As New York increases tax breaks for films, some critics are postponing the program

Four years ago, Amazon delayed its plans to build a headquarters in New York City amid leftist outrage over a $3 billion public subsidy package. But New York has barely cut the company: Amazon’s film and television division has received more than $108 million in state tax credits since then, and the left has barely raised a peep.

The handout is part of a government program that offers hundreds of millions of dollars in tax incentives each year to producers across the film and television industry, including Amazon, fueling rapid expansion of studios in Brooklyn, Queens, the Bronx and Westchester County.

Now Gov. Kathy Hochul is pushing for an almost 70 percent expansion of the program, using the proposed state budget to shower the industry with up to $7.7 billion in tax credits over the next 11 years. As it stands, the subsidy is the most generous of any offered by the state, according to an analysis by Reinvent Albany, a monitoring group.

The proposed expansion from $420 million to $700 million a year has slammed a number of critics, who argue that the decades-old program has been consistently bad business for taxpayers. But its likely success shows what’s possible when powerful political and economic forces combine in Albany and states are increasingly pitted against each other for prestige jobs.

Ms. Hochul’s team is most concerned about neighboring New Jersey, which along with Georgia and Canada offers its own candy buffet that threatens to siphon off New York film projects.

Hollywood executives and unions representing film workers, two of the Democrats’ staunchest political allies, have also spent significant sums to solidify bipartisan support in Albany. Industry and government leaders say the grants have built a sizeable film and television sector by giving production companies credit for the “below-the-line” jobs they create by filming in New York, including crew members and technicians.

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

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

“This is modern manufacturing, but without this program, this business is going away,” added Mr. Steiner, who contributed $40,000 to Ms. Hochul’s 2022 campaign and spends about $10,000 a month on lobbyists.

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

“This isn’t movie magic, this is basic economics,” said Kristin Devoe, a spokeswoman for Empire State Development, the state agency that administers the program. “The New York City film and theater industry brings jobs and investment to our state, provides a return for New York taxpayers, and is critical to our economy.”

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

The latest analysis performed for the state concluded that the loans helped generate nearly $10 billion in direct spending in 2019 and 2020 and returned about 50 cents in tax revenue to the state for every dollar credited. New York City will receive an additional 49 cents and 5 cents will go to other local governments.

Critics of the program argue that these numbers are too rosy and count projects that would be implemented in the state with or without tax credits.

Not only that there is “no evidence for it Incentives ever almost pay for themselves,” said Michael Thom, a professor of tax policy at the University of Southern California, but he argues that there is a real opportunity cost when so much taxpayer revenue flows at the expense of an industry’s proven investment in a skilled workforce or a good infrastructure.

Reinvent Albany conducted his own analysis of the numbers to show that each full-time TV and film job created under the current program costs taxpayers essentially $66,819.

“I like to say that politicians love two things, athletes and movie stars,” said JC Bradbury, an economics professor at Kennesaw State University. “Any sports team that wants a subsidy will get it. Movies seem to get it too.”

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

Liz Krueger, a Liberal Manhattan state senator who chairs the finance committee, said she has given up trying to convince her peers that the program is not sound. State Senator Michael Gianaris, who helped scuttle the 2019 deal with Amazon headquarters, is an avid supporter of lending to the industry, even if it helps an old foe.

Another leading critic of Amazon development, Rep. Alexandria Ocasio-Cortez, the Democratic Socialist who advocates a more progressive budget, recently told a reporter the governor’s tax credit plan is not on her radar. “It’s good to know, good to learn,” she said.

For many policymakers, subsidizing film and theater means making more of what makes New York New York. It also means jobs.

Mr. Gianaris, the Senate No. 2 Democrat, bemoaned attempts by states to underbid each other on film and television projects. “But it exists, and it happens to be a very transient industry that’s constantly making location decisions,” he said.

The senator added that his district’s economy, which encompasses much of western Queens and is near several sound stages, “would be devastated if the movie industry wasn’t here.”

Hollywood’s influence runs deep in New York. Rhoda Glickman, the former chair of the Congressional Arts Committee who now oversees the New York State grants program, is married to Dan Glickman, former chairman of the Motion Picture Association of America. Their son Jonathan Glickman is a major Hollywood producer. And in recent years, Hollywood giants including Steven Spielberg and Ari Emanuel have donated hundreds of thousands of dollars to Ms. Hochul’s political campaign.

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

Ms. Hochul and key lawmakers have received tens of thousands of submissions from unions representing the industry’s grassroots, including local units of the Writers Guild of America, the Teamsters and the Screen Actors Guild.

Union leaders say supporting the industry should be a no-brainer. “These aren’t just good union jobs. They’re good middle-class and upper-middle-class jobs that come with great health care and retirement benefits,” said Tom O’Donnell, president of Theatrical Teamsters Local 817, which represents approximately 2,500 drivers, location staff and casting directors.

Then there’s the proven appeal of the film itself.

Even a lukewarmly reviewed TV series about Nazi hunters, set in 1970s New York and starring Al Pacino, sparked interest in its various recognizable filming locations around the city, including Coney Island. Amazon, which produced the show Hunters, received more than $25 million in film production grants from New York State.

“These films and shows tend to portray New York in a very attractive and glamorous light,” said Mr. Gianaris. “How many people have come to New York to visit the ‘Sex and the City’ venues?”