‘Due to the program’s enormous success, the allocated funds for this tax credit incentive have now been exhausted,’ said the statement from the Empire State Development Corp., and with that, the program that got New York City soundstages record levels of film and TV production in 2008 was gone. Cash-strapped New York State had run out of money to fund its popular tax-credit program.

New York, which introduced a tax credit in 2004 to steer film and TV production away from Canada, set aside US$515 million for tax incentives to 2013. But the state also tripled its tax credit to 30% of labor costs in April 2008 to keep pace with neighboring Connecticut and its 30% tax sweetener. The result is that the Empire State ran through its tax-credit money early, and may not renew the program when the next state budget is unveiled on April 1 as Governor David Paterson tackles a growing fiscal crisis. Tax breaks brought 19 pilots to New York City soundstages in 2008.

New York’s pain could be Canada’s gain, according to Ken Ferguson, president of Toronto’s Filmport Studios. No immediate competition from New York is ‘100% good news’ for both Filmport and Ontario, says Ferguson. ‘We already have two [TV] pilots this year that New York would have gotten,’ he says, ‘one from Disney and one from Fox. It’s absolutely going to make a difference.’

The pilots are shooting on Filmport’s smaller stages. Recent bookings also include Universal’s Scott Pilgrim vs. the World and Atom Egoyan’s Chloe.

Ferguson predicts New York State will likely renew its tax credit, but at a far lower rate, to recapture lost revenues – and sources indicate that some 10 to 15 feature films may land in Ontario or Quebec because of that.

Toronto budget aims high on Hollywood

With all this news coming from just south of the border, the City of Toronto is looking to make an ‘aggressive’ comeback in the film business, and hopes to see spending by foreign productions go as high as $500 million in 2009, according to its film commissioner and the proposed budget put forth by Mayor David Miller. That would put spending in the under-used city significantly higher than the levels it enjoyed in 2004 through 2006, when Hollywood brought in about $400 million per year.

Newly minted Toronto film commissioner Peter Finestone tells Playback he’s ‘hopeful’ production levels will bounce back in ’09, despite the receding economy, though he concedes that the $500-million goal is high.

‘The entertainment business has done well through challenging economic times in the past,’ he says, noting that U.S. studios were ‘still talking about making product’ during a recent trip to L.A. with the mayor. Toronto had more than $700 million in film activity in 2007.

The city’s goals for 2009 also include enhancing its marketing, advocacy and training efforts within the film industry, and increasing the number of film locations in Toronto by 13% to 1,100. Finestone says his office will work with the Ontario Media Development Corporation on making new or previously overlooked locations available to productions. He says they want to be able to offer variety, especially to filmmakers who are in the early stages of preproduction and not physically present in the city to scout locations.

Though other departments were not so lucky, and Torontonians were hit with a 4% property tax hike, Miller spared his Film and Television Office from budget cuts when he put forth his proposed budget for ’09. The budget, which must be approved by city council, allocates $1.3 million to ‘film services’ under the culture and tourism banner – an amount on par with last year – with the majority of the funds earmarked for the Toronto Film and Television Office, which handles industry and government relations and permits, and promotes the city as a destination for film and TV projects.