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When Tax Incentives Become Incendiary

<Creative Commons. Courtesy of John Morgan

by Louis Bertini, MPSE

Louis Bertini.

When I last reported on New York’s film tax credit program and the Albany budget battle (“Nor’Easter,” Editors Guild Magazine MAY-JUN 10), I stated that Governor David A. Patterson had proposed $420 million per year of credits, to run from 2010 through 2014.  The proposal had passed in the State Senate, and moved on to the Assembly.  Some serious budget haggling was underway, but it did seem likely that a final agreement was within reach.

I wrote that assessment last April.  Before the article was published in May, we at the magazine were concerned that, during the time the magazine was printed and mailed out, the New York budget would pass––and the article would no longer be timely.

What a foolish thought!  As it turned out, there was really nothing to worry about.

The New York State budget was finally passed August 3, ending months of contentious negotiations, with the budget 125 days late.  The record was set in 2004, when that budget passed on August 11.  The final film and television tax incentive is $420 million per year, to run from 2010 through 2014, as originally proposed by the governor.

Also included is a new tax credit of $7 million per year on 10 percent of post-production costs for projects that film outside the state.  Local 700 and Eastern Executive Director Paul Moore have been lobbying for this credit for a number of years.  This is a major victory for us!

The battle in Albany actually had little to do with film tax credits, but was fought over the more basic parts of the budget, such as education, Medicare and tax revenue.  The Senate and Assembly had different ideas about how state revenue should be apportioned in these areas, and no one was willing to budge from his or her position.

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In New Jersey, Governor Christopher Christie––faced with a $10.7 billion budget gap––chose to cut New Jersey’s Film and Television Tax Credit program entirely from the state budget this year.  This may save some revenue from his bottom line, but it pays no heed to the amount of money the program pumped into New Jersey’s economy.

Since 2006, New Jersey offered a 20 percent tax credit in a similar fashion to the program in New York.  Now that it has ended, film and television work is fleeing the state.  As an example, Law & Order: SVU, which over the last 11 years brought about $540 million into New Jersey in wages alone, has moved from NBC studios in North Bergen to the original Law & Order’s former studio at Chelsea Piers on the west side of Manhattan.  This was vacated when the original show was cancelled after its 20th season.  So it seems that New York stands to benefit from New Jersey’s short-sightedness.

In the face of these kinds of politics, it’s good to know that New York’s lawmakers at least understand the need to leave filmmaking to the filmmakers, and to stay away from censorship01

In other states around the country, film tax credits have run into a different kind of obstacle.  Although 44 states offer some type of film tax credit, many of these incentives come with strings attached.  Conservative politicians are pushing legislation that will allow credits to only go to the type of film projects of which they approve.  State film commissions must approve scripts in advance, and they must appeal to conservative sensibilities.  Under these conditions, it is inevitable that state governments will censor movies before they are made.

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In Michigan, The Woman––a sequel to the horror movie Offspring, which was supported by state film tax credits the first time around––was rejected for subsidy because the state’s film commissioner determined, “This film is unlikely to promote tourism in Michigan or to present or reflect Michigan in a positive light.”
Films made in Pennsylvania can be denied tax credits if the movie in question does not “tend to foster a positive image” of the state.  Texas possesses a similar requirement, which apparently was used to prevent the makers of a film about the Waco siege of 1993 from even applying for film tax credits.  In Utah, the state’s film commission director admitted to withholding credits from films that he wouldn’t feel comfortable taking the governor to see.

And in Florida, lawmakers are negotiating for a tax credit that would only be available to “family-friendly” projects.  The bill would prohibit productions with “non-traditional family values” from receiving a so-called family-friendly tax credit.  But it doesn’t define what “non-traditional family values” are.  The sponsor of the bill, State Representative Stephen Precourt (R-Orlando), had a hard time doing it too.  When asked for a definition, he stated, “Think of it like Mayberry [referring to The Andy Griffith Show].  That’s when I grew up––the ‘60s.  That’s what life was like.  I want Florida to be known for making those kinds of movies for kids, and all that stuff.  Like it used to be, you know?”

In the face of these kinds of politics, it’s good to know that New York’s lawmakers at least understand the need to leave filmmaking to the filmmakers, and to stay away from censorship––even if they have a hard time agreeing on taxation and social services.  They know that these credits help to keep the multi-billion-dollar film and television industry thriving in the state.  The Editors Guild, along with Local 52 and other New York production unions, will continue to lobby the politicians in the future and promote our industry.

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