Studios got $1.5B in New York tax breaks since 2006

ALBANY – Nearly two-dozen studios raked in more than $1.5 billion in rebates from New York over the past nine years as the state rapidly expanded its incentives to lure in movies and shows.

At a time when upstate New York is battling job losses and Gov. Andrew Cuomo is trying to entice new companies through tax incentives, it’s Hollywood that is one of the biggest beneficiaries of the state’s largesse.

Indeed, no New York tax program is as generous as the one targeted toward the film and television industry, and records obtained by Gannett’s Albany Bureau shows that big-name studios reaped massive rewards for shooting in the Empire State.

NBC/Universal was by far the leader in rebates awarded between 2006 and 2014, getting back a whopping $320 million for up to 30 percent of its production costs to film in New York.

Sony/Columbia was refunded $200 million, while HBO got $198 million, the WB got $185 million and CBS received $171 million, the records obtained by Gannett through a Freedom of Information request showed.

The figures were staggering to critics of the program, who said the money should be used instead to help existing businesses in New York, particularly in regions trying to recover from decades of decline in manufacturing jobs.

Overall, $423 million was sent back to studios in 2014 – with the most, $117 million, returned to CBS, said Empire State Development, the state agency that runs the program.

“I’ve always said that the benefits are way out of whack with a sound economic policy because there are industries and businesses all through the state that are having difficulty,” Senate Finance Committee chairman John DeFrancisco, R-Syracuse, said.

State officials hailed the program. Last year, productions spent more than $2 billion in New York and $1.5 billion was eligible for the 30 percent reimbursement. That totaled nearly 145,000 hires.

The number of applications for the tax breaks grew from 68 in 2006 to 194 last year.

“The Film Production Tax Credit Program has made New York state the premier destination for the entertainment industry, driven billions of dollars into our economy and created thousands of good jobs for New Yorkers,” Jason Conwall, a spokesman for Empire State Development, said in a statement.

Losses vs. gains

DeFrancisco pointed to a series of layoffs over the past week in upstate: 150 jobs at GlobalFoundries in the Albany area and East Fishkill; 600 jobs at the FitzPatrick nuclear plant outside Syracuse; and 500 workers with the closing of an Alco plant in northern New York.

Supporters of the program and the studios said they’ve produced jobs and economic development. New York’s program is the most generous in the nation at $420 million a year; California recently boosted its program to $300 million a year.

A report last month from a consulting firm showed that film production spending in New York City alone jumped 6.4 percent since 2011 – hitting a record 8.7 billion last year.

“New York is a terrific place to base a television series, offering great locations and a highly skilled work force to support the production,” CBS said in a statement.

Films and shows are eligible for a tax break that's as much as 30 percent of production costs in New York. They are reimbursed after production; it can’t go to pay actors.

CBS said it’s “proud of the many series we film in NY and the significant financial contribution that it makes to the local economy.”

The tax breaks have soared in recent years as New York expanded the program and lowered its backlog of cases by hiring third-party auditors. The reimbursements, which can take years for studios to receive, increased from $148 million in 2013 to the $423 million in 2014.

NYC state of mind

Forty-six shows were shot in the city last year – up from just 11 shows a decade ago, the report showed. And the number of full-time equivalent jobs in the city rose from 20,000 to 31,000 over the past four years, an average annual increase of nearly 15 percent.

A separate study earlier this year found that New York’s subsides equated to about $38,000 a job.

Quentin Schaffer, a spokesman for HBO, said some of its top shows, such as “Girls” and “Boardwalk Empire,” were shot in New York and received the tax breaks.

“An incentive for us is always a critical part of our decision-making process,” Schaffer said.

While upstate and the city’s suburbs have seen an increase in films and shows being shot there, it’s still mainly a city industry: 84 percent of the jobs created in 2013 and 2014 were in New York City, one of the state-commissioned studies showed.

New York hosted 277 films and 270 TV shows in 2013 and 2014, such as its largest production, “Amazing Spider-Man 2,” in Rochester and “Teenage Mutant Ninja Turtles 2” in Buffalo. That’s up from just a few dozen a decade ago.

“Today, we attract productions from around the world to the Empire State, resulting in a thriving production and post-production industry that stretches from Montauk to Buffalo,” Conwall said.

Transparency and donors

The program continues to be criticized for a lack of transparency and charges that it fuels a pay-to-play culture.

In April, WikiLeaks released emails that showed Sony Pictures’ executives were being pressed to donate to Cuomo’s re-election bid. He’s received nearly $1 million from the industry since taking office — including several attending Hollywood fundraisers, campaign finance records show.

Cuomo’s office has rejected any quid pro quo, saying the program is tailored to improving the New York economy.

Schaffer said campaign contributions doesn’t sway HBO’s decisions on where to shoot, saying it has also expanded productions in Baltimore for shows like “Veep” and “The Wire.”

The race to entice states to offer incentives to the industry leads to campaign cash and competition among states to lure in movies and shows, said Susan Lerner, executive director of Common Cause/NY, a good government group.

“The problem with any of these tax credits is that it pits one state against another,” she said. “So that race to the bottom is not healthy.”

In 2013, amid backlash over secrecy around the program, the state Legislature required Empire State Development to detail how much each film or movie was receiving in tax breaks.

Previously, the agency declared the details as proprietary and wouldn’t release them.

Earlier this year, the state reported that Netflix’s “Orange is the New Black,” filmed mainly in Rockland County, received $10 million the fourth quarter of last year — the most of any of the 10 shows that received reimbursement during that period.

But that was March, and the state hasn’t offered any new reporting since then. It was required to release quarterly summaries of the projects that received state reimbursements.

DeFrancisco, who pushed for the law, said the lack of disclosure is troubling.

“I guess we could pass another law that says we really mean it,” he said.

Follow Joseph Spector on Twitter @GannettAlbany.

Findings

• Nearly two-dozen studios raked in more than $1.5 billion in film-tax rebates from New York between 2006-14.

• The tax breaks has soared in recent years as New York expanded the program and lowered its backlog of cases.

• NBC/Universal got the most: $320 million, followed by $200 million for Sony/Columbia and $198 million for HBO.

Search our database

Check out how much each studio received in New York tax breaks since 2006, according to Empire State Development

http://pressconnects.nydatabases.com/database/tax-breaks-film-and-tv-productions