Assembly Panel Green-Lights Democratic Legislation to Expand NJ Film Tax Credit
An Assembly panel on Thursday gave the green light to legislation sponsored by Assembly Democrats Gordon Johnson, Carmelo G. Garcia, Valerie Vainieri Huttle, Joseph Lagana and Raj Mukherji that would expand New Jersey's film and digital media production tax credit program in order to generate jobs, revenue and a slew of other ancillary benefits.
"The expansion of this tax credit will give New Jersey the shot in the arm it needs to once again attract film and digital media productions that have added so much to our economy in past years," said Johnson (D-Bergen). "We need to fix the mistake that was made when this credit was suspended and create an even more powerful economic development tool for our state."
The bill (A-2474), which was amended to match a Senate substitute (S-779) that was approved earlier this year, would increase the FY 2015 annual program cap for the film production tax credit from $10 million to $50 million and for the digital media production tax credit from $5 million to $10 million.
"First and foremost, the restoration of this tax credit will significantly boost job creation and revenue for our state," said Garcia (D-Hudson). "It will also spur capital investments in our neighborhoods from the influx in talent that typically follows these industries. For communities like Hoboken and Jersey City, just a stone's throw from Manhattan, this is particularly important."
The bill also provides for a tax credit equal to 22 percent, instead of the current 20 percent, of eligible production expenses if the expenses represent purchases of goods from businesses located in Urban Enterprise Zones or purchases of services performed by residents of a UEZ.
"What's sad is that we squandered a prime opportunity in the immediate aftermath of the recession to take advantage of the many production companies that were interested in coming to New Jersey because we were a more cost-effective alternative to filming in New York City," said Vainieri Huttle (D-Bergen). "Hopefully this legislation will send them a clear signal that we still are and we're open for business."
The bill also stipulates that applicants must demonstrate that the awarding of the tax credit will yield a net positive benefit to the state. Additionally, it enhances the benefits provided to the state by requiring applicants to enter into a public-private partnership with a four-year public institution of higher education in New Jersey in order to qualify for tax credits under the program.
The bill also requires qualified applicants to appropriately credit the filming and production locations within New Jersey that were used.
"The suspension of this tax credit dealt a significant blow to our economy, particularly with all the ancillary benefits that come along with this industry," said Lagana (D-Bergen/Passaic). "However, it's never too late to reverse this mistake. This bill will restore the confidence film and digital media production companies once had in New Jersey and help lure high-paying jobs back to our state."
Additionally, the bill expands the type of productions that are eligible for the tax credits to include a television series or a television show of 22 minutes or more in length intended for a national or regional audience, including a game show, award show, or other gala event filmed and produced at a nonprofit arts and cultural venue receiving state funding.
"Given the struggles we're still facing to get our economy back on track, we need to nurture - not abandon - successful programs like this one that stimulate economic development," said Mukherji (D-Hudson). "When this credit was eliminated, we lost numerous productions that had pumped millions into our local economies. Not only will this bill allow us to reinvest in our communities by attracting film and digital media productions, it will also incentivize these productions to buy goods from businesses located in UEZs and hire residents of those cities, like Jersey City."
The bill also extends tax credit eligibility to gross income taxpayers who are partnerships, S corporations, limited liability companies, cooperatives, or non-profit corporations and also extends tax credit eligibility to gross income taxpayers for digital media production expenses.
Lastly, the substitute requires the New Jersey Economic Development Authority, in consultation with the Motion Picture and Television Development Commission, to study the prospect of developing a film production studio at a location in a northern New Jersey county and submit a copy of the study to the Governor and the Legislature within one year after the effective date of the bill.
The bill was also amended to extend the expiration date of the program from July 1, 2015 to July 1, 2022.
The sponsors noted that an Ernst & Young study of the economic and fiscal impacts of the New Mexico film production tax credit concluded that 2007 film productions generated 9,209 jobs in New Mexico, $487.5 million in additional income and $891.8 million in additional economic activity.
A June 2009 study of Pennsylvania's Film Production Tax Credit conducted by Economic Research Associates also yielded similar positive results.
The bill was approved by the Assembly Commerce and Economic Development Committee.