Gov. Kathy Hochul offered an array of sweeteners on Tuesday to the New York film and TV tax incentive, as the state looks to combat a sharp decline in production.
Hochul proposed a new $100 million pool for independent films, as well as a 10% bonus on top of the 30% base credit for companies that do at least three big-budget productions in the state.
Production spending in New York is projected to drop 15% since 2019, according to the state’s development office. Applications for the state tax credit are down 53% from the figure five years ago, even as the state nearly doubled the annual cap from $420 million to $700 million in 2023.
Production has also dropped sharply across the U.S., as well as in Canada and the U.K. over the last couple of years, as studios pulled back in response to the economics of streaming. Those declines have left many crew members struggling to find work, and spurred some lawmakers to try to jump-start production in their jurisdictions.
In California, Gov. Gavin Newsom has proposed expanding the state tax incentive to $750 million a year, in part to compete with New York. British Columbia is also set to expand its tax incentive to an estimated $843 million (CA$1.2 billion) in response to a dramatic slowdown there.
New York is particularly focused on competition from rival New Jersey, where the film incentive reaches as high as 39% of production costs.
New York raised its credit from 25% to 30% in 2023, and made eligible the first $500,000 of salaries for actors, directors, writers and producers. In response to lobbying from the studios, Hochul’s new proposal would eliminate that $500,000 cap, aligning with New Jersey and other states.
Another issue is the time it takes to cash in on the credit. For some productions, the credits are allocated over two years, while for larger productions they are apportioned across three years. Hochul’s proposal would eliminate that delay, providing the full credit in the first year of allocation.
The program is oversubscribed, leading to a backlog and prompting the state to draw from future years’ allocations to fund current productions.
That delay disproportionately affects independent productions. To address that, Hochul’s office proposed creating a $100 million set-aside for low-budget films and TV shows, which will be allocated on a first-come, first-served basis.
The Motion Picture Association, which lobbies for the seven major studios, praised Hochul in a statement, calling her “a champion for New York State’s creative community.”
“She recognizes that when a movie or series films in cities and towns – from Yonkers to Buffalo – the production creates high-quality, high-paying jobs for local workers and supports local businesses,” the MPA said. “In fact, major motion pictures add $1.3 million to communities – and TV series pump $475,000 into local economies – every day they are in production. The governor’s proposal today to enhance the production incentive program will further our industry’s track record of creating union jobs, establishing talent pipelines, and supporting small businesses.”
State Sen. James Skoufis, a Democrat from the Hudson Valley, has been critical of the film incentive, highlighting a 2023 state audit that found it generates 31 cents in tax revenue for every dollar invested. At a press conference last year, Skoufis called for the credit to be repealed, though he acknowledged that is unlikely.