Hochul urged to veto film tax credit expansion

Kathy Hochul
New York Gov. Kathy Hochul listens to speakers during a news conference in New York. (AP Photo/Seth Wenig)

Hochul urged to veto film tax credit expansion

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(The Center Square) — A coalition of groups are urging New York Gov. Kathy Hochul to veto a plan to expand the state’s generous film tax credits, which have been criticized as a taxpayer giveaway to Hollywood movie studios.

In a letter to Hochul, Reinvent Albany and the Citizens Budget Commission called on the Democrat to reject the tax credit expansion, which doles out tens of millions of dollars each year in subsidies for movie and TV productions.

The coalition said lawmakers added last-minute changes to the bill without holding a public hearing, “continuing the bad habit of denying New Yorkers their rightful opportunity to evaluate and weigh-in on policy and fiscal proposals.”

“These changes deepen the “race to the bottom” component of economic development policy — the interstate competition to offer the richest or most lucrative incentives,” they wrote.

The coalition said New York policymakers should focus on expanding the state’s economy “based on its comparative strengths, such as human capital and cultural and natural amenities, and enhancing its willingness to make it easier to do business.”

“Competition based on the deepest pockets ultimately risks our economy, drives up taxes overall, and weakens the ability to provide services to those in need,” the group wrote.

The Democratic-controlled Legislature approved the expansion as part of a $229 billion two-year state budget that critics say expanded subsidies without making cuts to offset the loss of taxpayer revenue.

The move dramatically increased the film tax subsidy costs from $420 million a year to $700 million and raised the credit percentage from 25% to 30%, bringing the tax credits in line with rival states.

Democratic legislative leaders also added a provision making the newly expanded film tax credit available retroactively to productions that submitted applications before the expansion was approved.

A Hochul spokesman issued a statement saying the governor is “focused on growing industries and opportunities across the state and the film and television industry is no different.”

“The enhancement of the film tax credit passed in this year’s budget will grow the film industry and keep New York competitive in this very important sector of our economy which has generated over $20 billion in spending and created 57,300 direct and indirect jobs in the Empire State,” the statement read.

New York has had a film tax credit program since 2004, when the credits totaled about $25 million annually, allowing producers to claim 10% of production costs.

The state eventually expanded the credit, making it worth up to 35% of filming costs by 2008. The state also made post-production work, such as visual effects and editing, eligible for the credit and increased the pool of credits available in a year to $420 million, the report noted.

Republican lawmakers have filed a bill every session to repeal the state’s film tax credit program, but the proposals haven’t gained much traction in the Democratic-controlled General Assembly.

An economic impact study on the tax credits by the Empire Center argues that New Yorkers are getting fleeced by the generous film production program. The center’s report pointed to an estimated $1 billion in state tax receipts from economic activity stemming from $2.1 billion in film tax credits issued in 2019 and 2020.

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