The film and television industries, which spent a whopping $7.1 billion in New York City last year, are giving the city a crucial economic boost, Mayor Michael Bloomberg said on Tuesday at a press conference at the Saturday Night Live studio at 30 Rockefeller Center.
But since much of the growth was spurred by generous state tax incentives, which reduce taxes by 30 percent on designated production projects, the joke may actually be on taxpayers.
The tax credits don’t directly take money out of the state budget, but they cost a few hundred million dollars a year in foregone tax revenue. The value of the tax credits in 2012-13 is expected to be $342 million. Last year, they totaled $297 million.
Some incentives go to some productions that might have been filmed in the city anyway, which would mean less tax revenue for the state, said Robert Tannenwald, an adjust lecturer on public finance at Brandeis University.
“The key is, what would New York State’s employment and income have looked like had the money spent over several years on film tax credits been used instead to keep teachers in classrooms, firefighters in our firehouses, cops on the street and clinics open,” said Tannenwald, who analyzed such credits in a 2010 Center on Budget and Policy Priorities report. “What would the bottom line have been if that had been the case?”
Mayor Bloomberg, who released a study laying out the latest figures on film and TV job and spending growth since 2002, touted the results as a sign of his administration’s success in diversifying the local economy.
“With this flood of new business has come tens of thousands of new jobs that have put New Yorkers to work in these tough economic times,” Bloomberg said. “Without a doubt, our booming media and entertainment industry is one of the main reasons why we have weathered the national recession better than most of the rest of the country.”
The study, conducted pro bono by the Boston Consulting Group, also found improvement in the city’s advertising and publishing industries and its digital media sector, which has grown to account for over $8 billion in revenue and now employs 25,000 people.
TV and film production companies spent nearly $7 billion in the city in 2005 and 2006, the report shows, after combined tax incentives from the city and the state were boosted to reduce taxes on productions by 15 percent.
Then in 2008, as Massachusetts, Pennsylvania and Connecticut raised their own production credits to between 25 and 30 percent, New York City saw its film and TV production spending plummet.
New York State raised its incentives to 30 percent in 2009, and while the city’s incentive program expired, additional state funding lured some of those companies back to the city and set off another boom, the report concluded.
“Our interviews with industry leaders consistently cited the strong support of the city and the state of New York as an important driver of growth, including the New York State tax incentive, improved permitting, and access to premier locations, to name just a few,” said Kate Sayre, the study’s author.
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