New York State’s tax revenues have fallen more than $1 billion behind projections since the current state budget was adopted eight months ago.

When the fiscal year starts April 1, it’ll be staring into the gaping maw of at least a $689 million shortfall. Under the circumstances, a new corporate-tax giveaway is the last thing Albany needs.

Gov. Cuomo agrees — at least for now.

Until this week, Cuomo had never seen an entertainment industry subsidy he didn’t like — including a five-year, $2.1 billion extension of the nation’s most generous state firm tax credit, set to expire in 2019.

Monday, however, he vetoed a bill that would have authorized up to $50 million in annual tax credits for music producers and digital-game developers.

The question now is whether New York will finally press “stop” on taxpayer-funded entertainment-industry subsidies. On this, Cuomo’s veto was less encouraging.

His brief veto message didn’t object to the tax credit in principal. Instead, after stressing his continued “support [for] the music and digital gaming industry,” he noted that the Legislature had approved the handout “without accompanying funding.”

Such funding, the message concluded, “must be addressed in the context of annual budget negotiations” — effectively inviting the industry to rewind and replay the credit push next year.

Passed overwhelmingly by both the Assembly and Senate in the waning hours of June, the new music and gaming tax credit would have equaled 25 percent of “below the line” production costs in the New York City metro region, and up to 35 percent of the same costs upstate.

The annual gift was to be capped at $25 million for each of the two credits, or up to $150 million over the next three years. It was modeled on the state’s $420 million a year Film Tax Credit, which is “refundable” to filers whose total tax liability comes to less than the credit amount.

Gifts like this are, to say the least, a very sweet deal — as researchers for Cuomo’s now-defunct tax reform commission pointed out in a devastating (but unpublished) study several years ago.

The study said the film tax credit — 30 percent of costs, plus a 10 percent “labor credit” outside New York City — is so generous it can amount to more than half a production company’s taxable income in a given year.

In 2008 alone, the commission’s researchers found, tax credits awarded to just 31 film producers exceeded the total tax liability of the more than 1,600 film and TV production firms doing business in the state in nine of the previous 10 years.

For a politician, the appeal is obvious: The entertainment industry is glamorous, heavily unionized — and flush with celebrities, producers and investors who know how to reward friendly politicians at campaign time.

Cuomo alone collected almost $900,000 in campaign contributions from film and TV producers during his first term, Bloomberg News reported last year.

Lobbyists for Hollywood have long argued that the credit pays for itself in the form of new jobs and business activity. But, as noted in Cuomo’s tax-reform-commission study, those claims are inflated by the assumption — preposterous on its face — that no movies or TV shows would be made in New York in the absence of the credit.

You can’t blame musicians and gamers for trying to jump on the same gravy train, even if their justification for a new tax credit boiled down to the lame assertion that, in the words of the bill sponsor’s memo, “New York is undoubtedly the home of the most creative individuals in the music industry, and graduates the finest game developers anywhere.”

Substitute “publishing” and “investment bankers” for “music” and “game developers,” and you’ve got an equally strong justification for subsidizing those industries, too.

If there’s a silver lining in New York’s increasingly pinched fiscal outlook, it’s that Cuomo and the Legislature will find it harder to favor corporate welfare over education, transportation and other basic services. Going beyond Cuomo’s veto, it’s time to bring down the curtain on New York’s giveaways to the entertainment industry, once and for all.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

Hochul Tells It Like It Is

Presenting her budget this week in Albany, Gov. Kathy Hochul delivered more than just a financial plan. She gave the state a refreshing dose of fiscal honesty. “The truth is,” Hochul said, “we can’t spend like there’s no tomorrow, because tom Read More

Collapse of Projects Shows Again that Wind Power is Not Affordable

The renewable-power fantasy is being blown apart by furious financial headwinds. Already this year projects have tumbled in Rhode Island, Connecticut and Massachusetts, and now Danish wind-power giant  Over and over, the litany of causes is the sam Read More

AOC Redefines the Term ‘Rich’

New York socialists calling for higher taxes aim to spread the tax net far beyond Wall Street, scooping up folks on Main Street—especially in the suburbs. Bemoaning “violent budget cuts” at New York City agencies, Rep. Alexandria Ocasio-Cortez an Read More

Preparing for COVID’s return: Learning the lessons of what went wrong

The day after New York recorded its first positive coronavirus test, on March 2, 2020, then-Gov. Andrew Cuomo said something that should go down in the annals of misplaced hubris: Read More

NYC schools should worry less about ‘mindful breathing’ and more about reading

Mayor Adams should save his oxygen for the real crisis in our schools — our children are not being taught how to read, if they’re even showing up to class at all. Read More

State should not change law for disciplining public employees

A bill headed to Gov. Kathy Hochul’s desk would make major changes to how school superintendents, town supervisors, and mayors handle bad behavior by public employees. Read More

School Choice Is Not About Test Scores

Flawed science not needed to make judgements about school choice. A new study out of Stanford University indicates that charter schools are outperforming traditional public schools (Editorial Board, June 15). School choice supporters touting the study Read More

Spend! Spend! Spend! New York pols burn $9 billion hole in our pockets

When Gov. Kathy Hochul and state lawmakers approved New York’s latest budget, they pushed spending to its highest level in history. New data about the state’s financial picture show they didn’t think enough about the future. A new budget proje Read More