Motion Picture Tax Credits Backfiring on Taxpayers – in New Jersey

Hawaii lawmakers earlier this year declined to increase tax credits for television and film productions filming in the islands, but the proposal is still alive for the 2012 legislative session.

Relativity Media and Shangri La headed up the effort and offered lawmakers the construction of two film studios on Oahu and Maui respectively in exchange for a higher tax credit.

HB 1551 and SB 1550 would have increased the film production tax credit on Oahu by 35 percent (from 15 percent) and 40 percent (from 20 percent) on the neighbor islands. But the legislation died in the final days of the session.

The Tax Foundation of Hawaii said the legislation would cost the state an estimated $46.3 million in lost revenues. But the production companies used their their political ties in an effort to sway lawmakers.

Bill Clinton, who has financial ties to both companies and other motion picture industry executives, sent a letter to lawmakers in support, and several well known actors testified at the capitol and sent in testimony.

While Hawaii and some other states are considering whether to invest in additional film tax credits, the Wall Street Journal reports that lawmakers in New Jersey are giving their motion picture tax credit a second review. Here is the report in today’s Political Diary:

New Jersey politicians are learning a lesson in corporate welfare. To wit, tax credits don’t always make for good economic incentives.

In 2006 the New Jersey legislature approved a 20% tax credit for TV and movie companies that film in the Garden State. The tax break was supposed to stimulate the state’s infant entertainment industry and encourage Hollywood and New York studios to film more of their movies and television shows in New Jersey. But much to the dismay of legislators, the state’s Economic Development Authority has just approved a $420,000 tax credit for the MTV hit “The Jersey Shore.”

Lawmakers and a national coalition of Italian-Americans are complaining that the show and its superficial characters give the Garden State and Italian-Americans everywhere a bad image. “Let us just hope against hope that New Jersey taxpayers don’t end up paying for ‘Snooki’s’ bail the next time she is arrested,” Democratic state Sen. Paul Sarlo told the New Jersey Star-Ledger, referring to one of the show’s hard-partying stars. “The governor needs to step up for decency and veto this. If the show wants to go somewhere else, let ’em,” added fellow Democratic state Sen. Joseph Vitale.

Lawmakers of both parties are calling on Republican Gov. Chris Christie to rescind the tax break, but Mr. Christie says it’s out of his hands. Since funding for the film tax credits has already been appropriated and the Jersey Shore met all of the program’s criteria, the governor can’t nix the agency’s decision.

New Jersey legislators say they approved the subsidies to compete with states that were offering production companies similar incentives. New York, for instance, gives companies a 30% tax credit. But for many states, the film subsidy race has become a competition they can’t afford. According to the Tax Foundation, in 2002 just five states offered production companies financial incentives, which in total equaled $1 million. Last year 40 states offered incentives worth $1.4 billion. Because of their budget problems, eight states dropped their programs and two states curtailed their subsidies this year.

As New Jersey politicians are realizing, tax credits don’t always work out as intended. If lawmakers really want to make their states more competitive, they would be better off slashing business- and income-tax rates across the board instead of targeting their favorite industries.

Hawaii’s Seniors Get Politically Active in Washington DC

Three of Hawaii’s seniors from the Hawaii Alliance for Retired Americans served as delegates to the national Alliance for Retired Americans 10th Anniversary Legislative Conference in Washington, D.C., and while they were in the nation’s capitol, they visited with Hawaii’s U.S. Reps. Mazie Hirono and Colleen Hanabusa to “thank them for their strong support on senior issues, especially preserving and protecting Social Security and Medicare.”

According to a statement from the group, Al Hamai received the President’s Award from the Alliance for Retired Americans for his “hard work and steadfast activism on behalf of senior citizens in his state.”

See the video here: http://youtu.be/YlAawte59BM

Hawaii Military Out Again in Redistricting Plan

Hawaii’s Reapportionment Committee, which includes 9 appointed members charged with redrawing Hawaii’s congressional lines in time for the 2012 election based on the U.S. Census’ new population report, had originally included Hawaii military and dependents in its redistricted maps.

Hawaii was the only state not to included Hawaii’s military, and eight of 9 members voted to change that.

But this week, the Reapportionment Commission changed its earlier position in favor of the military being counted and removed about 15,000 armed forces from the total. The only member absent was Harold Matsumoto.

Sen. Sam Slom, R-Hawaii Kai-Diamond Head, writes in his weekly report that “no one seems to be happy with this reversal because the Neighbor Island folks who wanted the military removed so they would pick up a senate seat for the Big Island at Oahu’s expense won’t get their way. Not enough military were ‘extracted’ to do that. Court challenge here we come. The final report of the Commission is due next Monday, September 26.”

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