Good morning. I am Sheila Reynertson and am a Senior Policy Analyst at New Jersey Policy Perspective (NJPP). New Jersey Policy Perspective (NJPP) is a nonpartisan think tank that drives policy change to advance economic, social, and racial justice through evidence-based, independent research, and analysis.
NJPP opposes A6070 and encourages the committee to vote against its passage.
It’s shocking that the film and digital media tax credit program is back again for another round of corporate tax subsidies. When exactly is enough enough?
Here is a recap of how this program has ballooned in the past year:
Right out of the gate, the film and digital media tax subsidy program was given special privileges in the first draft of the Economic Recovery Act passed a year ago. While all other programs in the ERA were to expire in four years, the film and digital program was first revised to a 10-year program to expire in 2028. At the last minute, the program became a 16-year program, expiring in 2034 – 4 times as long as originally proposed.
Tax subsidies in this program were originally proposed to equal at most 25 percent of production costs. This clean up bill increases that to 35 percent. It also increases the annual tax credit limit for digital productions from $10 million to $30 million. Payments above $500,000 to a “highly compensated individual” screenwriter, director, music director or actor currently cannot count toward a tax credit. That reasonable threshold would now be increased to $15 million.
The annual program cap is currently set at $100 million. But that turns out to be negotiable, too. If there are unused tax credits at the end of the year, this legislation allows the Economic Development Authority to wave them around and say, “Anyone want the leftovers?” These aren’t drink tickets. These are tax dollars that New Jersey will have to forgo for decades.
Now, we learn there is an even more egregious amendment. Beginning in 2025, when all this will be in the distant past, the annual program cap may be lifted to $200 million for digital productions and $450 for film productions, at the discretion of the EDA. What’s going on here? Why have a $100 million annual cap at all if it’s going to be tinkered with until it’s meaningless?
This is just another example of New Jersey’s unhealthy relationship with corporate tax subsidies. And it’s the responsibility of this committee to be skeptical stewards of taxpayers money. It’s the responsibility of this committee to ask “When is enough enough?”
We respectfully ask the committee to vote no on A6070. Thank you.