Relates to the empire state film production tax credit

Summary of specific provisions

Section 1 of this bill would amend Tax Law § 1201-a(b), the section that authorizes the City of New York to amend its General Corporation Tax {"GCT"} and its Unincorporated Business Tax ("UHT") with respect to the Empire State Film Production Credit. This proposal would (1) reduce the City credit rate from five percent to four percent; (2) phase out the credit for television series: after three years of receiving the full credit, a television series would receive a three percent credit in year four of the program, a two percent credit in year five, and no credit thereafter; and (3) establish a cap of $250,000 in credits per qualified film or episode of a qualified television series; for those productions incurring more than 75% of their post production costs in New York City, the cap would be $300,000.

Section 2 of the bill would amend . 7(b) of part P of Chapter 60 of the Laws of 2004 to provide that if any of the aggregate amount of tax credits that are available in a given year remain unallocated in such year, they would be available for allocation in a subsequent year.

Section 3 of the bill would amend such § 7(b) by adding two new subdivisions (e) and (t). Subdivision (e) would provide that the tax credits allocated in 2009 under the GCT and UBT would not exceed $24 million, and if the amount of credits applied for reaches $24 million, additional tax credit applications would not be accepted until on or after January 1, 2010. Subdivision (t) would provide for an additional aggregate annual amount of $24 million to be allowed in 2010 and 2011, in $12 million increments for the periods January 1st through June 30th, and from July 1st through December 31st, for each of these years. Moreover, should the total amount of allocated credits applied for in any of such six-month periods reach the allowed additional aggregate amount of $12 million, additional tax credit applications would not be accepted until the first day of the next six-month period which has tax credits available for allocation.

Section 4 of the bill provides that the law would take effect immediately and would apply to taxable years beginning on or after January 1, 2009, and to applications filed on or after such date.

Justification

As part of the 2009-10 State budget, the Empire State Film Production Credit program was provided additional $350 million in State funding. The legislation does not apply to that portion of the program that is particular to New York City, which has been enacted through the City's GCT and the UBT. Without new legislation, funds for the City's film production credit will be exhausted before the end of

calendar year 2009. This bill will secure funding for the "Made in NY" film production credit through the end of 2011. Given the fiscal constraints facing the City, this legislation would also contain measures to enhance the program's effectiveness as an incentive and to better target the tax credit. These proposals represent a carefully crafted plan to share the sacrifices needed to cope with the fiscal challenges facing the City while preserving the film production credit program as a viable incentive to attract film and television production to New York City.

The annual cap of $24 million and the overall reduction of the City credit rate from five percent to four percent would limit the City's exposure to excessive program costs and allow for improved future fiscal planning. The television series phase-out would provide a credit for the first five years of a series, after which these successful and established television series would no longer be eligible for the credit. The per-production cap would preserve the full credit for independent features and for television series, which provide year-round employment, and a graduated percentage reduction for large-budget feature films.

Both the City and State have taken a number of important steps to provide incentives to the film and television industry, because it is an important contributor to the City's economy. The New York City's Mayor's Office of Film, Theatre & Broadcasting has dramatically enhanced the range of services that it offers to the industry. Combined with the State credit, the "Made in NY" film production tax credit, enacted in January 2005, has been a major success in attracting film and television production to New York City. Production spending for qualifying film and television projects increased significantly since 2004, accounting for an additional $5 billion in direct spending while providing thousands of additional jobs. These increases were evident in all production areas: feature films, independent films, television series and pilots.

Through the "Made in NY" film production tax credit, New York City is the only municipality in the United States offering a tax credit incentive to the film and television industry. This extension of the program will ensure its continued success.

Prior legislative history

New Legislation.

Fiscal implications

No new fiscal implications to the State.

Effective date

This act shall take effect immediately and shall apply to taxable years beginning on or after January 1, 2009; provided further that this act shall apply to applications filed on or after January 1, 2009; provided, however, that the amendments to subdivision (b) of section 1201-a of the tax law made by section one of this act and to subdivision (b) of section 7 of part P of chapter 60 of the laws of 2004 providing tax credits for certain costs incurred in film and television productions made by sections two and three of this act, shall not affect the expiration and repeal of such provisions and shall expire and be deemed repealed therewith.