Although the vast majority of tax breaks have been awarded in the past decade, the Murphy administration anticipates the annual cost of financing those incentives will explode to more than $1 billion starting next year.
The data comes amid an effort by Gov. Phil Murphy to enact hard caps on the incentive programs the state uses to lure businesses into New Jersey.
“Blank checks are bad policy. No family budgets that way. Neither should we,” Murphy said in his prepared remarks Tuesday.
Between 2013 and 2019, the state awarded at least $5 billion in tax breaks under the controversial Grow New Jersey incentive program, and at least $1 billion via the Economic Redevelopment and Growth gap financing program. Grow NJ makes up the lion’s share of tax breaks that the state will have to finance, followed by the now-expired Business Employment Incentive Program, under which the state stop awarding incentives in 2013.
2020 was the first year the state had to start financing tax breaks under the state’s film, television and digital media tax credit program. Other incentives that the state will be on the hook for over the next few years include the Net-Operating Losses Transfer Certificate Program, the Angel investor Tax Credit Program, the Business Retention and Relocation Assistance Grant, and the Urban Transit Hub Tax Credit Program.
But criticism from Murphy and progressive watchdogs has honed in on the Grow NJ program, how it was crafted, and how the tax breaks were awarded.
Several companies agreed to pay back a combined $11 million, following scrutiny by a task force Murphy convened to examine the incentives. And another $500 million over the course of the next several years could be clawed back by the state.
“Billions given away in open-ended tax breaks will be billions we will not have to make our state more affordable for both residents and businesses,” Murphy said. “Tax incentives cannot be about rewarding special interests. They must be about making our state more competitive, creating jobs, and growing the next great wave of New Jersey-based companies.”