The proposed Senate Bill 4094 was approved in a 31-2 vote by the state Senate on Monday and a 65-12 vote by the state Assembly. It’s now headed to Gov. Phil Murphy’s desk, where he has until Jan. 18 to sign the bill or pocket veto it, exercising a rare power he can wield for the week following the latest voting session.
Murphy has been widely supportive of the film tax credit program, baking it into many of his economic development strategies for the state.
Under the film tax break program, the state compensates producers for filming scenes in New Jersey and buying in-state goods. Murphy signed one expansion in January 2020, and another as part of the $14.5 billion economic subsidy program he approved a year ago.
The New Jersey Economic Development Authority, which oversees the program, said that since 2018 the state has approved 49 film and TV projects that saw more than $635 million of spending in the state economy.
The bill’s main sponsor, Assemblyman Gordon Johnson, D-37th District, said that the expansion “will give New Jersey an even more competitive edge by further establishing our state as an appealing destination for creative projects of all kinds.”
State officials have used the program to attract such productions as “Joker” and “West Side Story.” In addition, Netflix is reportedly considering a film studio in the Garden State, while NBCUniversal uses the former Meadowlands arena.
Many production companies have cited the tax credit program as a significant factor in their decision to come to New Jersey, a less expensive, though still nearby, alternative to New York that offers urban, rural and scenic landscapes.
“It’s allowed us in the industry to continue to employ people in the Garden State and use vendors and become a catalyst for growth during this bad time,” Angela Miele, an executive with the Motion Picture Association, said last year.
But critics have questioned the economic benefits and efficacy of the incentive program and other state tax breaks. A note released Jan. 10 by the nonpartisan state Office of Legislative Services said that an expansion of the digital media tax credits by $20 million each year could mean the state would lose another $240 million over the next 12 years.
“Digital media projects are just as important to the entertainment industry and economy as film projects, and deserve the same opportunities to grow and thrive in our state,” Johnson continued.
Lawmakers are proposing to widen the array of benefits that film, television and digital media producers could claim, and to allow payments to big-name actors, directors and screenwriters to count toward the total tax break amount. Currently, payments above $500,000 to any “highly compensated individual” cannot be used to calculate credits.
The yearly program cap on digital media productions would increase from $10 million to $30 million, while the tax breaks for those kinds of productions would increase to 35% of the expenses incurred in South Jersey, in an effort to draw productions beyond the New York City area, and 30% in the rest of the state.
Lawmakers are planning to extend the program to 2034, rather than the original sunset date of 2028. And the tax credits could be counted against gross income tax, instead of solely the corporate business tax under the current law.
There would be a “diversity bonus” for hiring film crew members in minority groups typically “underrepresented” in film and media productions, or for hiring workers that reside in the municipality where the filming occurs, or who belong to a labor union.
The state would create “studio partners” in 2025–three major studios that relocate to New Jersey for at least a decade would be able to tap into an added $350 million of state subsidies. That’s on top of the existing $100 million in the program, and according to the bill comes out of any unused dollars from other economic incentive programs.
Rules would also be loosened so that studios would no longer need to be the sole owner of a facility to qualify for the incentives. Instead, they would only need to lease at least 50,000 square feet and commit to spending an annual average of $50 million for the next five to 10 years.[/vc_column_text][/vc_column][/vc_row]
1 of 1 article
0 articles remaining
Advance your business edge with news from NJBiz. Register now for more article access.