The Murphy administration is floating the prospect of expanding New Jersey’s film tax credit program so that it could last much longer and projects can win larger grants, reasoning that the state stands to benefit from the typically longer-lasting television productions that otherwise might not have as much use for the incentive.
Gov. Phil Murphy said at an economic development discussion Tuesday morning at Rowan University that he would like to expand the program beyond five years – it runs until 2023 – and raise the cap, which is $75 million to cover the costs for film and $10 million for digital media projects. Overall, the program will offer $425 million in credits during its five-year lifetime.
“If a television pilot takes hold and it’s successful, that can be an eight or 10-year run, and those are big money-spenders,” Murphy said. “Movies are great but they come and go. TV programs, if they’re hits they last.”
Granted, several big-names have filmed in New Jersey, such as WB Studio Enterprises Inc.’s “Joker” which was shot in Newark, and producer Steven Speilberg’s rendition of “West Side Story” which is being produced in Paterson.
“We were [there] 24 hours with all the heads of all the studios, in Los Angeles. They loved our incentive program,” the governor said of his April meetings with film executives. “The two big questions they have is can you look at possibly extending this,” for the benefit of television programs.
Under the program – formally called the Garden State Film and Digital Media Jobs Act – the state allows for a 30 percent tax break for filming in New Jersey, or a 35 percent tax break for filming in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Mercer or Salem counties, all in South Jersey.
Digital media companies can win tax breaks of up to 20 percent of their expenses, or 25 percent if they film in South Jersey.
Businesses have to spend at least 60 percent of their expenses on goods and services from state businesses. They can also obtain a 2 percent diversity hiring bonus.
Former Gov. Chris Christie allowed a scaled-down version of the program to expire in 2011, citing worries about the costs. The program fizzled out for good in 2015.
But critics of the film tax credit worry that the state could bleed out money over time because the program lacks a net benefits test, which is a formula the state uses to figure out how the money the state spends on tax breaks for a company is exceeded by the amount of economic activity that the business generates for the state.
An analysis last year from the nonpartisan Office of Legislative Services found that the state could lose $425 million in revenue over the life of the program because it lacks this test.
Supporters of the program argue that the costs will be far exceeded by the business and economic activity that the incentives generate.
“The payback is immediate,” Murphy said Tuesday. “This comes to town, the circus comes to town…and you get immediate payback.”