By MICHAEL CIEPLY
New York Times
January 28, 2009
LOS ANGELES – Costly state incentives to lure film production and
jobs may be paying off, at least in New York.
A study of New York’s tax breaks for movie and television production
suggested that a 30 percent credit offered by the state, with an
additional 5 percent offered by New York City, could be expected to
keep or create about 19,500 jobs while yielding $404 million in tax
revenue, at a cost of $215 million in credits.
But the benefits were heavily weighted toward New York City, which
attracted by far the largest share of production with New York-based
television series like “Ugly Betty” and “30 Rock” and movies like
“Notorious,” a rap music drama released by Fox Searchlight this
month. The city collects about 6.4 times as much in taxes from film
as it spends on incentives, the study said.
The study, completed last week, was conducted by the accounting firm
Ernst & Young for both the Motion Picture Association of America and
the film office of New York State.
In recent years, states like New York, Michigan and Louisiana have
used aggressive subsidies to compete for film jobs, but comprehensive
reviews of their impact have been few and far between.
In 2005, a study by the chief economist of Louisiana’s legislative
fiscal office said that state’s incentives, among the country’s
highest, created only a modest number of jobs and did not generate
enough tax revenue to offset their costs.
New York State’s subsidies were raised from 10 percent of qualified
expenditures to 30 percent in April 2008, in a move to stem the flow
of productions to competing states, including Connecticut and
Massachusetts.
In its assessment, Ernst & Young noted that New York State’s film
office received 100 applications for movie and television shoots from
April 23, when the new subsidy became effective, until the end of the
year. Spending on those projects was estimated at $1.8 billion, up
from $940 million in all of 2007.
Applying the new 30 percent subsidy rate and current tax rates to the
level of activity that occurred in 2007, Ernst & Young figured that
the state would have spent $184.4 million, while getting $208.7
million back in taxes. New York City, meanwhile, would get $195.3
million from a tax credit expenditure of only $30.7 million.
Ernst & Young said it figured about 7,000 jobs were gained or
retained in direct film employment, while an additional 12,500 came
from related economic activity, not counting any increase in tourism
spending.
If the subsidies are indeed working for New York, that can only be
bad news for California, the film production capital, which has seen
jobs and income flee and which offers no major subsidies.
Last year, according to FilmLA, which tracks location shoots in Los
Angeles, days of feature film production outside of studio walls fell
14 percent, to 7,043 days, the lowest level since the count began in
1993.