set through 2011. That incentive, administered by the City of New York Mayor’s Office of Film, Theatre, and Broadcasting, has been unaffected by the State shakeup, although of course productions have been less likely to commit to shooting in New York City if the State tax credit was unavailable.

New York State had allocated $65m in 2008, $75m in 2009, $85m in 2010, $90m in 2011 and 2012, and $110m in 2013, offered on ‘a first come, first serve basis.’

Before the Budget news, independent producer Ted Hope wrote a think-piece to rally the industry and question the suddenness of the news in February. ‘It couldn’t have come as a surprise that $500m was gone - or that it was being spent far quicker than expected,’ Hope wrote. ‘This wasn’t some sort of Madoff swindle. It was something that was easy to calculate or predict if you knew what films and TV shows were shooting in the state. But it seems that no one was doing that calculation. I wasn’t. Our politicians evidently weren’t. And neither were our industry’s leaders, organizations, or guilds.’

Next year will be an election year for the New York Governor’s seat, which could mean more lobbying for more security or more funding for the film and TV tax credits. ‘Nobody’s going to take their eyes off this,’ IFP’s Byrd says. ‘For the moment it can be business as usual, but we’re keeping an eye on what to do when it runs out.’