As New York Boosts Tax Breaks for Movies, Some Critics Pan the Program

Four years ago, Amazon pulled the plug on its plans to build a headquarters in New York City, amid left-wing outrage over a $3 billion public subsidy package. But New York has hardly cut the company off: Amazon’s film and TV arm has received more than $108 million in state tax credits since then, and the left has raised nary a peep.

The handout is part of a state program that provides hundreds of millions of dollars each year in tax incentives to producers across the film and television industry, including Amazon — helping fuel a rapid expansion of studios in Brooklyn, Queens, the Bronx and Westchester County.

Now, Gov. Kathy Hochul is pushing to expand the program by nearly 70 percent, using the proposed state budget to shower as much as $7.7 billion in tax credits on the industry over the next 11 years. As it now stands, the subsidy is the most generous of any offered by the state, according to an analysis by Reinvent Albany, a watchdog group.

The proposed expansion to $700 million a year from $420 million has drawn stern rebukes from a range of critics who argue the decades-old program has consistently been a bad deal for taxpayers. But its likely success shows what is possible when powerful political and economic forces align in Albany, and states are increasingly pitted against each other for prestige jobs.

Ms. Hochul’s team is most concerned about neighboring New Jersey, which, along with Georgia and Canada, offers its own buffet of sweeteners that threatens to siphon film projects from New York.

Hollywood executives and labor unions that represent film workers, two of Democrats’ most stalwart political allies, have also spent handsomely to firm up support across both parties in Albany.. Industry and government leaders say that the subsidies have built a sizable film and television sector by giving credits to production companies for the “below-the-line” jobs they create by filming in New York, including crew members and technicians.

In recent years, projects that have benefited include NBC Universal’s “Unbreakable Kimmy Schmidt,” which received at least $14 million, and Lionsgate’s “John Wick” franchise starring Keanu Reeves, which netted at least $15.7 million and created thousands of jobs.

Doug Steiner, the chair of Steiner Studios — which runs 30 sound stages in the Brooklyn Navy Yard — said the state needs to keep boosting a growing industry. “The pilot that reaches 30,000 feet, he doesn’t turn off the engine,” Mr. Steiner said.

“This is modern manufacturing, but without this program, this business goes away,” added Mr. Steiner, who contributed $40,000 to Ms. Hochul’s 2022 campaign and is spending some $10,000 a month on lobbyists.

Ms. Hochul’s plan would also tweak rules to allow the companies to recoup more money per project, including parts of the salaries of actors, producers, directors and writers for the first time.

“This is not movie magic, it is basic economics,” said Kristin Devoe, a spokeswoman for Empire State Development, the state entity that manages the program. “New York’s film and theater industries bring jobs and investment to our state, provide a return on investment for New York taxpayers and are vital to our economy.”

But budget watchdogs and economists who have studied programs like New York’s take a more skeptical view about whether they actually have the economic impact politicians and industry representatives claim.

The most recent analysis conducted for the state concluded that the credits helped generate close to $10 billion in direct spending during 2019 and 2020 and returned about 50 cents in tax revenue to the state for every dollar credited. New York City receives another 49 cents and 5 cents goes to other local governments.

Critics of the program argue that those figures are too rosy, counting projects that would happen in the state with or without tax credits.

Not only is there “no evidence these incentives ever come close to paying for themselves,” said Michael Thom, a professor of tax policy at the University of Southern California, but, he argues, there is a real opportunity cost to putting so much taxpayer revenue toward one industry, at the expense of more proven investments in an educated work force or good infrastructure.

Reinvent Albany did its own number crunching to show that each full-time TV and film job created under the current program essentially costs taxpayers $66,819.

“I like to say that politicians love two things, jocks and movie stars,” said J.C. Bradbury, a professor of economics at Kennesaw State University. “Any sports team that wants a subsidy, they’ll get it. Movies seem to get it as well.”

Outside of think tanks and academia, there are few critics of the tax subsidies, even among progressives wary of corporate giveaways and conservatives who have increasingly turned against Hollywood as a bastion of liberalism.

Liz Krueger, a liberal Manhattan state senator who chairs the Finance Committee, said she had given up trying to convince her colleagues that the program is unsound. State Senator Michael Gianaris, who helped scuttle the 2019 Amazon headquarters deal, is an enthusiastic supporter of offering credits to the industry, even if it helps an old foe.

Another leading critic of the Amazon development, Representative Alexandria Ocasio-Cortez, the democratic socialist rallying for a more progressive budget, recently told a reporter the governor’s tax credit plan was not on her radar. “It’s good to know, good to learn,” she said.

To many policymakers, subsidizing film and theater means making more of what makes New York, New York. It also means jobs.

Mr. Gianaris, the No. 2 State Senate Democrat, lamented the attempts by states to undercut each other for movie and TV projects. “But it exists, and it happens to be a very transient industry that is constantly making location decisions,” he said.

The senator added that the economy of his district, which encompasses much of western Queens and is close to several sound stages, “would be devastated if the film industry wasn’t here.”

Hollywood’s influence runs deep in New York. Rhoda Glickman, the former head of the congressional arts caucus who now oversees the subsidy program for New York State, is married to Dan Glickman, the former chairman of the Motion Picture Association of America. Their son, Jonathan Glickman, is a major Hollywood producer. And in recent years, Hollywood giants, including Steven Spielberg and Ari Emanuel, have donated hundreds of thousands of dollars to Ms. Hochul’s political campaign.

Zach Goldsztejn, a spokesman for Amazon, said the company was “proud of the good jobs we create, for the trust local communities invest in us and for the opportunity we have to invest in those communities.” A spokesman for the Motion Picture Association of America declined to comment.

Ms. Hochul and key lawmakers have gotten tens of thousands of contributions from unions representing the industry rank and file, including local units of the Writers Guild of America, the Teamsters and the Screen Actors Guild.

Union leaders say support for the industry should be a no-brainer. “They are not simply good union jobs. They are good middle-class and upper- middle-class jobs that come with excellent health care and pension benefits,” said Tom O’Donnell, the president of the Theatrical Teamsters Local 817, which represents around 2,500 drivers, location workers and casting directors.

Then, there is the time-tested appeal of film itself.

Even a lukewarm-reviewed television series about Nazi hunters, set in 1970s-era New York City and starring Al Pacino, drew interest to its various recognizable shooting locales around the city, including Coney Island. Amazon, which produced the show, “Hunters,” received more than $25 million in film-production subsidies from New York State.

“These movies and shows tend to show New York in a very attractive and glamorous light,” Mr. Gianaris said. “How many people have come to New York to visit the ‘Sex and the City’ venues?”

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