Morelle Secures Empire State Film Production Tax Credit

November 3, 2004

Assemblyman Joseph D. Morelle (D-Irondequoit), Chairman of the Assembly Committee on Tourism, Arts & Sports Development, has successfully worked to secure a tax credit to benefit the film and television production industry in New York. The proposal, originally developed in conjunction with several members of the Brooklyn and Queens Assembly delegations and introduced as legislation (A.11595-A), was recently enacted as part of the 2004-05 budget.

The historic tax incentives, known as the "Empire State Film Production Credit," would lower the costs of producing films in New York State and allow the New York film industry to utilize its competitive advantages in talent and locale to attract major productions. Specifically, the initiative would provide $100 million over four years – $25 million annually – to provide a 10% credit on qualified production costs paid or incurred for films, television films or series, and similar productions (documentaries and commercials are not covered). The credit can only be applied to "below the line" production, which means that actor/director wages and script costs are not included. Additionally, New York City would be allowed to provide as much as $12.5 million annually in tax credits for production in New York City.

A qualified film production company that shoots 75 percent of their production in New York State would be eligible to apply for benefits, on a first-come, first-served program (to be determined by the Mayor’s Office of Film, Theater and Broadcasting, and the Commissioner’s of Economic Development and Tax and Finance).

New York State possesses a burgeoning film and television production industry that is vital to the State’s economy. The state hosts the second largest concentration of motion picture economic activity in the nation. The film and television industry provides a tremendous economic boost through direct and indirect spending, tax revenue, and the notoriety that comes with a film production that occurs in New York State. A June 2000 New York City Comptroller’s Office report cited motion picture production and services among the largest job growth industries in New York City from 1992-1998, more than doubling according to the City Department of labor. New York City’s film production industry employs 100,000 people and contributes an estimated $5 billion to the economy annually.

However, New York’s place in this highly lucrative industry has been in jeopardy. Growing competition from other localities, particularly Canada, has led to the decline of the New York (and U.S.) feature film and television production industry. According to a 1998 report by the Screen Actors Guild and Directors Guild of America, 27 percent of the 1,075 U.S. developed film and television productions were "economic runaways," filmed outside the United States.

Since becoming Chairman of the Tourism, Arts & Sports Development Committee in 2000, Assemblyman Morelle has sought to help the film industry in New York State by combating runway production. His proposals include the creation of a Motion Picture Investment Fund, which would have been established to help finance independent films produced in New York State; a wage tax credit for film and television productions that would have provided a 25% credit on the first $25,000 of wages of each employee in a production; exempting college students from sales taxes on the purchase of equipment and services used in the production of a film, among others.

Assemblyman Morelle is proud of the work that was done to secure this tax credit, especially the manner in which various state and city government officials came together with multiple production companies and studios throughout the state. This new initiative is a significant step toward combating runaway film production by improving the competitive advantage of New York.