Questions $425 Million in Film Tax Credits Approved by Governor for Program that Doesn’t Work
Senator Joe Pennacchio (R-26) applauded Governor Phil Murphy for highlighting problems with New Jersey’s tax incentive programs through a new report issued by the State Comptroller, but expressed concern that the Governor’s approval last year of $425 million in film tax credits for the entertainment industry sends the wrong message to the public. He also called for the passage of legislation he sponsors requiring recurring audits of all State business assistance and tax incentive programs.
Sen. Joe Pennacchio called for the passage of his legislation requiring audits of all State business assistance and tax incentive programs following a concerning report issued by the State Comptroller. (Pixabay)
“While I’m encouraged that Governor Murphy has expressed interest in reforming our state’s wasteful tax incentive programs, I’m concerned that the $425 million of film tax credits he approved just months ago runs contrary to his reform message,” said Pennacchio. “How can you pledge to fight wasteful tax incentives while simultaneously giving away hundreds of millions of dollars to Hollywood for programs that have never proven to work? Those inconsistencies feed into the public’s cynicism of government and politics.”
Pennacchio highlighted a pair of studies conducted by researchers at the USC Price School of Public Policy which determined state tax credits for film making to be “a bad investment.”
“I’ve long questioned whether New Jersey’s film tax credits represent an unnecessary and ineffective giveaway to the entertainment industry, and now we have published research saying these programs don’t work,” said Pennacchio. “I’m certain we would find that to be true in New Jersey as well, which is why I introduced legislation requiring the State to closely track the performance of the film tax credits approved by the Governor last year. I intentionally drafted the bill broadly to ensure that all of the various business incentive programs managed by the NJEDA would be subject to the same level of increased scrutiny. The Comptroller’s recent audit of those programs verifies that more oversight is needed.”
The State Comptroller’s audit, released on January 9th, showed that New Jersey companies given tax incentives to create in-state jobs sometimes failed to do so. The report also revealed insufficient oversight of the tax incentive programs managed by the New Jersey Economic Development Authority (NJEDA) and the failure to verify data submitted by those claiming benefits and incentives.
Pennacchio encouraged the Governor and legislative leaders to help advance his legislation, S-3051, requiring recurring audits of business tax incentives managed by the NJEDA.
Pennacchio’s bill, introduced last October, would increase oversight of the State’s various incentive programs by requiring the State Auditor to conduct performance review audits of the NJEDA’s business assistance and incentive programs at least once every two years. That includes any of the NJEDA’s programs or incentives that provides monetary or financial assistance in any form, including grants, loans, loan guarantees, tax credits, tax exemptions, or other monetary benefits or awards.
To increase transparency in the incentive programs, Pennacchio’s legislation requires audit reports to be published prominently on the websites of the Legislature and State Auditor.
“The Comptroller’s audit of tax incentive programs managed by the NJEDA has provided independent verification that increased oversight of all of New Jersey’s tax incentive programs, as I have proposed, is both appropriate and necessary,” added Pennacchio. “It seems that everyone agrees these reforms are needed, so we should get to work now to prevent the continued waste of taxpayer dollars.”
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