Film tax credits have long been a bad deal for states, yielding pennies on the dollar while leaving Hollywood studios the lion’s share of the benefits. The current bill would loosen requirements on these credits even further, weakening the case of their supposed economic benefits to New Jersey.
One main concern is the treatment of Pennsylvania workers as New Jersey workers for the purposes of defining qualified production expenses. Why should the state be subsidizing workers from other states who pay income elsewhere? If a film production uses out-of-state labor, that’s certainly a choice they can make, but it’s unclear why New Jersey would allow companies to count those workers towards their economic costs accrued in-state.
Another is the rollover of Aspire and Emerge credits into the film tax credit program. Aspire and Emerge each have requirements on projects that limit credits to deserving programs that can serve to revitalize underinvested communities. This bill allows unused tax credits from Aspire and Emerge to simply be made available through this program to a wider range of potential claimants and raises the cap to $300 million. Given the long-term financial cost of tax credits on the state budget, the state should think twice before expanding access to tax credits without stringent requirements on ensuring benefits go to communities, not big corporations.
Given the dire economic straits the state budget finds itself in, it may be tempting to view the film tax credit program as free money, which can be doled out without appropriation and without budgetary cost. But this is purely an illusion; loosening requirements on tax credit programs means money going out the door with fewer benefits coming back to the state.
NJPP urges the committee to vote no on this legislation.
