Lawmakers look to extend biz tax breaks Murphy wants to replace
TRENTON — With the state’s business tax incentive programs due to expire at month’s end, state lawmakers are poised to grant them a seven-month extension rather than adopt the economic plan Gov. Phil Murphy has been advocating since October.
The programs – Grow NJ and Economic Redevelopment and Growth – have become the subject of a critical audit by the state comptroller and the focus of hearings by a task force convened by Murphy that’s currently embroiled in a court fight.
Murphy has proposed a new set of incentives – more targeted than Grow NJ and ERG and capped at $400 million a year. But A5343, which is listed for votes in two Assembly committees Thursday, would push off that conversation until another time and maintain the current programs through January.
Senate President Steve Sweeney, D-Gloucester, said the extension is “the right thing to do.” The Senate’s version of the plan, S3901, isn’t yet scheduled for a vote, but the Senate Economic Growth Committee, to which the bill is assigned, is due to meet Monday.
“I don’t see why we wouldn’t extend it, even for a short period of time, because I’ve said this before: We’re right in the middle of budget now,” Sweeney said.
Murphy unveiled his proposal for a new set of business incentives in a speech in October. Sweeney acknowledged that lawmakers got the proposals from Murphy as proposed legislation months ago.
“That doesn’t mean we agree with the bills,” Sweeney said. “And we need to get to an agreement on tax incentives.”
The incentives have become the accelerant in a political feud between Murphy and South Jersey Democrats loyal to insurance and hospital executive George Norcross, who says the tax breaks – to his business and others – are central to turning around Camden.
Brandon McKoy, president of New Jersey Policy Perspective, a critic of the current tax incentives, said everyone has known for more than five years that the Economic Opportunity Act of 2013 sunsets this month.
“To see now the Legislature simply saying, ‘Well, we’re just going to extend these for seven months because we don’t want to deal with this right now,’ it’s very disappointing because we know that these programs are flawed,” McKoy said.
“And to allow politics to sort of delay improving of these programs is another disappointment,” he said. “It is a slap in the face to New Jersey taxpayers and is a lack of leadership.”
McKoy said an annual cap on incentives is no different from a line item in a budget that gives some predictability to costs. He said that without a cap since 2013, the volume of New Jersey’s tax awards has been more than five times the average of competitor states.
“So obviously we are not disciplined enough or responsible enough to operate these programs without a cap, and we need to put that back in place,” McKoy said.
In advance of the Assembly hearings, Murphy’s office on Wednesday issued a news release quoting around two dozen people in support of his economic plan, including the mayors of Newark, Plainfield and Paterson, progressive activists, business executives and business and tech industry groups.
Sweeney downplayed Murphy’s skepticism about Grow NJ and ERG, noting that every grant the Economic Development Authority has approved since the governor took office in January 2018 has been approved by a unanimous vote, except for one in which a commissioner abstained due to a conflict.
“Right now, the administration has the executive director, and the administration also has the chair of the board. And he has the ability to veto,” Sweeney said. “So I don’t know what the fear is.”
McKoy said there are “very simple reforms” that could be added to the extension without much issue but that none are in the current bill. At least one change will be made to the bill Thursday, cutting the extension back from a full year to seven months.
“Honestly, I would say that it’s better to have no plan whatsoever than a plain, seven-month extension with no reforms,” McKoy said.
“But for them to just extend these programs as they currently exist, as they are currently structured and designed, that’s bad policy and that’s a abrogation of their responsibility to New Jersey taxpayers,” said McKoy.