November 24th, 2016
Governor has until Nov. 28 to sign the Empire State Music Production Tax Credit into law
by Addie Morfoot
A coalition of music businesses called for Gov. Andrew Cuomo to sign a music tax credit into law before a Nov. 28 deadline. Its effort was partly a response to a letter to Cuomo from a policy watchdog a week earlier questioning the benefit to the state of the tax break.
In June, the Senate and Assembly approved the Empire State Music Production Tax Credit, which would provide a 25% tax break for eligible music-production-related costs in downstate counties and a 35% credit for upstate production. The bill, sponsored by Assemblyman Joseph Lentol, D-North Brooklyn, and Sen. Martin Golden, R-C-I, Brooklyn, allocates $25 million per year to each program, for a total of $50 million annually.
To be eligible for the tax incentive, companies must produce 75% of their project in New York state. Production costs under the credit’s provisions include below-the-line fees like studio rental fees, mixing, session-musician salaries, engineering and mastering services. Under both programs, all costs eligible for the credit must be incurred and paid in New York state.
New York Is Music, a coalition of 200-plus music-related organizations, has worked to pass the incentive since 2014. It analyzed more than 1,400 recording sessions covering the top-selling albums made between 1999 and 2014 and reported that New York state’s share of the projects had fallen by almost 50%. Local 802 Associated Musicians of Greater New York also reported that work has fallen approximately 30% in the past decade.
“We believe acknowledgment and support of music recording and production by the New York state government will have a profound effect on the growth and sustainability of a robust music ecology statewide,” said Bill Harvey, co-founder of New York Is Music.
“For too long we have all watched as iconic recording studios, retail outlets and other businesses necessary for a healthy New York music economy have shuttered,” said Recording Industry Association of America Chairman and CEO Cary Sherman in a statement. “Jobs have been lost to other countries, other states or lost altogether. That’s a shame and an outrage. New York once was—and should again be—a vibrant epicenter of music.… This legislation provides an opportunity for New York to regain its footing and reclaim its status as an economic engine of music industry growth. We urge Governor Cuomo to sign this vital bill into law.”
The Citizens Budget Commission does not share the coalition’s positive view of the bill. CBC’s president, Carol Kellermann, sent a letter to Cuomo on Nov. 17, a day after the bill was formally delivered to him for final consideration. Kellermann reminded Cuomo that when the film tax credit program was originally adopted in 2004, it was capped at $25 million per year before growing to its current $420 million annual budget.
“If adopted, there will be pressure to continue expanding the music and digital gaming credits as well, despite evidence that these types of narrowly focused tax credits do not provide a return on investment and should be curtailed, not expanded,” she wrote.
If Cuomo signs the bill on Monday, it will go into effect immediately and will sunset on Dec. 31, 2019.