The state Legislature on Monday approved a bill ramping up the size of New Jersey’s film and television tax credit program, an increasingly popular incentive the state has used to lure media productions for the past year and a half.
Assembly Bill 5580 – which increases the annual cap on tax breaks for television and film projects from $75 million to $100 million a year, and extends it for five more years to expire in 2029 – was approved by the Senate in a 33-4 vote and by the Assembly in a 65-10 vote with one abstention on Jan. 13.
The digital media tax breaks will still be set at $10 million a year. Gov. Phil Murphy will have until Jan. 21 to decide on the bill.
Murphy pushed for an expansion of the program after the New Jersey Economic Development Authority, which oversees the program, revealed that demand for tax credits outstripped supply, with more production companies applying than there were dollars available.
The EDA will be allowed to carry over up to $50 million of unused tax credits from the previous year into the new year.
The governor has been pushing for a hard cap on the replacements for New Jersey’s incentive programs, which expired on July 1. Opponents of the cap, however, have pointed to the film tax credit instance to argue that a cap could be counterproductive to the state’s efforts to attract business.
According to the nonpartisan Office of Legislative Services, the expanded incentive could cost the state $700 million over the life of the program – up from the original $425 million – if the legislation is approved.
That is because the program lacks a net benefits test – a formula the EDA employs to determine how the money spent on an incentive would be exceeded by the dollar amount of economic activity generated. The OLS indicated that an “indeterminate” amount of revenue would be generated for the state as a result of the credits, but pointed out that local governments would likely see financial benefit.
According to the National Conference of State Legislatures, 13 states have ended their film tax credit programs since 2009, citing questionable levels of economic benefit for the state.
“The payback is immediate,” Murphy countered at an October event at Rowan University. “This comes to town, the circus comes to town … and you get immediate payback.”
Several prominent productions were recently filmed in the state after receiving incentives, such as Wrestlemania 35, WB Studio Enterprises Inc.’s film “Joker,” which was shot partly in Newark; and Steven Spielberg’s remake of “West Side Story,” which is being produced in Paterson.