Less than a week after a $14 billion corporate tax break bill was introduced into the Democrat-controlled New Jersey state Legislature, lawmakers overwhelmingly approved the measure.
The New Jersey Economic Recovery Act of 2020 (S-3295/A-4) seeks to spur economic growth by providing tax incentives to companies for doing business in the Garden State. On Dec. 21, the Assembly passed the bill 68-11, while the Senate voted 38-1 in favor and the bill now heads to Gov. Phil Murphy, who has been promoting the virtues of the bill the last 10 days.
The proposal would restore and reform two incentive programs aimed to encourage redevelopment projects and job creation. Supporters of the bill point to it creating several new programs to promote economic development, numerous targeted tax breaks for brownfield remediation, historic preservation and eliminating food deserts in low-income communities.
As businesses continue to struggle for survival amid the ongoing public health emergency, State Sen. M. Teresa Ruiz (D-29), one of the bill’s primary sponsors, said the proposal will go a long way towards helping New Jersey “recover from the economic impact of the COVID-19 pandemic.”
State Sen. Paul Sarlo (D-36), a co-prime sponsor of the measure, echoed those comments in stating, “This legislation provides the tax incentives we will need to spur business and job growth as we come out of a pandemic crisis that has devastated broad sectors of our economy.”
“Most importantly, this legislation will provide tax incentives to attract the jobs we want—jobs that pay high salaries in cutting edge industries that will transform communities, partner with our higher education sector on R&D, provide valuable job training and be corporate citizens,” Sarlo said.
The 219-page bill, Ruiz said, is “comprehensive…balanced in its approach (and) will ensure responsible investment, greater oversight and tangible community benefits.”
“It will create greater investment in our communities by providing further incentives to locate in distressed municipalities, build affordable housing and redevelop brownfields,” said Ruiz, who added that it will “increase access to employment in high-growth industries and drive sustainable economic development.”
A breakdown of the bill shows:
- A $11.5 billion program to update and expand corporate tax credits over seven years for new incentive programs and up to $2.6 billion in film tax credits over 13 years.
- A $1.5 billion limit on the amount of tax credits the state can give companies each year.
- $2.5 billion for 10 major “transformative projects,” such as large-scale affordable housing, that could potentially generate substantial revenue increased.
- $50 million for grants, loans and assistance to support Main Street businesses
- $400 million a year package for incentives, including a brownfield tax credit program that encourages clean-up and redevelopment of vacant or polluted sites and funds supporting new grocery stores in “food desert” areas of low-income communities.
- Creation of an economic development inspector general within the Economic Development Authority to oversee the program
- Company executives will be required to certify that they are being truthful while seeking tax credits
‘Path To Economic Rebound’
In a joint statement, Assembly sponsors including Gordon Johnson (D-37) and Benjie Wimberly (D-35) believe the bill creates “a path to economic rebound” for the businesses and communities most affected by the pandemic and that a “robust incentive package is a necessary economic stimulus.”
“It continues to help us attract viable businesses, and grow Main Street programs, boosting job creation statewide. Getting residents back to work and creating job opportunities for those who have lost jobs as a result of this pandemic was a priority of this legislation,” the Assembly members said in a press statement. “COVID-19’s devastating impact on our state’s economy requires bold steps to ensure our economy rebuilds stronger and better, stabilizing families and their communities.”
New Jersey hasn’t had a business tax incentive program since July 2019, when the previous one—which was signed under former Gov. Chris Christie in 2013—expired.
That lack of a business tax credit program, Sarlo said, made New Jersey a less desirable option for industries.
While the Garden State offers “tremendous advantages for business,” Sarlo said, “Our ability to compete has been hampered for the past 18 months by our unilateral elimination of tax incentive programs that every other state offers.”
Shortly after Murphy took office, he commissioned a task force to investigate reports that some businesses were gaming the tax credits.
After, the task force found that the Economic Development Authority improperly awarded incentives, the state Attorney General’s office said it is investigating the matter, though the results of the investigation haven’t been announced.
Fast Track Needed
Murphy and legislative leaders struck a deal following more than a year of disagreements on how to reform and revive a tax credit initiative with legislative leaders pushed back on criticism that the bill was rushed through.
Murphy, Senate President Steve Sweeney and Assembly Speaker Craig Coughlin maintained the legislation needed to be enacted quickly to help put New Jersey in a better position to recover from the pandemic, the bill, stressing in a joint statement that the program “is especially important as we lay the foundation for a stronger, more resilient post-COVID economy in New Jersey.”
“Everything we asked for is in this bill. Not most everything. Everything. Caps, inspector general, program caps, Main Street, underserved communities, brownfields, historical, venture capital,” said Murphy’s at a press briefing Dec. 21. “We have gone from a corporate giveaway plan to economic development plan.”
Making the Case
To that end, the Murphy Administration has trumpeted the support of North Jersey officials, including local legislators, groups and unions who have come out in support of the bill they say is needed to keep businesses in New Jersey.
Bergen County Executive Jim Tedesco praised the passage of the bill, calling it “a comprehensive economic recovery package.”
“This measure aims to restore economic vitality to our state through new innovative economic development growth programs while also providing continued support to the businesses that make up the backbone of Main Street, Bergen County,” he said.
North Jersey Mayors
In Paramus, Mayor Rich LaBarbiera said the borough—also known as “New Jersey’s retail capital” —is “excited for this legislation” because it will “bring even more jobs and businesses” to the community.
Bergenfield Mayor Arvin Amatorio commented “communities like ours stand to reap the benefits” of the proposal and that the town “will take advantage of the many programs that will be funded and put into place, including the Main Street Recovery Program.”
“The passage of this legislation is critical to the success of Bergenfield coming out of the COVID-19 induced economic recession,” he said.
The “innovative” economic development incentives that are accountable and equitable,critical to ensuring the future economy of New Jersey drew praise from Paterson Mayor Andre Sayegh.
“Quite frankly, it couldn’t come at a better time, as we are still fighting this pandemic,” said Sayegh. “With these strong incentives to drive investment and balanced growth, we will position our state, and diverse communities across the Garden State, to rebound from one of the largest challenges of a lifetime.”
NJEDA, NJBIA Praise Bill
Kevin Quinn, Chairman of the New Jersey Economic Development Authority Board of Directors, said the program “is exactly the type of boost” New Jersey needs right now.
Besides providing economic benefits to a number of areas, the plan “incorporates the types of safeguards needed to ensure we continue to be good stewards of public money.”
Michele Siekerka, President and Chief Executive Officer of the New Jersey Business and Industry Association, said they are pleased the bill moved forward.
“Innovation, workforce development and manufacturing are hallmark missions for NJBIA and they are strongly prioritized in this bill. We believe growth in all three of these areas are the foundations of economic development in the state,” she said.