Is New York's Film Tax Credit at risk as budget talks continue?

Mar 28, 2019

If one Western New York-based State Senator has his way, New York will end its Film Tax Credit program. Another local State Senator, though, says while the state's tax structure is flawed, this is a credit that works. Both offered their points of view as an April 1 budget deadline approaches.

This week, a crew is again using the Village of East Aurora as a Christmas backdrop, as filmmaker Fred Olen Rey shoots the latest of his several projects in Western New York. Supporters of the state's film tax credit say he's an example of an industry that's been allowed to develop Western New York, thanks to Albany's help.

A film crew is seen here using the LaSalle Branch of the Niagara Falls Public Library in May 2016 as a set for the movie "Marshall." Some state lawmakers are calling for an end to the state's film tax credit amidst a budget deficit of more than two billion dollars. Supporters of the credit in Albany say it spurs local economic growth and is a tax credit that has proven to generate more revenue than what the state spends.
Credit WBFO file photo/Michael Mroziak

Patrick Gallivan represents East Aurora as part of the 59th State Senate District. The Republican lawmaker says New York's tax and regulatory structure is the worst in the nation.

But the film tax credit? That, he says, is one state program that actually works.

"Statewide, this returns 15 cents on every dollar," Gallivan told WBFO. "In other words, For every dollar that New York State expends on this particular credit, it gets back a dollar and 15 cents."

Fellow Republican State Senator Rob Ortt, who represents the 62nd District in Niagara and Orleans Counties, sees the tax credit as having become bloated, from an original $25 million years ago to $420 million in the 2020 budget. It's a credit, he suggests, that does not benefit all New Yorkers and is used mostly for larger productions downstate.

"If this was just for Western New York and small productions, we could probably do it for a fraction of what we're spending," Ortt said. "We're spending $420 million and 90 percent of it goes to New York City."

Ortt also argues that the credit serves Hollywood elites who tend to favor Governor Andrew Cuomo. But Tim Clark, Buffalo Niagara Film Commissioner, says the tax credit does not cover any of the actors, stuntpeople or personnel who are coming in from Hollywood. Instead, he says, the credit is available only for below-the-line expenses.

"What it does cover are all the services that they need, which they get here locally, and all of the crew or most of the crew which comes and works here locally," Clark said.

The money provided by the state in the form of tax incentives, supporters of the credit argue, stays in Western New York, as locals hired for the productions done in Western New York stay and reinvest that money in the local economy.

Ortt, pointing to the state's projected $2.3 billion budget deficit, suggests if the state insists on providing incentives it should be doing so in more vital industries including agriculture and manufacturing.

"We have a lot of things to fund: infrastructure, education, helping our veterans, mental health services," Ortt said. "Usually we're told we have to tax more or we have to spend less on those kinds of priorities. But you know who never has to spend less? Hollywood billionaires."

Gallivan, meanwhile, says Western New York has enjoyed a measurable positive economic impact from the tax credit.

"Last year alone, I think, the economic impact in Western New York was 30 to 35 million dollars," he said. "When the Teenage Mutant Ninja Turtles were here (in 2015) for just the short time, they booked 3,300 hotel nights. And that was just for one small portion of that particular movie. A $7 million economic impact locally for our stores, for our hotels, for our restaurants."