Gov. Phil Murphy has conditionally vetoed a bill that would restore state tax credits for film and digital production companies, asking New Jersey lawmakers to revise the measure to make reality TV shows eligible for the tax breaks.
The bill (S122) would provide up to $425 million in tax breaks over five years to lure film, television and other digital productions to the Garden State. But as presently written, the bill excludes reality television shows from qualifying for the incentives.
In his veto message to lawmakers, Murphy emphasized that he supports reviving the program that expired under former Gov. Chris Christie, saying the tax credits would “allow New Jersey to regain a competitive footing in the entertainment industry.”
But the Democratic governor said the bill should allow a reality television show to be eligible for tax credits if the production company commits to owning or leasing a production facility in an Urban Enterprise Zone—urban areas where the state provides businesses with tax incentives.
“While I understand the rationale for generally excluding reality television shows from eligibility for tax credits, I also recognize that not all reality television shows are the same,” Murphy wrote. “For instance, those that make substantial capital investments in our communities generate ripple benefits in local economies and create the potential for tourism and sightseeing opportunities.”
Jersey City officials and Cake Boss star Buddy Valastro met with Murphy’s staff earlier this month to ask the governor to remove the provision exempting reality television shows, according to POLITICO.
Murphy also asked lawmakers to include an additional tax incentive for productions that hire a diverse cast and crew.
“One of New Jersey’s greatest strengths is that it is one of the most diverse states in the nation,” Murphy wrote. “I want to make the economic opportunities of the film and entertainment industry available to all of our communities, and to ensure that the film and television projects receiving our support reflect the diversity of our state.”
A news release announcing Murphy’s conditional veto included statements from lawmakers who supported the governor’s recommendations, indicating the legislature will go along with the governor’s changes.
“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,” Senate Majority Leader Loretta Weinberg (D-Bergen) said in a statement.
Under the bill, the state could award up to $75 million annually in corporate and income tax credits for film productions and no more than $10 million in tax credits per year for digital productions. The credits could be worth up to 35 percent of a film production’s cost and up to 25 percent of a digital production’s expenses. Productions based in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Mercer or Salem Counties would be qualified for the maximum tax credit offered.
To get the tax credits, film companies would have to spend at least 60 percent of a production’s cost in New Jersey, or its expenses would have to exceed $1 million. Digital productions would have to total $2 million with at least 50 percent of the expenses tied to paying employees in the state.
The state’s Office of Legislative Services (OLS) gave the movie bill a bad review.
A fiscal note from the OLS predicts the bill will have a negative fiscal impact on the state because the legislation does not require tax credit-receiving expenses to yield a net fiscal benefit to the state.
Christie, a Republican, repeatedly vetoed bills to revive the program after it expired, arguing the state didn’t get the bang for its buck with the tax breaks. (The Christie administration, though, doled out more than $8 billion in corporate tax breaks through other subsidy programs.)
The former Republican governor also stripped tax credits from MTV’s Jersey Shore, which he said did “nothing more than perpetuate misconceptions about the state and its citizens.”
Correction (3:29 p.m.): A previous version of this story misspelled Cake Boss star Buddy Valastro’s name.