Tim Sullivan, chief executive officer at the NJEDA, joins Gov. Phil Murphy and members of the state’s entrepreneurial community at NJIT’s Makerspace in Newark to discuss the importance of tax incentive reform to New Jersey’s economic future on June 24, 2019. – EDWIN J. TORRES/GOVERNOR’S OFFICE
The head of the Economic Development Authority pushed back against a narrative vocalized by New Jersey’s business community that controversy and scrutiny of the state’s multi-billion dollar corporate tax break programs – and whether they will even exist after June 30 – has scared businesses away from utilizing the incentives and moving into New Jersey.
“We haven’t seen a huge, or really a meaningful change in the number [of applicants]. You might expect to see a rush to the end of the program as people try and send in a bunch,” EDA Chief Executive Officer Tim Sullivan, who Gov. Phil Murphy picked in 2018 to head the agency, told NJBIZ at NJIT in Newark on June 24.
This comes despite allegations and narratives to the contrary – even at the same event, by Newark Alliance CEO Aisha Glover – that uncertainty whether the Grow New Jersey tax breaks will continue after they are set to expire have made businesses wary about the state.
Lawmakers on June 20 sent Murphy a bill that would extend both the Grow New Jersey tax breaks and the Economic Redevelopment and Growth gap financing program for seven months, but Murphy has promised to veto them.
Newark Alliance CEO Aisha Glover speaks at NJIT’s Makerspace on June 24, 2019. –
“Without a clear incentive package, it’s kind of like in limbo,” Glover told NJBIZ. “Developers as well. If you talk to any developer around the city, they’ll express frustration or uncertainty to move forward or wait, because they don’t know what their own incentives are going to look like.”
Glover pointed to two businesses, but declined to give names, she said opted out of moving to Newark because of the uncertainty of the future of the incentive program.
Darryl Isherwood, a Murphy spokesperson, agreed with Sullivan. The EDA, he said, would continue to process applications received by June 30, “making any lapse in the program far from catastrophic.”
“[S]ince January, the EDA has approved an average of only two Grow awards per month,” Isherwood added.
Meanwhile, at an Assembly economic development hearing on June 13, Chamber of Commerce Southern New Jersey Senior Vice President Christina Renna alluded to two separate businesses which declined a move to Camden over the “political climate” surrounding the state’s tax incentives.
“Now, what we have is an NJEDA in complete flux. It is decimated. [EDA Board Chair Laurence Downes] has resigned, more changes to the board are expected, and the business incentive programs it administers are set to expire on June 30,” New Jersey Chamber of Commerce President and CEO Tom Bracken said in an April statement.
“This is a lot of upheaval in an organization whose mandate is essential to New Jersey’s economic health,” Bracken added.
According to Isherwood, the EDA, and the state, have more to offer business “than just formulaic tax incentives.”
“The EDA itself offers far more … including rental assistance and loan programs for small businesses, bond financing for larger businesses, and a new film and digital media tax credit that makes us an attractive location for production companies,” Isherwood said. “We are number one in the nation in our concentration of scientists and engineers, we have the highest percentage of K through 12 students in the country enrolled in foreign language classes, and we have some of the top ranked colleges and universities in the country.”
Grow NJ, which awarded over $7 billion since its expansion in 2013, has fallen under intense scrutiny by the Murphy administration in the past year.
The governor put together a task force in January, which in a 75-page report released earlier this month highlighted how businesses and individuals with strong ties to South Jersey political powerbroker George Norcross unfairly won hundreds of millions of dollars in tax breaks in exchange for moving to Camden.
Murphy wants to see Grow NJ expire on July 1, and replace it with a set of five new incentives capped at a total $400 million a year. The report meanwhile includes a variety of ways to boost greater transparency in administering the program, which Murphy has assured would be embedded into the incentives.
“In the existing programs and in the future programs, I think there should be an expectation, if you’re getting a public investment, there should be public scrutiny and public transparency that comes with it,” Sullivan said. “I don’t think that’s a controversial position. Lots of companies are fine with that.”
