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As New York boosts film tax breaks, some critics take issue with plan

Four years ago, Amazon scrapped plans to build a headquarters in New York City amid left-wing anger over a $3 billion public subsidy program. But New York has done little to sever ties with the company: Since then, Amazon’s film and television division has received more than $108 million in state tax credits, and the Left has done nothing.

The handout is part of a state program that provides hundreds of millions of dollars in annual tax breaks to producers in the film and television industries, including Amazon — helping to boost Brooklyn, Queens, the Bronx and Westchester The studio in Te County expanded rapidly.

Now Gov. Kathy Hochul is pushing to expand the program by nearly 70 percent, using the proposed state budget to provide the industry with up to $7.7 billion in tax credits over the next 11 years. The current subsidy is the most generous of all subsidies offered by the state, according to analysis by watchdog group Reinvent Albany.

The proposed expansion from $420 million to $700 million a year has drawn harsh criticism from a range of critics who say the decades-old program has been a bad deal for taxpayers. But its likely success shows that anything is possible when powerful political and economic forces align in Albany, and when states increasingly compete with each other for prestige jobs.

Ms. Hochul’s team is most concerned about neighboring New Jersey, which along with Georgia and Canada has offered its own buffet of sweeteners, threatening to siphon movie projects away from New York.

Hollywood executives and unions representing film workers, two of the Democrats’ staunchest political allies, have also spent heavily to cement bipartisan support in Albany. Industry and government leaders say the subsidies have created a sizable film and television industry that credits production companies for “off-the-line” jobs, including crew members and technicians, created by filming in New York.

Projects that have benefited in recent years include NBC Universal’s “Unbreakable Kimmy Schmidt,” which earned at least $14 million, and Lionsgate’s “John Wick” franchise starring Keanu Reeves , netted at least $15.7 million and created thousands of jobs.

Doug Steiner, chairman of Steiner Studios, which operates 30 soundstages at the Brooklyn Navy Yard, said the state needs to keep pushing the growing industry. “When a pilot gets to 30,000 feet, he doesn’t shut down the engine,” Mr. Steiner said.

“This is modern manufacturing, but without this plan, the business would disappear,” added Mr. Steiner, who has donated $40,000 to Ms. Hocher’s 2022 campaign and speaks monthly to lobbyists. The body cost about $10,000.

Ms. Hochul’s plan would also tweak the rules to allow companies to recoup more money from each project, including some of the salaries of actors, producers, directors and writers for the first time.

“It’s not movie magic, it’s basic economics,” said Kristin Devoe, a spokeswoman for Empire State Development, the state entity managing the project. “New York’s film and theater industries are critical to our economy by bringing jobs and investment to our state, providing a return on investment for New York taxpayers.”

But budget watchdogs and economists who have studied programs like New York’s are more skeptical that they actually have the economic impact that politicians and industry representatives claim.

The latest analysis for the state concluded that these credits helped generate nearly $10 billion in direct spending between 2019 and 2020, and return about 50 cents to the state for every dollar credited taxation. New York City received another 49 cents, and 5 cents went to other local governments.

Critics of the program say the numbers are overly optimistic, counting projects that would occur in the state with or without the tax credit.

Not only is there no “no evidence that these “Incentives pretty much pay for themselves,” said Michael Thom, a professor of tax policy at the University of Southern California, but he argues that there is an opportunity cost to putting so much taxpayer income into an industry, at the expense of an educated workforce or good infrastructure. Make more reliable investments.

Reinvent Albany has done its own data analysis, which shows that each full-time TV and film job created under the current program essentially costs taxpayers $66,819.

“I would say that politicians like two things, athletes and movie stars,” said JC Bradbury, an economics professor at Kennesaw State University. “Any sports team that wants to be subsidized, they’ll get it. The movies seem to understand that.”

Outside of think tanks and academia, few critics of the tax subsidy, even progressives wary of corporate giveaways and conservatives increasingly opposed to Hollywood as a bastion of liberalism.

Liz Krueger, the liberal Manhattan senator who chairs the finance committee, said she had given up trying to convince her colleagues that the plan was unsound. State Senator Michael Gianaris, who helped sabotage the Amazon headquarters deal in 2019, is an enthusiastic supporter of extending credit to the industry, even if it would help an old enemy.

Another major critic of Amazon’s development, Representative Alexandria Ocasio-Cortez, recently told reporters that the governor’s tax credit plan was not on her radar. “It’s good to know, it’s good to learn,” she said.

For many policymakers, funding movies and theater means producing more of what makes New York New York. It also means work.

Mr. Janaris, the No. 2 Democrat in the state Senate, lamented the states’ attempts to undercut each other on film and television projects. “But it exists, and it happens to be a very ephemeral industry, constantly making siting decisions,” he said.

The senator added that the economy of his district, which covers much of West Queens and is close to several studios, “would be devastated if the film industry wasn’t here.”

Hollywood’s influence runs deep in New York. Rhoda Glickman, the former chair of the Congressional Arts Caucus who now oversees the New York state subsidy program, is married to Dan Glickman, the former president of the Motion Picture Association of America. Their son, Jonathan Glickman, is a major Hollywood producer. Hollywood moguls including Steven Spielberg and Ali Emanuel have donated hundreds of thousands of dollars to Ms Hochul’s political campaigns in recent years.

Amazon spokesman Zach Goldsztejn said the company is “proud of the good jobs we create, the trust that local communities place in our investments and the opportunities we have to invest in those communities.” A spokesman for the Motion Picture Association of America declined to comment.

Ms. Hochul and key lawmakers have already secured tens of thousands of donations from unions representing the industry’s grass roots and files, including local units of the Writers Guild of America, the Truckers Guild and the Screen Actors Guild.

Union leaders say support for the industry should be taken for granted. “They’re not just good jobs for unions. They’re good jobs for the middle and upper middle class, with great health care and pension benefits,” said Tom O’Donnell, president of Theatrical Teamsters Local 817 , which represents about 2,500 drivers, location crews and casting directors.

Then, there’s the tried and tested appeal of the movie itself.

Even a nonchalant TV series about Nazi hunters, set in 1970s New York City and starring Al Pacino, has sparked interest in various well-known shooting ranges around the city, including Coney Island. Amazon, which made the show “The Hunter,” received more than $25 million in film-making subsidies from the state of New York.

“These films and shows tend to showcase New York in a very engaging and captivating way,” Mr. Janaris said. “How many people come to New York to visit the ‘Sex and the City’ venue?”

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