NJ has no biz tax incentive program for first time since 1996
For the first time in more than 23 years, New Jersey doesn’t have a business tax incentive program designed to encourage companies to move or retain jobs in the state.
The lapse could be temporary – but the governor and legislative leaders disagree about the path forward and aren’t talking with each other about it.
Gov. Phil Murphy says he won’t renew a program that drains funding the budget needs, hasn’t generated enough economic growth and has raised as many questions about oversight as the programs that expired Sunday night.
“I do not take lightly the prospect of New Jersey going for any period of time without an incentive program,” Murphy said. “But the expiring programs are so flawed that this actually is the better alternative than continuing a broken and rigged status quo.”
Murphy hasn’t yet vetoed a bill approved by lawmakers that would extend the programs that had been in effect since 2013 until January, seemingly in hopes of negotiating an agreement that could be written into a conditional veto.
He proposed an economic plan last October that lawmakers haven’t taken up, more targeted than the just-expired programs and capped at a combined $400 million a year. He said the past programs were not effective.
“Even if the Boy Scouts and the Girl Scouts ran them, they finished 42nd, 47th and 49th in wage growth, job growth and poverty eradication,” Murphy said. “It’s quite clear that there were some poor behavior in this. I don’t know how you can extend that.”
Senate President Steve Sweeney, D-Gloucester, said Murphy is “a hundred percent right” when he says the incentives aren’t as effective as they should be.
“And Gov. Kean probably hit it dead on the head. He said these payments are like extortion payments,” Sweeney said. “Because New Jersey is so unattractive for businesses, you have to pay larger than normal incentives to get people to do business here.”
Sweeney said he’s more than willing to talk about tax incentives with Murphy though still thinks the governor should have temporarily extended the existing programs in the meanwhile.
“Why wouldn’t he just extend it? Because he’s made it so political, he made it impossible for him to extend it,” he said.
Michele Siekerka, president and chief executive officer of the New Jersey Business and Industry Association, said the consequences of having no tax incentive programs are significant, given that the states New Jersey competes with for businesses have them.
“We know that businesses need those types of programs in order to fill the gap for the lack of affordability that we have here in the state of New Jersey,” Siekerka said. “Without those incentive programs, we are even less competitive, knowing we already have a competitiveness problem.”
Siekerka said the reason New Jersey’s tax incentives amount to more per job than in other states is because costs are higher here.
And she said the impact of the program’s lapse is immediate because the market for businesses to sell their tax credits, as allowed under the 2013 law, “has shriveled up” because buyers aren’t sure future tax credits will be provided.
The Economic Development Authority will continue to process applications for tax incentives that were received by Sunday night.
Siekerka hopes Murphy and legislators start talking about the issue and that the Legislature begins holdings hearings soon on the next incarnation of the tax incentives program.
“I know that the Legislature left open the opportunity to come in for some summer sessions,” Siekerka said. “And I believe that if our policymakers sat down and realized how important this is right now, they would make the time over the summer to get the process going.”