Giving films a starring role in N.J.’s economy

Here's an article from NJBIZ by Beth Fitzgerald that New Jersey-ites will find interesting. Hopefully this is an encouraging sign that the Garden State is finally taking the creative economy seriously . . .


Legislation aims to increase tax incentives for movie production
By Beth Fitzgerald
12/28/2009


(reprinted from NJBiz.com)


Movie and television production plays a supporting role right now in New Jersey, but proposed legislation is designed to give it a starring role in economic development.

The legislation aims to get more cameras rolling by increasing the state’s tax credit incentives for film and digital media production, raising the annual cap to $50 million, from $10 million. It faces an uphill fight with New Jersey facing a multibillion-dollar budget deficit, but advocates said the credits pay for themselves through increased economic development that boosts tax revenues.

“We believe this is a strategic long-term investment for the state,” said Christopher Eilert, senior chief of staff for state Sen. Paul A. Sarlo (D-Wood-Ridge), who is co-sponsoring the bill with state Sen. Thomas H. Kean Jr. (R-Westfield). A companion bill in the Assembly is sponsored by Anthony Chiappone (D-Bayonne).

“If we can attract this industry to make New Jersey its home and its headquarters, it will pay dividends for years to come, in terms of economic development and income taxes, and all the other associated economic benefits that come with high-paying and high-tech jobs,” Eilert said.

Companies that shoot 60 percent of a project in New Jersey are eligible for a tax credit equal to 20 percent of their allowable expenses, but the state’s $10 million cap is quickly exhausted each year, leaving producers to line up for the next year’s tax credit pool, said Stephen Gorelick, executive director of the New Jersey Motion Picture and Television Commission. Production companies that owe minimal state taxes typically sell their credits for cash, at a discount, to profitable New Jersey companies that can use the tax credits to lower their taxes.

“Some of the independent producers depend on this money [from selling the tax credits] to finish the film, or to pay for distribution, or advertising and marketing, or even to finish the sound mix,” Gorelick said. “Why film here and wait, when you can get the tax credit right away in another state?”

More than 800 film and digital production projects were shot in New Jersey in 2008, contributing $114 million to the state’s economy — $76 million of which came from projects that got tax credits, he said.

But Sarah Stecker, policy analyst for the think-tank New Jersey Policy Perspective, is a skeptic of such a plan. “New Jersey needs its tax revenue to make investments in roads and in K-12 and higher education,” she said, adding that filmmakers “don’t decide where to make a film based on tax breaks.”

Simon Broad is chief operating officer of ARRI CSC, in Secaucus, the nation’s leading light- and camera-rental business. The company moved from Manhattan to facilities in Secaucus and Hoboken more than three years ago, and now has about 100 employees here. Expanding the tax credits “would help us continue our growth, and bring others to this area,” he said. “If there was an equal attraction to shoot in New Jersey, we would be as busy in this state as we are in New York.”

The tax credits “are a key factor that producers consider when evaluating where to shoot, and the improved incentive program would attract more productions to New Jersey,” said Matthew Savare, who practices intellectual property, media and entertainment law at Lowenstein Sandler, in Roseland.

Christine Peluso, an attorney and principal with Piscataway-based Tax Credit LLC, gets calls from studios and independent producers before they “green-light” their projects, to discuss tax credits and “without the incentive, filmmakers will simply take their millions of dollars elsewhere.” This year, New York budgeted $350 million for film and television tax credits, and Pennsylvania budgeted $75 million.

E-mail to bfitzgerald@njbiz.com