When actor Timothée Chalamet made his way through the 1960s-era West Village in last year’s Bob Dylan biopic “A Complete Unknown,” he was actually in Hoboken, New Jersey.
That’s a problem for New York’s movie and television industry, which has struggled to regain its footing after taking hits during the COVID-19 pandemic, a pair of film-halting strikes and the Garden State’s success luring film productions.
“We don't want to lose [TV shows and movies] across the river to New Jersey,” said Kris Bagwell, head of Silvercup Studios in the Bronx and Long Island City.
Bagwell is among an array of executives from the film industry backing Gov. Kathy Hochul’s budget proposal for a nine-figure boost to New York’s already generous film tax credit.
For the second time in three years, the Democratic governor wants to give movie and TV producers more state tax breaks to entice them to film and perform post-production work in the Empire State. The measure would also make it easier for the producers to claim credits for actor, writer, director and composer salaries.
Hochul’s latest proposal would extend the tax credit an extra two years, until 2036, and calls for the state to put up $800 million a year for the refundable credit, already one of the largest industry-specific tax breaks in New York. That’s a $100 million increase from the current level and $380 million higher than the start of 2023, meaning that the credit would nearly double in less than three years.
The governor’s plan is the latest salvo in a year’s long battle in Albany over the tax credit, which some budget analysts, think tanks and even a state-funded report have long criticized as an overly generous handout with a bad return on investment.
“If you approve these new subsidies, New York taxpayers will pay Hollywood producers $9.5 billion from 2024 through 2036,” wrote Ron Deutsch, senior policy fellow for the government reform think tank Reinvent Albany, in testimony to the state legislature. He called the program “incredibly inefficient.”
But film studios, soundstage operators and other supporters say the boosted credit is necessary to keep New York’s film industry competitive with other states offering similar or stronger incentives – like New Jersey.
They note that New York’s film and TV industry is still lagging behind pre-strike and pre-pandemic levels, with location shooting permits issued in New York City far lower than in 2019.
New York’s film tax credit is worth up to 30% of qualifying production costs for projects filmed in New York state, with an additional 10% available in certain counties north of New York City.
Under Hochul’s latest proposal, the additional $100 million would be set aside to lure more indie productions to the state. She’s trying to build on the state’s recent success landing “Anora,” the independent film that won the Academy Award for Best Picture on Sunday. The movie was shot in Brooklyn, making it eligible for New York tax credits.
Hochul wants to tweak the credit to offer studios extra money for filming multiple productions in the state. Her proposal would also allow each production to claim the credit for so-called “above the line” costs — including actor salaries — of up to 40% of the total amount they claim, removing a previous cap of $500,000 per job.
Hope Knight, president and CEO of Empire State Development, the state entity that oversees the tax credit, touted Hochul’s proposal at a state budget hearing last week.
“These programs will attract new film projects to the state generating positive returns for host communities and to the many small businesses oriented around filming such as set and costume design, hospitality and restaurants,” she said.
Critics of the credit often point to a January 2024 report from a state-funded consultant that analyzed the state’s major tax-incentive programs. It concluded that every dollar spent on the film-tax credit generated a 31-cent return on investment.
Among other things, Deutsch takes issue with the credit being refundable, which means the state cuts the studio a check if they qualify for a credit that’s larger than their tax bill. “They are payments from the state to employers based on their expenses, not tax liability,” he wrote. “It does not matter if a movie makes a billion dollars or one dollar.”
But supporters — including the Motion Picture Association, the trade group representing major movie studios including Disney and Warner Bros. — say the studies that have been critical of the credit don’t do enough to account for the ancillary benefits, such as the neighborhood caterers, dry cleaners and lumber companies that film producers hire when a movie or TV show films nearby.
“When you go to northern Brooklyn right now, where [CBS drama] ‘Blue Bloods’ just wrapped 14 seasons, the coffee shop, the steakhouse that supplied the family meals there — they’re not feeling that same bump there now,” said Josh Levin, the MPA’s vice president for state government affairs in the Northeast. “They're struggling.”
The cost to the state can be significant.
In the fourth quarter of 2024, the state paid out at least $17 million each for single seasons of six different TV or streaming shows: “The Blacklist,” “Brightside,” “Evil,” “Extrapolations,” “FBI” and “Fleishman is in Trouble,” according to state records.
HBO received $846,000 in state tax credits for season three of “How To With John Wilson,” according to the data. In the second-to-last episode of the comedic, man-on-the-street docuseries, Wilson admitted to recreating an overflowing toilet on a soundstage explicitly to qualify for the credit, which generally does not apply to documentaries.
From January through November 2024, New York City issued 22% fewer location shooting permits than it did over the same period in 2022, before actor and writer strikes temporarily shut the industry down, Gothamist reported last year. Permits were down 43% when compared to the same period in 2019, just before the COVID pandemic.
Those numbers don’t include filming at private soundstages, like Silvercup, which has been home to shows like “The Sopranos,” “Sex and the City” and “30 Rock” over the years.
Bagwell said Silvercup is starting to see an uptick in filming as it continues to bounce back from the strikes. He said Hochul’s proposal will help keep productions in the five boroughs.
“I don't know the exact answer to what is the exact return,” he said of New York’s tax credit. “But what I know is that there are tens of thousands of jobs in the industry here that are middle-class, well-paying, union jobs with benefits — and they can go somewhere else.”
State lawmakers will have to approve Hochul’s proposal as part of the state budget process if it is to take effect. Legislative leaders have been supportive in the past, and Senate Majority Leader Andrea Stewart-Cousins (D-Yonkers) represents a district that’s home to a large Lionsgate Studios facility.
The state budget is due before the April 1 start of the state’s fiscal year.