The New Jersey Economic Development Authority is opening applications for a massive corporate tax break program meant to act as the cornerstone for the state’s post-COVID economic recovery
Called NJ Emerge, the program is capped at $1.1 billion a year for six years, with a seventh potential year for any unused tax credits. It’s meant to incentivize employers to remain in the state, or set up shop here in New Jersey.
An accompanying program is being finalized by the NJEDA called NJ Aspire, also capped at $1.1 billion a year and geared toward real estate and community development.
Both are part of the mammoth $14.5 billion economic incentive program Gov. Phil Murphy signed in early January, which he, business leaders and state lawmakers contend will shape the course of New Jersey’s economy amid its reopening.
Murphy, in a May 27 statement, said the incentive package “has become even more important as we begin our recovery from the economic devastation of the COVID-19 pandemic.”
The program is the replacement for its predecessor, the Grow New Jersey corporate tax breaks, which has fallen under intense scrutiny by government activists and the Murphy administration for how it was created and how companies were able to get incentive awards.
NJ Emerge contains more stringent job creation and oversight requirements, and the tax break agreements need to wield much larger benefits to the state economy.
Despite no overall award caps, the programs are designed so that awards in the hundreds of millions of dollars – as seen under Grow NJ – will be more difficult to procure under NJ Emerge. And, state officials contend the higher award-per-job requirements would serve as a buffer for massive tax breaks, like a $260 million award that went to Holtec International under the predecessor program.
There are lower job creation requirements for “targeted industries” – like advanced manufacturing, finance, film and digital media, “food innovation,” clean energy and life sciences.
Applicants have to shell out more money on new construction or the rehabilitation of existing buildings. Awards for projects valued at more than $10 million need to have a “community benefits agreement” in order to ensure that towns, where businesses moved to in exchange for tax breaks, can also benefit.
“Launching the application for the Emerge program is a major step forward that will open the door to exciting new economic development projects while also remaining true to our commitments to equity, transparency, and accountability,” Tim Sullivan, who heads the NJEDA, said in the May 27 announcement.
Progressive groups nonetheless panned the tax break bill for the quick speed at which it moved through the state Legislature, with hundreds of pages of amendments introduced during committee sessions where the bills were being considered.
Now, lawmakers are hoping to rush through a clean-up bill before the break for summer recess on July 1.
Those rules deal with loosening requirements surrounding remote work, given the continued work-from-home trends during the pandemic, and the uncertainty with how large of a role telecommuting will play in the post-COVID economy.
And state lawmakers are looking to lower job retention requirements for companies currently in the state that are considering moving out of New Jersey. Such businesses would need to retain 500 jobs in some of the state’s poorest cities, like Camden or Newark. Elsewhere in the state, they’d need to retain 1,000 jobs. In either case, business groups and lawmakers say the requirements can prove to be too cumbersome for employers that have nowhere near that number of workers, nor does their business model or financial capabilities call for that size of a workforce.
“This program does absolutely nothing if there’s a 90-person manufacturer that’s right in the Trenton area, and they want to go over the river to Pennsylvania. There’s not a lot that’ll help them,” said Chris Emigholz, vice president of government affairs at the New Jersey Business & Industry Association.o