Tax credits specifically designed to help New York State keep and attract more commercial production are now law. The next step is writing the regulations to properly implement the incentives, for which the state has provided $7 million in funding.
There had been some question as to the fate of the spot filming measure last month when Governor George E. Pataki (R-N.Y.) vetoed more than $2 billion in tax cuts and spending in the overall New York State budget that the legislature had passed for fiscal year 2006-’07. Included in that proposed budget was the incentives package for commercialmaking.
However, upon reconvening in late April, the state legislature overrode the veto. And while Gov. Pataki may still contest some budget provisions on the grounds that they are unconstitutional, the spot industry program is believed to be on firm constitutional footing. Furthermore, it’s widely believed that Gov. Pataki doesn’t take issue with the spot package. He has a track record as a proponent of incentives to spur on filming, as evidenced by his support of the continuing Empire State Film Production Credit covering features and TV programs.
THREE-PRONGED INITIATIVE
Plans call for the commercials measure to take effect on January 1, 2007. Regulations governing how the incentives are to be applied will be drafted by the New York State Department of Budget, and the Governor’s Office for Motion Picture and Television Development.
The state initiative consists of three prime components:
- A growth credit provision designed to encourage companies to increase the amount of business they bring to the state by providing a refundable tax credit of 20 percent of qualifying production costs solely on newly generated business. The amount will be based on the difference between the total qualified production costs of the current year and the total amount of production costs of the preceding year. The growth credit is funded by $3 million of the aforementioned $7 million total. The intricacies of the growth credit–such as coming up with the best way to verify total qualified production costs of the prior year as compared to the next–will be addressed in the regulations.
- A downstate jobs credit which addresses the misconception about the commercials industry that there is a fixed amount of work that will occur in a certain location regardless of economic circumstances. This is clearly not the case in that every spot lensing job is considered up for grabs prior to being filmed. The rationale for this downstate jobs credit is that it’s important not to take this business for granted and to make efforts to retain the existing share of work that is currently being produced in New York. For this provision, $3 million in annual funding is being apportioned for eligible commercial production companies that conduct filming activities within the Metropolitan Commuter Transportation District. The jobs credit is five percent of the total production costs that exceed $500,000 and would be distributed on a first come, first served basis.
- And an upstate jobs credit which recognizes that spot production regularly occurs outside major metropolitan areas that are considered traditional production centers. This incentive component provides $1 million annually to all eligible commercial production houses that participate in filming activity outside the Metropolitan Commuter Transportation District. This jobs credit would be five percent of the total production costs that exceed $200,000 and would be distributed on a first come, first served basis.
PRECEDENT SETTER
Matt Miller, president/CEO of the Association of Independent Commercial Producers (AICP), which took a lead role in helping to bring about the New York State measure, noted, “Filming incentive legislation in a number of states has included commercials in various ways, shapes and forms. But this is the first piece that specifically targets the commercial production business. It’s an initiative about us and for us. That in and of itself is a major accomplishment.”
This accomplishment sprung from bipartisan support. Among the legislators offering pivotal backing were State Senator Martin J. Golden (R-Brooklyn) and Assemblyman Joseph D. Morelle (D-Rochester), who offered their takes on the precedent-setting incentives.
“New York has a long and rich history of both film production and advertising,” said Sen. Golden. “The commercial production industry is the bridge between those two worlds. This bill will send a serious message to producers that New York State is fighting aggressively for its share of this $5.5 billion a year [commercialmaking] industry.”
Assemblyman Morelle related, “All of us are in agreement that we need to take dramatic steps to recover New York’s fair share of this industry. This incentive bill will have an undeniable impact on commercial production in our state and create jobs and economic opportunities for many thousands of New Yorkers.”
CITY VIEW
Also on the docket is the possibility that the City of New York will set up a counterpart program to that of the state, putting 50 cents to the dollar on what Albany legislators approved. This would amount to a $3.5 million fund for tax credits to encourage commercialmaking in New York City.
Support from Mayor Michael Bloomberg (R-NYC) and passage by the City Council are needed to bring a New York City incentives package to fruition. There is precedent for this matching municipal initiative in that the state credits for theatrical features and TV programs–which were passed in 2004 under the earlier alluded to Empire State Film Production Credit measure–also garnered a companion program funded by New York City.
Miller said the AICP will take an active role in lobbying for the New York City initiative. He noted that the Mayor’s Office and a number of City Council members see the benefit of instituting a spot incentives package in that they have already witnessed the profoundly positive impact that the feature and TV program tax credits have had on the city’s economy over the past year and a half.
