Murphy dangles tax credits to lure film, TV industry

By: Daniel Munoz
NorthJersey.com
USA Today Network - New Jersey

..... Governor Phil Murphy has touted the state's growing film and television industry ever since taking the helm in 2018.
..... Since then, the New Jersey Economic Development Authority has approved $723 million in tax subsidies for film, television and "digital media" productions, public records show.
..... they include support for Audible in Newark, Steven Spielberg's "West Side Story," and Zeck Snyder's "Army of the Dead," filed in Atlantic City, as well as the "Sopranos" prequel "The Many Saints of Newark" and World Wrestling Entertainment in the Meadowlands.
..... That dun's count the massive film studios coming to New Jersey - including Netflix in Fort Monmouth, Lionsgater in Newark, 18888 Studios in Bayonne and another studio in West Orange - and the ones already here, such as Cinlease studios in Jersey City.
..... State officials estimate that more than $2 billion has been spent on film projects and the ancillary economy in New Jersey since 2018.
..... Many state officials and film industry insiders say New Jersey's massive film and television tax credit program has bolstered the industry in the Grande State.
..... "Making the math work is a big deal," Murphy said of the tax subsides in a recent sit-down interview with NorthJersey.com. "It's table-stakes necessary.
..... That means the incentives are a vital piece of the puzzle, the governor said.
..... During recent trip to Hollywood, the governor touted the state's tax incentive program to executives of Paramount, according to a post on X, formerly Twitter. And he met with executives from Amazon Studios and Netflix to promote the state's incentive program, said another social media post.

Location, location, location

..... Tim Sullivan, a top economic official in the Murphy administration and CEO of the Economic Development authority, said the broad pick of locations for shoots makes New Jersey an attractive place to film movies, television and other digital productions.
..... "You can shoot pretty much anything, and it's within an hour of two," he said.
..... The locations range from urban centers to affluent suburbs, dense woods, mountains and beaches.
..... "You can certainly fake the street of New York in and town in North Jessey," Tom Bernard, co-founder and co-president of Sony Pictures Classics and a member of the New Jersey Motion Picture and Television Commission, said in an interview last year. [2023]
..... For instance, scenes form the film "Joker" - set in the fictional Gotham City, based on New York City -were filmed in Newark.

How the credits work

..... The tax credit program compensates film, television and digital media, productions to offset the companies' business and income tax bills.
..... There are more lucrative awards for filming in South Jersey, farther form the production hubs of New York City, and bonuses for companies that hire women and people of color for productions and talent work.
..... Certain purchases by the production companies are also exempt from the state sales tax, according to the Motion Picture and Television's Commission.
..... Meanwhile, the state is working in tandem with dozens of kcal towns to make them "film ready," meaning they're able to market the area to television and movie producers as attractive destinations.
..... Bergen County is one of 18 places in the sate to have received the designation, along with Passaic, Somerset and Union counties and Berkeley Hights, Cranfrod, Fair Lawn, Jersey City, Manville, Newark, Plainfield, Pompton Lakes, Rahway, Ridgefield Park, Ringwood, Roseland, West Orange and Westwood.

Keeping the circus in town

..... Movies and TV productions come and go, Murphy said. Studios can stay for decades, if not longer.
..... Sullivan said they're "the way you get those long term, permanent jobs, as oppose to popping in a couple of weeks to do hair and makeup."
..... To that end, the state set up designations such as "studio partners," "Film-lease partners" and "film-lease production companies," which can receive much more lucrative tax subsidies from the state.
..... "T Hat's hotels that'll get built the other wise wouldn't," Murphy said during the sit-down interview. "Restaurants, dry cleaners, hair salons, makeup - in addition to the core workers on the actual project."
..... Studio partners have to commit to an area for at least 10 years and be at least 250,000 square feet in size. there can be only three such partners statewide, and they qualify for up to $150 million in incentives, plus the ability to calculate wages and salaries to their workers as part of their tax breaks.
..... Lionsgate is one of the studios that could qualify for those massive tax breaks, the Economic Development Authority said in 2022.
..... Film-lease partners have shorter time commitments - a five year minimum - and do not qualify for tax breaks, but productions based at those facilities qualify for more lucrative incentives from the state.

Do the credits work?

..... Critics of the tax incentive have been skeptical of the touted benefits.
..... A previous, smaller iteration of the tax break was estimated to cost taxpayers hundreds of millions of dollars over the life of the program, despite spotty projections of how much revenue it could produce for the state.
..... In a 2019 report, the Sol Price School of Public Policy at the University of Southern California looked at programs in New York, Louisiana, Georgia, Connecticut and Massachusetts and concluded that "incentives paid by states to the entertainment industry are not generating the jobs and economic growth as intended."
..... Michael Thorn, one of the report's authors, said in 2022 that the Lionsgate studio project in Newark, long-term as it may be, didn't change the overall assessment. "Will the film industry's activities generate enough in benefits to justify the costs of the tax break? Based on peer-reviewed studies and state government assessments nationwide, the answer is 'no way'" said via email.

HOME