New York’s $7.7 billion in handouts for the film industry came under scrutiny Wednesday — as state lawmakers seized on a new analysis showing taxpayers aren’t getting the best bang for their bucks.
The independent analysis of the Film Production Tax Credit, conducted by a Philadelphia-based consulting firm, found the nearly $700 million yearly in forgone revenue returns only about 31 cents on the dollar.
“We now have more than enough evidence to demonstrate that a lot of this programming, a lot of the spending, is not being spent wisely and we have to do something about it,” state Sen. Jim Skoufis said after a hearing on economic incentives.
Albany signed off last year on massive new incentives to encourage film and TV productions to shoot in New York — adding up to $7.7 billion over 11 years — with dubious proof as to how much economic return the handouts would actually bring to the state.
Ashley Ranslow, NY State Director for the National Federation of Independent Businesses, testified the mid-sized businesses she represents don’t really feel a substantial impact from the program.
“For three quarters of a billion dollars I question how that is really helping small businesses generally,” Ranslow told lawmakers.
Skoufis took the head of New York’s economic development arm to task during the hearing, asking her at one point if any analysis of an incentive program conducted by her agency had ever shown a negative return on investment.
“Not during the time that I’ve been in this seat, but I can look back and see if that’s been the case,” Hope Knight, CEO of Empire State Development, responded.
She tried to cast doubt on the damning independent study of the film production tax credit — which was ordered by Gov. Kathy Hochul and the legislature — by saying it didn’t factor in enough of the trickle-down economic benefits small businesses, like caterers and hotels, see when a film production comes to town.
“I think you have to look more inclusively at that metric because … so much of the film industry is connected to the small business community where these productions exist and so there is significant induced activity as a result of these productions engaging the local economy,” Knight told lawmakers.
Knight pointed to other state studies that have estimated the production tax credit nets $1.70 for local and state governments for every $1 spent.
Brian O’Leary, tax counsel for the Motion Picture Association, an industry group pushing for the incentives, also pointed to the other reports to try and prove the program’s worth.
“They have done a credible job of, through the beginning of the history of this program, of showing not just showing the growth in production, but the growth in jobs and union jobs as well as the investments in infrastructure,” O’Leary said.
But Skoufis pointed out that the litany of reports and surveys presented by the MPA had been paid for by the film industry group itself.
“They conveniently left out that those analyses were commissioned by them, paid for by them. So, of course, they’re going to come back and underscore exactly what they want to underscore,” the Hudson Valley rep later told reporters.
State Sen. Liz Krueger, chair of the powerful Senate Finance Committee, shed considerable doubt on the incentives at the conclusion of the hearing and noted that the state needs to tighten its belt since it can’t easily lean on Washington for financial help with the incoming administration of President-elect Donald Trump.
“We know we’re walking into an era where we expect far less cooperation or funding from our federal government. We have to get smarter in New York state about what programs we operate, whether they are worth their salt, whether they are a bad use of the public’s money,” Krueger said.
“Are we going to frankly continue to just have bad policies that we’ve known are bad policies forever and yet not choose to do anything about them?” she added. “I hope that we will choose to do something about them.”
The non-profit group Reinvent Albany calculates that New York spends $75,000 on every film and TV job supported by the program.
“Credit the State Senate for using facts to punch through the Hollywood lobbying fog to show the $7.7 billion Film/TV tax credit and other corporate subsidies are a waste of New York tax dollars,” Executive Director John Kaehny, who also testified, told The Post after the hearing.
“Does anyone but [Empire State Development] and the film industry think spending $75,000 in taxpayer money to pay for one full-time film job for one year is OK?” he added. “This is what legal corruption looks like in New York.”