BILL NUMBER:S7023

TITLE OF BILL:
An act to amend chapter 60 of the laws of 2004, amending the tax law
relating to the empire state film production credit, in relation to the
aggregate annual amount of such credit against state taxes

PURPOSE:
Provides for an annual increase in the aggregate annual amount of empire
state film production credits taken, based upon inflation

SUMMARY OF PROVISIONS:
Section 1 of the bill amends e of section 7 of part P of chapter 60 of
the laws of 2004, amending the tax law relating to the empire state film
production credit, as amended by section 1 of part C of chapter 312 of
the laws of 2010, to provide for an annual aggregate amount of the
Empire State Film Credits that may be taken against state taxes in 2015
and beyond, based on an inflation adjusted calculation of the amount
provided in the final funded year of 2014.

Section 2 establishes the effective date.

JUSTIFICATION:
The Empire State Film Production Tax Credit has been an unqualified
success for the State of New York, both culturally and financially.
Despite the fact that New York's tax credit is significantly less gener-
              

ous than the credits offered by competing states (including Connecticut
and Massachusetts), it continues to be a premier destination for films
and television shows, shining light on the State's rightful status as a
world capital for the arts. The tax credit program has also proven to
have a consistently beneficial impact on the State's bottom line. In
2009, an Ernst & Young study estimated that the program had cost the
state $690 million while generating $2.6 billion in tax revenue. Even
more importantly, the program has helped create tens of thousands of new
jobs in this state.

While the 2010-2011 state budget extended the program by five years in
2010, it failed to address a major institutional problem which dissuades
television shows from setting up roots in the state. Unlike movie
productions, television productions are "quasi-permanent" institutions
that ordinarily must run for at least four years to reach syndication
length and become truly profitable. This means that as soon as the
second year of a five-year tax credit extension, television production
companies considering putting down roots in the state can no longer be
assured that the credit will still be in place when their shows reach
sufficient length.  Consequently, in order to consistently attract the
most promising television series, it is critical that production compa-
nies be given the peace of mind that, if their shows are successful,
they will not be forced to uproot production and move elsewhere in a few
short years.

This bill gives television producers that peace of mind by providing
inflation adjusted annual funding for the Empire State Film Tax Credit
program. A simple funding extension would only delay the problem instead
of providing the genuine solution that is called for.  This bill does
not increase the percentage of production costs eligible for a tax cred-
it, and it only increases the aggregate total insofar as is necessary to
keep pace with inflation. Consequently, the State would remain largely
insulated from risk while seeing increased benefits.

Between 2002 and 2009 the number of states offering film-production tax
credits rose from 5 to 44. The vast majority of those states offer more
substantial credits to individual productions than New York, and many
are considering increasing the percentage of costs that can be credited
still further. Fortunately, New York does not need to take part in this
film tax credit arms race.  Television production companies want to come
here, even if it costs more. They simply want to be assured that funding
for the program will still be in place when their shows become profita-
ble.  If we are to continue to attract top-shelf television productions
we must make certain that our own program follows the basic dictates of
common sense. This bill provides that common sense solution.

LEGISLATIVE HISTORY:
This is a new bill.

FISCAL IMPLICATIONS:
To be determined.

EFFECTIVE DATE:
This act shall take effect immediately.