New York looks to ratchet up competition to NJ film industry

New Jersey has seen its own successes in the film industry in recent years — from the Academy Award-winning "Joker" and Steven Speilberg’s "West Side Story" to a Sopranos sequel and the announcement of the arrival of the Netflix and Lionsgate studios.

Many state officials and film industry insiders credit New Jersey’s massive film and television tax credit program, which has spent hundreds of millions of dollars to entice productions to film in the Garden State.

And so New York has in turn ramped up its own film tax credit program, expanding it from $425 million to $700 million a year, raising the incentives to 30% of production expenses, and extending the program from 2029 to 2034 — the same year New Jersey’s program expires.

New York Gov. Kathy Hochul spokesperson Justin Henry said in an email that “when New York lowered its film tax credit in 2020 as other states raised theirs, it resulted in vacant film studios and jobs moving across the Hudson and to other parts of the country."

Hochul signed the expanded film and television tax credit provisions as part of the New York state 2024 budget earlier in May.

“I think some of the rhetoric from Albany was pretty explicit that New Jersey was on their mind as they were thinking about what they were doing with their program,” said Tim Sullivan, head of the New Jersey Economic Development Authority, during a May 17 budget hearing.

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Film tax credits got a head start in New Jersey

The state EDA oversees New Jersey’s multimillion dollar film and television tax credit program. Gov. Phil Murphy reinstated the program in 2018, and his office estimated it led to film and television production companies spending $650 million last year.

Under the program, the state has awarded $557 million since 2018 to film, television and digital media productions, according to public records. New Jersey’s program is capped at $100 million a year, and covers up to 35% of production expenses.

“We’re reviewing the technical details of what they actually enacted, but certainly it’s a competitive market, and if they’ve done something that we need to respond to, it’s probably a good idea to respond,” Sullivan said during the hearing.

Tom Bernard, co-founder and co-president of Sony Pictures Classics and a member of the New Jersey Motion Picture and Television Commission, said that New York is “trying to catch up” with New Jersey.

“New York has some very old stages and facilities, and New Jersey is in the midst of building brand new, state-of-the-art stages,” Bernard said in an interview. “It’s a lot more difficult to film in New York —the neighborhoods in Manhattan and Brooklyn — they’ve had it with film crews.”

“You can shut down a road a lot easier in New Jersey” for film production, Bernard added.

Other states that offer film and television incentives include Georgia, Massachusetts, Pennsylvania and Louisiana. Murphy had made several efforts dangling the state’s tax breaks to Georgia production companies to relocate to New Jersey.

“Georgia’s the behemoth of the East Coast, but there’s no question we’re getting business, we’re getting people and companies, or projects to move here, film here, that we otherwise wouldn’t have got,” he said during the Lionsgate groundbreaking ceremony at Newark in May 2022.

New York and New Jersey’s increasing competition comes at a time when thousands of writers in Hollywood have gone on strike for the first time in 15 years, demanding better pay and job security and protesting the use of artificial intelligence in the writing process.

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A need for incentives?

Critics of the program have been skeptical, however, of the touted economic benefits.

In a 2019 report, the Sol Price School of Public Policy at the University of Southern California looked at the incentive programs in New York, Louisiana, Georgia, Connecticut and Massachusetts and concluded that “incentives paid by states to the entertainment industry are not generating the jobs and economic growth as intended.”

“This new study should put to rest any notion that motion picture tax incentives may work in some states but not others,” said lead author and associate professor Michael Thom.

Peter Chen, an analyst with the progressive think tank New Jersey Policy Perspective, warned of a “race to the bottom” between states, and that film companies may play states against each other for the biggest subsidies.

“There’s a constant dangling ever larger tax subsidies — corporate subsidies coming from other states, and in order to keep up you have to give away more and more,” Chen said. “This is money that we’re handing over to large, profitable corporations.”

This article originally appeared on NorthJersey.com: Film tax credits in NY up in response to NJ's success