Sen. Pennacchio: 'NJ Film Tax Breaks Only Help Hollywood Elites'

CALDWELLS, NJ — Judging New Jersey’s recently revived film tax break program by the amount of interest it's seeing from the industry is like opening a hot dog stand and offering free hot dogs, according to Sen. Joe Pennacchio.

“The line for the free hot dogs would circle the block,” said the senator, a Republican who represents the state’s 26th District (Essex, Morris, Passaic counties). “We shouldn’t assume this program is a success because Hollywood moguls are lining up to take our free money.”

On Tuesday, Pennacchio – who has been a vocal critic of the Garden State Film and Digital Media Jobs Act – issued a renewed call to put the brakes on the tax breaks.

The law, signed by Gov. Phil Murphy in 2018, offers film and television production companies business tax and gross income tax credits for some expenses incurred while filming in New Jersey. To qualify for the tax credits, companies must spend 60 percent of their total budget through qualified New Jersey vendors, or spend at least $1 million in qualified expenses in the state.

The wildly successful “Joker” movie starring Joaquin Phoenix has been one of the productions that have taken advantage of the program, with WB Studios Enterprises Inc. getting $1.96 million in tax incentives to shoot in Newark and Jersey City.

• See related article: Tax Breaks Helped Bring 'Joker' Movie To Newark

Another recent production that benefited from the tax breaks program was Steven Spielberg's adaptation of "West Side Story," which was filmed in Paterson.

"Since the tax credit took effect I've been the point person and the phone has been ringing off the hook," a Bergen County official said. "We probably get a dozen or so requests a week about filming."

• See related article: Filming Is On The Rise In Bergen County

Supporters of the program say it encourages production companies to locate in New Jersey, spurring economic growth and industry development, an argument that Pennacchio vehemently disagrees with.

“This is a huge corporate giveaway that only helps the Hollywood elites who share nothing in common with working class taxpayers,” Pennacchio charged. “Hollywood is lining up for free money without providing any long-term benefits for our residents who struggle to make ends meet under the highest taxes in the nation.”

A recent report in The Record and northjersey.com seems to support Pennacchio’s view. It cites a study of film incentives in 30 states, published in September, that found they “mostly show no statistically significant effects,” according to a professor at the Price School of Public Policy at the University of Southern California.

Pennacchio said there has been no thorough study of the impact and effectiveness of the relatively new film tax credit program.

“We cannot evaluate the impact without more data, but there is no sign that any permanent jobs are being created or that there is any continuing benefit for local communities or the state,” Pennacchio said. “There are so many red flag warnings with this program. Now others are noticing the same problems. To be fair to New Jersey taxpayers, it should be put on ice before we throw more good money away.”

Pennacchio called for an audit of the $425 million Garden State Film Tax Credit program in July 2018. Last month, he commended the State Auditor’s office after the release of the annual audit plan for 2020 revealed a pending review of the Garden State Film and Digital Media Jobs Act.

Pennacchio represents Butler, Fairfield, Jefferson, Kinnelon, Lincoln Park, Montville, Morris Plains, North Caldwell, Parsippany-Troy Hills, Rockaway Township, Verona, West Caldwell and West Milford.

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