On Wednesday, state lawmakers jumped on a new research that revealed taxpayers aren’t receiving the best value for their money, bringing scrutiny to New York’s $7.7 billion in handouts for the film industry.
A Philadelphia-based consulting firm’s independent study of the Film Production Tax Credit revealed that the almost $700 million in lost income each year only amounts to about 31 cents on the dollar.
Following a hearing on economic incentives, state senator Jim Skoufis stated, “We now have more than enough evidence to demonstrate that a lot of this programming, a lot of the spending, is not being spent wisely and we have to do something about it.”
Albany approved $7.7 billion in new incentives last year to entice movie and television studios to film in New York, with little evidence of the economic benefits the handouts would have on the state.
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The National Federation of Independent Businesses’ NY State Director, Ashley Ranslow, testified that the program has little to no effect on the mid-sized companies she represents.
“I wonder how that is actually helping small businesses in general for three quarters of a billion dollars,” Ranslow said to lawmakers.
During the hearing, Skoufis questioned the head of New York’s economic development department, asking her if her agency had ever performed an analysis of an incentive program that revealed a negative return on investment.
Hope Knight, CEO of Empire State Development, retorted, “I can look back and see if that’s been the case, but not during the time that I’ve been in this seat.”
She attempted to cast doubt on the damning independent study of the film production tax credit, which was mandated by the legislature and Governor Kathy Hochul, by claiming that it failed to adequately account for the economic benefits that small businesses, such as hotels and caterers, receive when a movie production comes to town.
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Because so much of the film industry is linked to the small business community where these productions are located, Knight told lawmakers, “I think you have to look more inclusively at that metric because … there is significant induced activity as a result of these productions engaging the local economy.”
Knight cited further state studies that calculated that for every $1 spent, the manufacturing tax credit generates $1.70 for state and municipal governments.
In an effort to demonstrate the value of the program, Brian O’Leary, tax counsel for the Motion Picture Association, an industry organization advocating for the incentives, also cited the other reports.
“From the start of this program’s history, they have done a credible job of showing not just the growth in production but also the growth in jobs and union jobs as well as the investments in infrastructure,” O’Leary stated.
However, Skoufis noted that the film industry association itself had funded the many papers and surveys that the MPA had given.
Conveniently, they neglected to mention that they commissioned and funded such analyses. Naturally, they will return and emphasize precisely what they like to emphasize,” the Hudson Valley representative subsequently informed reporters.
At the end of the hearing, state senator Liz Krueger, who chairs the influential Senate Finance Committee, expressed serious skepticism about the incentives and pointed out that the state must tighten its belt because it cannot simply rely on Washington for financial assistance under President-elect Donald Trump’s incoming administration.
We anticipate far less collaboration and financial support from our federal government as we enter a new age. In New York State, we need to become more astute about the programs we run, their value, and whether they are a waste of taxpayer dollars, Krueger stated.
She went on, “Are we really going to keep having bad policies that we’ve known for a long time are bad policies and still not decide to do anything about them?” “I’m hoping we’ll decide to take action against them.”
According to the non-profit organization Reinvent Albany, New York spends $75,000 on each TV and movie project that the program funds.
“After the session, Executive Director John Kaehny, who also spoke, told The Post, ‘Credit the State Senate for utilizing facts to smash through the Hollywood lobbying fog to reveal the $7.7 billion Film/TV tax credit and other corporate subsidies are a waste of New York public dollars.
“Is it acceptable for the film industry and [Empire State Development] to spend $75,000 in taxpayer funds to cover a single full-time film job for a year?” He went on. “This is the manifestation of legal corruption in New York.”
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