NJ Set To Pass $14 Billion Tax-Break Plan Amid COVID-19 Crisis

NEW JERSEY — As businesses continue to struggle and many find it hard to make ends meet, Gov. Phil Murphy is set to sign a massive, $14 billion corporate tax-break bill into law that's supposed to give New Jersey a big boost amid the COVID-19 crisis.

The more than 100-page New Jersey Economic Recovery Act of 2020 — introduced last Wednesday — received criticism for its limited public testimony. But Murphy defended the proposal in Monday's coronavirus news conference, saying the bill would update economic-development incentive programs that expired more than a year ago.

It would also enact new programs for endeavors such as historic preservation and brownfield remediation.

Murphy may address the bill during a 1 p.m. news conference on Wednesday. Patch will cover it live. Read more: WATCH LIVE: Gov. Murphy Issues NJ Coronavirus, Closures Update

"The principles that underpin this incentives package have been out there for two years,” Murphy said. “The more that people look at this…it gets better on close inspection.”

The Assembly passed the Economic Recovery Act by a 68-11 margin before the Senate voted 38-1 in its favor (see the bill's details below).

It wasn't immediately clear how lawmakers will pay for the initiatives.

Sen. Paul Sarlo, D-Bergen, said this legislation provides more than $14 billion in tax incentives over seven years that 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 research and development, provide valuable job training and be good corporate citizens,” he said.

Business-lobbying groups have urged Murphy to restore state incentive programs since they lapsed in 2019.

Christopher Emigholz, vice president of the New Jersey Business & Industry Association, said the legislation meets four of the five prongs that NJBIA asserts to improve New Jersey’s economy: affordability, innovation, workforce development and infrastructure.

He also said there are some weaknesses in the bill as it relates to regulatory burdens and mandates that might offset the positives designed to attract and retain businesses.

“NJBIA has been asking for more balance and an economic plan reflecting that throughout the economic struggles of this pandemic, and we believe this bill represents that balanced plan,” Emigholz said.

“It is impossible to know if this economic development plan will achieve the right balance, but we ask the Legislature for a chance to revisit this balance in the future as we learn more about the strengths and weaknesses of this bill. We do appreciate that this plan does not continue the unrelenting tax increases, cost drivers and regulatory burdens that we have seen over the course of the pandemic instead providing new supports to an economy on the brink.”

Lawmakers say the legislation would establish economic development programs to incentivize:

• The rehabilitation of certain historic properties (Historic Property Reinvestment Act); remediation and redevelopment of brownfield sites (Brownfields Redevelopment Incentive Program Act);
• Investment in innovation (New Jersey Innovation Evergreen Act);
• The location and improvement of certain grocery stores in food desert communities (Food Desert Relief Act);
• Partnerships with certain anchor institutions (New Jersey Community-Anchored Development Act);
• Property redevelopment (New Jersey Aspire Program Act);
• Job creation and retention (Emerge Program Act);
• The continued operations of small businesses (Main Street Recovery Finance Program Act);
• The growth of certain early-stage companies (New Jersey Ignite Act).

The bill would also amend the existing statute to expand the availability of tax incentives for certain wind projects (Offshore Wind Economic Development Act) and certain film projects (Film and Digital Media Tax Credit Program).

It would further establish a working group on entrepreneur zones and address the procurement and manufacturing of personal protective equipment (PPE).

Here's a closer look at what's in the bill:

Tax-breaks

The bill would effectively restore two expired incentive programs that existed to encourage job creation and redevelopment projects. The measure would also establish new programs to incentivize economic-development efforts.

More specific tax breaks include those for historic preservation, brownstone remediation and eliminating food deserts. The bill would also establish a public-private venture-capital fund for investment in startups and emerging businesses in New Jersey.

Caps

The bill establishes new caps covering seven different programs the bill creates. For instance, the legislation caps some programs through how much a region can receive in an effort to ensure equitable geographic distribution of tax breaks.

The bill would allow for up to $1.5 billion in tax breaks to get rewarded over six years. But if the total rewarded value doesn't hit the proposed program caps in its first six years, it could get extended another year. But overall, tax breaks would get capped to $11.5 billion.

The total price tag of $14 billion counts the changes to the film-tax credit program and other additions lawmakers approved.

Watchdogs

The bill calls for changes to improve government oversight on tax breaks. This would include adding an inspector general position to the Economic Development Authority and upgrading the net-benefit test for tax-incentivized projects.

Companies and executives would have to certify under penalty of perjury that they're telling the truth in tax-break applications.