Gov. Phil Murphy told NJBIZ he was not dead set on the state’s tax breaks being capped at $400 million a year total, as he and lawmakers hash out the economic incentives that will replace the Christie-era tax breaks – but he still wants the tax breaks capped, a potential sticking point with wary lawmakers.
“We’ve put forward five pillars, and they have common attributes. They’re capped, they’re transparent, and they go where we want to take the economy,” Murphy said at a Choose New Jersey event Monday afternoon in New Brunswick. “We’ve seen the price we’ve paid for uncapped incentives, which has been a big price.”
“But as we machine these with the legislative colleagues, we’re not cemented on the exact specific elements of this, including numbers,” Murphy added.
Murphy unveiled the budget on March 5 for the 2020 fiscal year, which starts July, and included the five new economic incentives in the budget.
The new tax incentives he proposed would replace the outgoing Grow New Jersey tax breaks and the Economic Redevelopment and Growth program, both of which expire in July.
“Tax incentives, transparent and accountable, smartly devised and strategically deployed, have a vital role to play in a focused economic growth plan,” Murphy said at his budget address last week.
But the governor’s chief political opponent and state Legislature’s top Democrat — Senate President Stephen Sweeney, D-3rd District — has been skeptical of capping tax breaks and other incentives, saying he would only approve the proposals “if it makes sense.”
“We weren’t capping Amazon, were we?” Sweeney said last week in an interview with several media outlets.
The governor frequently cites a January audit by the state comptroller which suggested that the Economic Development Authority exercised little oversight of the $11 billion of tax breaks awarded between 2005 and 2017, making it difficult for the state to determine if recipients actually delivered on their promised economic benefits.
But Murphy’s focus on the tax incentives, according to Sweeney, has not shown “how much money we did actually benefit from [tax credits], from job creation.”
“There is a plus on all of those things,” Sweeney said.
“We’ve got to develop a plan to ensure that if we make investments, that we get good returns, and if it makes sense to cap it … that’s what we’ll do,” he added.
Murphy unveiled his own task force, armed with subpoena power, to gauge the effectiveness of the tax breaks, which were vastly expanded in 2013 under then-Gov. Chris Christie.
Sweeney and Assembly Speaker Craig Coughlin, D-19th District, unveiled a similar-goaled legislative panel to hear from business leaders on how they were impacted by the tax breaks.