A5533

An Act requiring a comprehensive review of certain State tax expenditures, designated the "Tax Credit Review Act," and supplementing Title 54 of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. No later than three months after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the chief executive officer shall retain an expert to review the efficacy of the incentive program, including a cost-benefit analysis of the program, an assessment of the success of the program in meeting its goals, and recommendations for improving the operation and effectiveness of the program.

b. (1) Within nine months of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the expert shall complete a comprehensive review of, and publish a written report concerning, the effectiveness of the tax expenditures incurred through the incentive program.

(2) The comprehensive review and resulting written report shall include, but not be limited to:

(a) the total costs associated with the program, including the amount of tax revenues foregone;

(b) the benefits and economic impact generated by the program, including increased State tax revenues, increased job creation and retention, and changes to levels of economic activity in the State;

(d) a comparison of the costs and benefits of the program, culminating in a final evaluation of the efficacy of the program;

(e) any recommendations for improving the operation and effectiveness of the program, including legislation and administrative changes, as appropriate;

(f) recommendations for the State to engage in future reviews of the efficacy of other State economic development programs, including, but not limited to, recommendations as to the frequency of reviews and additional economic development programs that should be subject to future review;

(g) a detailed description of the expert’s methodologies in generating any quantitative estimates or assessments that contributed to the written report; and

(h) an accompanying database that contains all datasets used in the analysis that contributed to the written report, except not including any databases or datasets that are proprietary in nature.

c. Upon the completion of the written report pursuant to subsection b. of this section, and upon the completion of any subsequent review in accordance with the expert’s recommendations, the chief executive officer shall:

(1) submit a copy of the written report to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), the Legislature; and

(2) present the findings of the expert to the Senate Budget and Appropriations Committee and the Assembly Budget Committee during the authority’s budget hearing before each committee next following the completion of the written report.

d. (1) As part of its review, the expert may request and access any relevant data and information from State agencies. A State agency or local government shall provide such information to the expert, upon request, and shall coordinate as necessary with other State agencies or local governments for this purpose. In response to a request, the State agency or local government may redact such information as is necessary to protect the confidentiality of any personal identifying information or legally protected information.

(2) As part of its review, the expert may request any relevant data and information from the recipient of tax credit awards under the program, which requests may be issued directly to the recipient or indirectly through the authority. The recipient shall provide such information to the expert, upon request, and shall coordinate as necessary with other State agencies or local governments for this purpose. In response to a request, the recipient may redact such information as is necessary to protect the confidentiality of any personal identifying information or legally protected information.

e. The Legislature shall appropriate such amounts as are necessary to defray the costs of retaining the services of the expert, as required pursuant to this section.

f. As used in this section:

"Authority" means the New Jersey Economic Development Authority established pursuant to section 4 of P.L.1974, c.80 (C.34:1B-4).

"Chief executive officer" means the Chief Executive Officer of the New Jersey Economic Development Authority.

"Expert" means a nonpartisan entity with expertise and experience in economic policy evaluation and econometrics, which entity may be an academic institution or a firm.

"Incentive program" or "program" means the film and digital media content production tax credit program established pursuant to the “Garden State Film and Digital Media Jobs Act,” P.L.2018, c.56 (C.54:10A-5.39b et al.).

"Local government" means a municipality, county or other political subdivision of the State, or any agency thereof.

"State agency" means any of the principal departments in the executive branch of State government; any division, board, bureau, office, commission, or other instrumentality of a principal department in the executive branch; and any independent State authority, commission, instrumentality, or agency.

2. This act shall take effect immediately.

STATEMENT

This bill, designated the "Tax Credit Review Act," requires the Chief Executive Officer (chief executive officer) of the New Jersey Economic Development Authority (authority) to retain an expert to review the New Jersey Film and Digital Media Tax Credit Program (program).

Specifically, this bill would require the chief executive officer to retain an expert that is a nonpartisan entity with expertise and experience in economic policy evaluation and econometrics, which entity may be an academic institution or a firm. This hiring would be required to happen no later than three months after the enactment of the bill. The expert would be responsible for conducting a comprehensive review and written report concerning the efficacy of the program.

The comprehensive review would include, but not be limited to: (1) the total costs associated with the program, including the amount of tax revenues foregone; (2) the benefits and economic impact generated by the program, including increased State tax revenues, increased job creation and retention, and changes to levels of economic activity in the State; (3) the effectiveness of the program in achieving its established objectives; (4) a comparison of the costs and benefits of the program, culminating in a final evaluation of the efficacy of the program; (5) any recommendations for improving the operation and effectiveness or the program, including legislation and administrative changes; (6) recommendations for the State to engage in future reviews of other State economic development programs, including, but not limited to, recommendations as to the frequency of reviews and which programs should be subject to future review; (7) a detailed description of the expert’s methodologies in generating any quantitative estimates or assessments that contributed to the written report; and (8) an accompanying database that contains all datasets used in the analysis that contributed to the written report.

Under the bill, a State agency, local government, or recipient of tax credits under the program would be required to provide relevant information to the expert, upon request, and would be required to coordinate with other State agencies or local governments as necessary for this purpose. In response to such a request, the entity may redact such information as is necessary to protect the confidentiality of any personal identifying information or legally protected information.

Following the completion of the expert’s review and written report, the chief executive officer would be required to submit a copy of the report to the Governor and the Legislature. Additionally, the chief executive officer would be required to present the findings to the Senate Budget and Appropriations Committee and the Assembly Budget Committee during the authority’s budget hearing before each committee next following the completion of the written report.