A proposed tax credit designed to help New York keep and attract filming of commercials has made substantive progress, gaining bipartisan legislative support in both state houses. Currently, two similarly worded tax incentive bills are in play–one introduced in the State Senate, the other in the Assembly.
Sponsoring the latter is Assemblyman Joseph D. Morelle (D-Rochester) who prior to the measure’s formal introduction enlisted more than 20 other Assembly co-sponsors. Morelle chairs the Assembly’s Tourism, Arts and Sports Development Committee.
There is also high profile backing for the tax credit in the Senate. House majority leader and president pro tem, Sen. Joseph L. Bruno (R-Rensselaer and Saratoga Counties), is a major supporter, as are others, including Sen. Martin Golden (R-Brooklyn).
Full details of the proposed tax credit weren’t available at press time. Suffice it to say that if passed, the credit would apply to certain below-the-line expenditures. Matt Miller, president/CEO of the Association of Independent Commercial Producers (AICP), noted that when factoring in the credit, many producers would view a significantly greater number of jobs as being economically viable to film in New York–projects that previously wouldn’t have been regarded as such.
The legislative initiative is generally regarded as precedent setting for the advertising industry. While there have been film/TV tax credits and other broad-based anti-runaway programs that have included spots, the New York State proposal is believed to be the first major standalone measure specifically designed for and exclusively targeting commercial production.
While the prime push for the spot tax credit figures to come through the bills currently in both houses, at press time there was a possibility that the incentive could come to fruition as a part of New York State’s 2005-’06 fiscal year budget. For the first time in 21 years, both New York houses teamed to submit a state fiscal year budget by the deadline, which was April 1. However, many key items in that budget–including the filming tax credit–are open-ended, meaning that there’s room for further negotiation, now primarily between the legislature and Gov. George E. Pataki (R-N.Y.), who has until April 12 to sign or veto the budget.
Supplemental budget appropriations could emerge. Or if Gov. Pataki decides to veto, the legislature will again have to come up with another budget, renewing extensive, if not protracted, wrangling in both houses.
According to a spokesperson from Assemblyman Morelle’s office, the spot tax credit is contained in the current budget bill description. Yet there’s no allocation of funds for that tax credit in the budget that was submitted to Gov. Pataki. That could change in the jockeying that goes on to arrive at a final state budget for ’05-’06. However, the outcome of this give and take on both sides of the political aisle is unpredictable, particularly when dealing with a $100 billion-plus budget in the face of a significant deficit.
Just getting to this point where there’s a real chance that the spot filming incentive could come to pass–either via the fiscal year budget process or through the aforementioned freestanding bills–represents an accomplishment unto itself, assessed AICP’s Miller. Both he and AICP executive VP Steve Caplan are optimistic over the prospects for the ultimate passage of the tax credit.
The AICP played an instrumental role in putting the measure on the legislative fast track, dating back to last August when the spotmaking industry suffered a major disappointment with the passage of an ambitious state anti-runaway production program that excluded commercials (SHOOT, 9/17/04, p. 1)
That state program has New York contributing $100 million over the next four years ($25 million annually) in order to provide a 10 percent tax credit on below-the-line production costs for certain qualifying projects (feature films, TV movies, TV pilots and series episodes) shot in New York State. New York City then followed with its own credit to work in tandem with the state initiative. The city production tax incentive, which is tied to the state legislation, offers a five-percent refundable tax credit to those filming in New York City. That city program also excludes spots.
In response to commercials being given short shrift, the AICP immediately set out in August ’04 to help bring about a tax incentive bill tailored specifically for spot production, exploring various options and strategies. During its December meeting in Los Angeles, the AICP national board offered full support for the effort, which entailed the hiring of a major national lobbying firm, Wilson, Elser, Moscowitz, Edelman & Dicker. The firm helped open some doors in Albany, enabling the AICP to present its case regarding the importance of commercialmaking to the New York economy.
Miller and Caplan made two trips to Albany to meet with legislators. “We received positive feedback and support from members of both houses,” said Miller.
Caplan noted that the economic impact findings in AICP-commissioned, independently conducted research studies in ’03 and ’04 made a favorable impression in the State Assembly and Senate. The study released last year showed that AICP members account for nearly $5.5 billion in production-related expenditures annually.
Miller added that labor has stepped up to the lobbying plate, with the International Alliance of Theatrical Stage Employees (IATSE), the Screen Actors Guild (SAG) and the Directors Guild of America (DGA) expressing their support for the tax credit. A letter-writing campaign to key legislators has already gotten underway with AICP members urging them to back the spot filming incentive measure. It figures that increased industry lobbying will also be directed at Gov. Pataki.
The current tax credit proposal differs from the New York State measure passed last year for features and TV programs. That feature/TV tax credit stipulated that a production company had to book 75 percent of a project’s stage work in the State of New York in order to be eligible for the incentive. There is no such stage shoot prerequisite in the tax credit for commercials, as long as the location lensing takes place in New York.
At the same time, the AICP hopes that the tax credit measure it’s lobbying for will carry a key parallel to that which passed for features and TV. Tied to that feature/TV tax credit legislation was the aforementioned additional tax incentive for filming in New York City. The AICP would like to see a counterpart city tax credit for commercials emerge from any spot reform that comes to pass on the state level.
There’s a strong case to be made for a city measure, given that Manhattan is home to Madison Avenue. Indeed. spotmaking is an essential contributor to the New York City economy, and the industry has had a longstanding cooperative relationship with the city. A case in point on the latter front is the marshalling of ad industry and commercialmaking resources in support of the drive to bring the 2012 Summer Olympics to New York City. The AICP, along with other industry factions, have played pivotal roles in the pro-bono creation of films and spots designed to help New York land the Summer Games.
