New Jersey’s two major economic incentive programs both expired at midnight, including the multibillion-dollar corporate tax break program which has fallen under intense scrutiny by the Murphy administration.
Lawmakers sent Gov. Phil Murphy a bill on June 20 that would extend the Grow New Jersey tax breaks and the Economic Redevelopment and Growth gap financing program for another seven months while they all hash out a new set of incentives.
Murphy has promised to veto the bill. He has 45 days from June 20 to make a move on the legislation otherwise it automatically becomes law.
Senate President Stephen Sweeney, D-3rd District, – one of Murphy’s biggest political opponents and a supporter of Grow NJ – said a veto override would always be an option if Murphy shoots down the extension.
The state awarded over $7 billion in corporate tax breaks under Grow NJ ever since its expansion in 2013.
“I don’t get it, I don’t know how you can support extending this program,” Murphy said at a Sunday afternoon budget press conference which more resembled a political rally, with catering, chants, cheers, applause and standing room only attendance.
A June report, put together by a task force that Murphy convened to scrutinize Grow NJ, unveiled a myriad of ways that businesses with close ties to South Jersey powerbroker George Norcross “rigged” the incentive program by inserting language into the tax break legislation that allowed them to unfairly and wildly benefit from moving to Camden.
The report also highlighted how many of these same companies – with the help of Kevin Sheehan, a lawyer at Parker McCay where George’s brother Philip is a partner – gave blatantly false plans about where out of state they would move if they did not win the tax breaks, even despite them having no such actual plans to leave New Jersey. At least half a billion dollars of tax breaks went to Norcross-tied companies for their move to Camden, according to the report.
Attorneys for Norcross and the businesses highlighted in the report are now suing the Murphy administration.
Murphy put the task force together in January at the heels of a state comptroller’s audit which found that the Economic Development Authority – tasked with administering the tax incentive program – conducted inadequate oversight of businesses that received incentives. The audit also suggested the EDA did not thoroughly monitor compliance with tax break requirements.
“It’s quite clear that there was some poor behavior in this. I don’t know how you could extend that,” Murphy said.
In October, the governor unveiled a set of five new economic incentives capped at $400 million a year, which would replace Grow NJ and ERG, but Sweeney has remained highly skeptical and outright opposed to the caps.
“The problem with capping incentives is then you’ve tied your hands,” Sweeney told NJBIZ in June.
With Murphy wanting caps and Sweeney in opposition to caps and the two at an apparent gridlock, neither on Sunday addressed how they would move ahead with the tax break programs.
“We’re more than willing to have a conversation with [Murphy] on tax incentives,” Sweeney said at Sunday afternoon press conference later in the day.
Michele Siekerka, president and chief executive officer of the New Jersey Business and Industry Association, warned that the lack of any state incentive program would have a “chilling effect” on the state’s ability to do business.
“Our policymakers all agree that tax incentives are an important and effective tool in New Jersey’s overall economic development toolkit. To not have this tool at its disposal for any length of time will render us even less competitive when we already lag behind the region and the nation in economic growth,” Siekerka said in a statement yesterday afternoon.