New Jersey Gov. Phil Murphy, in an effort to add incentives for reality shows, conditionally vetoed a bill that would restore tax credits for film and television productions.
The measure that passed both the state Senate and Assembly would provide up to $75 million of tax credits for film productions and $10 million of incentives for digital media content for the next five years through the New Jersey Economic Development Authority. Murphy, who signed an executive order during the winter directing the state comptroller’s office to audit the NJEDA’s tax incentive programs, said Wednesday he supports the concept behind entertainment tax credits, but wants to expand the legislation’s scope.
“Filming movies and TV shows in New Jersey creates good-paying jobs, generates economic growth, and centers our state as a home for 21st-century growth industries,” said Murphy in a statement announcing his conditional veto. “This is why I’m eager to work with the Legislature to strengthen the legislation by adding incentives for diverse hiring in the film industry and extending eligibility for certain reality TV shows that invest in New Jersey’s economy and promote tourism to the Garden State.”
Former New Jersey Gov. Chris Christie suspended a previous tax credit program for movies and TV shows in 2010 to close a budget deficit. An April 2 report released by the non-partisan Office of Legislative Services said the credits could cost the state up to $425 million in direct revenue, but also noted that the losses could also be offset by a "multiplier effect" from spurred new spending.
“A vibrant TV and film industry in New Jersey will create jobs, spur economic activity and bolster the State’s cultural identity,” said Senate Majority Leader Loretta Weinberg, D-Teaneck, a chief sponsor of the bill. “I was happy to work with the Governor on this important legislation, because we all recognize the value of the film industry to New Jersey, and I believe that his suggested changes will advance our shared goals of supporting and promoting an industry that is important to New Jersey.”
Murphy is exploring tax credits to attract new film productions at a time when the state is on target for a $2.4 billion revenue shortfall for the 2019 fiscal year, which starts July 1, according to May 21 testimony from State Treasurer Elizabeth Muoio before the Assembly Budget Committee. The Democratic governor’s $37.4 billion budget proposal hinges on $1.56 billion of new tax revenues that face resistance from many members of his own party, which control both the senate and assembly. He has proposed establishing a 10.75% “millionaire’s tax”, increasing the sales tax to its previous 7% level from 6.625% and legalizing recreational marijuana among other revenue-raising measures.
New Jersey incurred 11 bond rating downgrades under Christie from 2011 to 2016 driven largely by unfunded pension liabilities and structural budget deficits. The state has general obligation bond ratings of A3 by Moody’s Investors Service, A-minus by S&P Global Ratings and A by both Fitch Ratings and Kroll Bond Rating Agency.