New York State Exposed: Millions in tax credits going to movie production in NY

By: Brett Davidsen

In the spring of 2013, the streets of Rochester were taken over for two weeks for the production of The Amazing Spider-Man 2. Now next month, more filming is coming to New York State and upstate. The sequel to Teenage Mutant Ninja Turtles will be shot in New York City with some scenes being shot in Buffalo.

For Spider-Man, spectators on Main Street were treated to car chases and explosive crashes. The governor cheered it as a big boost to the economy and he credited the New York State Film Tax Credit Program for attracting films like Spider-Man to the state.

“We are now competing with Hollywood for movies and shows,” said Governor Andrew Cuomo. “It is a very big driver of our economy.”

Hot Rosita’s restaurant on Main Street is among the businesses that benefited from the film shoot coming to Rochester. Owners Arnold Casselbury and Chris Seeman say they provided catering for the movie crews.

“I definitely appreciated them coming downtown,” says Casselbury. “It did draw a big crowd and it was nice to have a lot of people downtown like that.”

But nearly two years later, what they aren’t sure about is whether it had any lasting effect on their business. The State of New York offers $420 million in film and television production tax credits each year — the most generous of any state in the country. Spider-Man’s producers may be eligible for an estimated $45 million which some small business owners can’t even fathom.

“What’s $45 million to them when they make billions of dollars off their movies every year,” asks Seeman.

A report prepared for the New York State Tax Reform and Fairness Commission found the credits have caused film productions to locate in New York and created jobs — mostly downstate. But it also found there’s no proof that the credit pays for itself and, therefore, comes at the expense of higher taxes for others or lower spending on state services. Marilyn Rubin co-authored the report.

She says, “There’s no way to know — to really answer definitively the question do benefits exceed cost, because you really don’t know what proportion of the activity would take place in the absence of the credits.”

Governor Cuomo says, “Are we providing a subsidy? Yes. But we’re providing a subsidy for them to create jobs and this to me is very simple: It’s about creating jobs.”

Nick DiBella says he can personally attest to that.

“I know what we did,” says DiBella. “It was really important for us to establish a company in New York State, in our town, and keep as much of it as we could here.”

DiBella is a Rochester filmmaker. In 2013, he made “King’s Faith,” a faith-based movie with a budget of $700,000. He received a tax credit from the state for $150,000. He says the subsidy helped him raise the money to make the movie, hire local crews and created work for others beyond the actual production.

“Because King’s Faith got made, not only did we have the production, we had all these other things that were off-shoots of it,” says DiBella. “People helped manufacture the DVDs. People printed our posters and our books and stuff like that. All things that didn’t qualify for the tax credit, but are there.”

But Greg Biryla, of Unshackle Upstate, says unlike other major business tax credits, the film credit has a major flaw.

“One of the biggest problems with the tax credit that goes to film productions, especially one that’s this much money, is the jobs aren’t permanent,” he says. “And to sustain the economic activity you have to continue with the tax credit program.”

Several states now appear to be re-thinking the value of film production tax breaks. States like North Carolina and Michigan have cut back on the incentives, while the governor of Massachusetts recently proposed phasing them out altogether.

Assemblyman Stephen Hawley says, “I think we have higher priorities than credits for Hollywood film producers.”

Assemblyman Hawley has introduced legislation that would do away with the film tax credit in New York and instead turn that money over to the state Department of Education for school funding.

“I think we need to take care of our kids and keep school property taxes down,” says Hawley.

The owners of Hot Rosita’s, meantime, would prefer to see the state use the money to cut business taxes.

“So even if it wasn’t us and it was a different city or state, I still think it should go back to small business,” says Seeman.

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