Film-tax credits: NY paying $38K a job

Joseph Spector, Albany Bureau Chief

ALBANY – How lucrative are New York’s film-tax breaks? Studios are getting $38,000 for every full-time job they create, a report by a state-hired consultant found.

At a time when the $420 million-a-year in tax breaks has drawn increased scrutiny, a state consultant’s report quietly released in March raised new questions about the effectiveness of the lucrative program for TV shows and movies.

Camoin Associates’ study found that New York doled out nearly $1.2 billion in tax breaks to studios in 2013 and 2014, creating 30,761 “direct” jobs or about $38,000 a job.

But the study painted a rosy picture about the tax breaks, one of the most aggressive programs in the nation. Over the two years, the state and New York City received back about $1.1 billion in tax revenue from about $5 billion in spending by films and movies.

“Because of the significant cluster of film‐related industries in New York, there exists a virtuous, self‐reinforcing cycle where businesses, workers, and infrastructure serve to perpetuate the advantages of producing in New York,” the report commissioned by Empire State Development, the state’s economic development arm, said.

ESD defended the tax breaks, pointing out that the studios spent at least $155,000 a job in New York.

“With one record-breaking year after another, the program is attracting more film and TV production to New York than ever before, along with the thousands of jobs and billions of dollars in economic activity that comes with it,” Jason Conwall, spokesman for ESD, said in a statement.

Still, critics pointed to the report as another reason why New York and Gov. Andrew Cuomo, who has championed the program, should curb the spending. Other than the income-tax breaks that small businesses receive, the film credit is the largest tax-incentive program the state offers.

The state is likely not breaking even on the program, which was first started in 2004 and expanded in 2010, said E.J. McMahon, executive director of the Empire Center, an Albany-based conservative think tank.

The report showed that the state’s return on investment on the credits is $1.09 for every $1 invested. But that’s assuming that no productions would be made in New York without the credit — which would never happen because many shows and movies are based in the state, particularly New York City, such as “Saturday Night Live” that receives the breaks.

The report showed that 84 percent of the jobs created in 2013 and 2014 were in New York City.

“The flaw is this whole study is that it assumes that 100 percent of the eligible productions would not have happened without the credit. That’s ridiculous,” McMahon said.

Proponents, however, said the program is growing in success, including outside New York City.

Films and shows are eligible for a tax break that’s as much as 30 percent of production costs in New York. They are reimbursed after production.

Westchester County generated an economic impact of more than $18 million in 2014 from 318 production days, the county’s film department said. That’s a 30 percent in revenue from 2013, said Natasha Caputo, director of the Westchester County Tourism & Film agency.

“We’ve seen an increase in inquiries and activity because of our various locations, our close proximity to the city and our film-friendly environment,” Caputo said.

HBO’s “Boardwalk Empire” and Netflix’s “Orange is the New Black” were among the shows that filmed in Westchester. “Orange is the New Black” is filmed largely at the state-owned former Rockland Children’s Psychiatric Center in Orangeburg.

Earlier this year, the state reported that the show received $10 million in the fourth quarter of last year in tax breaks — the most of any of the 10 shows that received reimbursement during that period. It was the first time the state, under a law passed in 2013, revealed how much any individual production received in tax breaks.

Aaron Gordon, owner of Optic Sky, a post-production company in Rochester, said the tax breaks have been a major benefit to his small business. He said studios, because of technology advances, can have the post-production work done anywhere.

“The tax incentive for me, I think, is a factor that has helped us begin our journey,” said Gordon, 24.

The success of New York’s program in drawing shows and movies has been unprecedented. New York’s share of earnings from the industry surpassed 23 percent in 2013, the most since at least 1990, the state report showed.

New York hosted 277 films and 270 TV shows in 2013 and 2014, such as its largest production, “Amazing Spider-Man 2,” in Rochester. That’s up from just a few dozen a decade ago.

“It’s an investment for the state that is producing enormous dividends in terms of employment,” said Vans Stephenson, senior vice president of state government affairs at the Motion Picture Association of America in Washington.

While some states have scaled back their film-tax incentives, questioning the benefits, California this year tripled its program to beat back the competition from New York. California is now doling out about $300 million a year.

But New York still remains the leader amid criticism that Cuomo is benefiting from campaign contributions from the industry.

In April, WikiLeaks released emails that showed Sony Pictures’ executives were pressed to donate to Cuomo’s re-election bid, and he’s received nearly $1 million from the industry since taking office — including attending Hollywood fundraisers.

Cuomo’s office has rejected any quid pro quo, saying the program has been a success for the New York economy.

“New York’s Production Tax Credit Program was created in 2004 to compete and regain our status as a premier destination for the film and television industry — which it certainly has accomplished, and then some,” ESD’s Conwall said.


— New York provides an average of $420 million a year for film-tax breaks, but paid out $1.2 billion in 2013 and 2014.

— The benefits have a rate of return of $1.09 — meaning every dollar in incentives is returning $1.09 in investments. But that assumes that no productions would take place in New York without the program.

— New York doled out nearly $1.2 billion in tax breaks to studios in 2013 and 2014, creating 30,761 “direct” jobs, or about $38,000 a job. The credit produced $5 billion in spending in New York.

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