Assembly Commerce and Economic Development Committee Statement to Assembly, No. 6070 (December 6, 2021)

Summary

Assembly Commerce and Economic Development Committee statement to Assembly, No. 6070, State of New Jersey, dated December 6, 2021. The committee reports favorably Assembly Bill No. 6070, which changes the film and digital media content production tax credit program. The bill would raise the digital media content production credit to 35 percent of qualified expenses purchased through vendors in certain counties in Southern New Jersey, or 30 percent of all other such expenses purchased within the State. It increases the cumulative annual limitation on digital media content production credits from $10 million to $30 million, and would let a New Jersey film-lease partner include up to $15 million of certain payments in excess of current allowances in qualified film production expenses.

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ASSEMBLY COMMERCE AND ECONOMIC DEVELOPMENT
                COMMITTEE

                          STATEMENT TO

                     ASSEMBLY, No. 6070

       STATE OF NEW JERSEY
                          DATED: DECEMBER 6, 2021

          The Assembly Commerce and Economic Development Committee
      reports favorably Assembly Bill No. 6070.
          This bill makes various changes to the film and digital media
      content production tax credit program, including increasing the
      amount of the digital media content production tax credit, allowing
      certain compensation to be included within the computation of
      qualified film production expenses, and revising the definition of
      “New Jersey film-lease partner.”
          Under the film and digital media content production tax credit
      program, the State awards tax credits to eligible taxpayers equal to: (1)
      30 percent of the qualified film production expenses incurred for use
      within certain parts of Northern New Jersey, or 35 percent of the
      qualified film production expenses incurred for use within all other
      parts of the State; and (2) 25 percent of the qualified digital media
      content production expenses purchased through vendors located in
      certain counties in Southern New Jersey, or 20 percent of all other
      qualified digital media content production expenses purchased within
      the State.
          Under the bill, the amount of the digital media content production
      portion of the tax credit program would be increased. Specifically, the
      bill increases the digital media content production tax credit to 35
      percent of the qualified digital media content production expenses
      purchased through vendors located in certain counties in Southern
      New Jersey, or 30 percent of all other qualified digital media content
      production expenses purchased within the State. In addition, the bill
      increases the cumulative annual limitation on digital media content
      production tax credits from $10 million to $30 million.
          The bill also modifies the definition of “qualified film production
      expenses” to include amounts paid by New Jersey film-lease partners
      for certain employees. Except for certain allowances for New Jersey
      studio partners, current law generally prohibits qualified film
      production expenses from including any payments in excess of
      $500,000 for: (1) a highly compensated individual for costs for a story,
      script, or scenario used in the production of a film; and (2) the wages
      or salaries or other compensation for writers, directors, including
      music directors, producers, and performers, other than background
                                  2

actors with no scripted lines. However, this bill would instead allow a
New Jersey film-lease partner to include up to $15 million of these
payments, in excess of current allowances, in the computation of
qualified film production expenses.
    The bill also provides that when the New Jersey Economic
Development Authority receives applications for more tax credits than
are available in any given fiscal year, then the authority may approve
applications for excess tax credits during the year in which such
applications were submitted, provided that the amount of excess
credits would be subtracted from the amounts otherwise available in
the next succeeding fiscal years. However, a taxpayer may not claim
the excess tax credits or tax credit transfer certificates until the first
day of the fiscal year from which the credits were made available.
    Additionally, the bill revises the definition of “New Jersey film-
lease partner.” Under current law, the term includes taxpayers who
commit to lease or acquire a New Jersey production facility, with an
aggregate square footage of at least 50,000 square feet, for a period of
five or more years, and who commit to spending an annual average of
$50 million in qualified film production expenses over a designated
period of five to 10 years. The bill revises this definition to allow for a
New Jersey film-lease partner to lease or acquire a portion of a New
Jersey production facility, provided that the leased or acquired portion
has an aggregate square footage of at least 50,000 square feet and
otherwise meets the requirements of existing law.


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