By Matt Rooney
A multi-million dollar, a tax credit package designed to lure the film industry to New Jersey for new projects, passed both houses of the state legislature on April 12th with token opposition. It’s unclear whether Murphy will sign it.
Film makers are reportedly “lining up” to take advantage should the tax credits become law. Or so we’re told.
That’s nice for Hollywood! The reality for those of us on the East Coast: these types of government credits invariably fail to generate the promised revenues and correlating economic benefits when tried in other states, Save Jerseyans.
On April 23rd? After the vote?
The Office of Legislative Services (OLS) issued a report which anticipated a direct state revenue LOSS of up to $425,000,000. Any indirect gains are… indeterminate.
It’s interesting reading.
“The Office of Legislative Services (OLS) expects the bill to produce a negative fiscal net impact of indeterminate magnitude on the State, considering that the bill does not require tax credit-receiving expenses to yield a net fiscal benefit to the State. The OLS’ inability to quantify the fiscal net impact is rooted in imperfect information regarding: a) the number and attributes of newly eligible film and digital media projects and expenses; and b) the State spending that may be crowded out by new incentive awards,” the report’s preparers explained.
Understanding the bill’s opportunity costs is critical to appreciating the problem:
“For example, if, instead of this bill, the State invested in road construction, the bill would produce a net fiscal effect equal to the difference between the total fiscal impact of the tax credit awards—or the direct State cost of awarding film production and digital media content production tax credits, minus the incentives’ indirect State fiscal effects—and that of the forgone road construction investment.”
Click here to read the full report.
I’m getting tired of saying “I told you so.” There’s no joy in it for me. I’m paying, too, right alongside the rest of you.