Gov. Phil Murphy will now be able to decide on a sprawling, 213-page “clean-up” bill for the state’s corporate incentive programs, just as those state subsidies are getting off the ground.
The state Senate approved proposed Assembly Bill 5939 by a unanimous vote at its June 30 voting session–the day before lawmakers break for the summer recess and begin reelection campaigns.
The measure was rushed through both legislative committees last week, having been approved in the Assembly Budget Committee even though a draft of the bill was not publicly available. The full Assembly approved it in a 65-9 vote last Thursday with one abstention.
“There’s no language on the website for the bill … how do we vote on something that the public doesn’t have an opportunity to comment on,” Assemblywoman Serena DiMaso, R-13th District, said during last week’s committee hearing. She was one of the nine votes in opposition at that time. “I just don’t understand how we’re running this government.”
Murphy – a first-term Democrat – signed the state’s economic subsidy program in January as a means to hoist the state’s economy out of the COVID-19 recession. He has not publicly commented on the proposals.
The $14.5 billion incentive package includes money to attract businesses to move into New Jersey or expand their current footprint here, rent support and seed funding for startups, Main Street business grants, tax breaks for film and television productions, money toward anchor institutions and redevelopment projects, funds toward revitalizing historic properties and polluted sites, and money toward so-called “transformative projects.”
Former state Assemblyman Jack Ciattarelli, a Republican vying to unseat Murphy this November, said he would like to gradually do away with the tax break programs and replace them with a lower tax rate for businesses.
Applications are open now for the key corporate incentive program called NJ Emerge, which is capped at $1.1 billion a year, but no applicants have been approved by the New Jersey Economic Development Authority, which oversees the incentives.
‘Hybrid work scenarios’
Lawmakers crafted the clean-up as a means to account for the widespread shift to telecommuting born out of the COVID-19 pandemic, as business executives gauge how prevalent the practice will be in the post-pandemic economy.
Currently, 80% of employees at a company that wins a tax break need to work on site. This bill would lower that to 60%.
“[M]ore businesses are allowing hybrid work scenarios as a result of the productivity they found during the pandemic,” said Chris Emigholz, who heads government affairs for the New Jersey Business & Industry Association.
In the clean-up measure, requirements are loosened across the board–lower job retention numbers and other lower standards that businesses have to meet.
“I just think that by loosening up the eligibility … it’s all watered down when you keep allowing more and more businesses that may not necessarily need tax credits to do their thing,” said Sheila Reynertson, a policy analyst with the progressive think tank New Jersey Policy Perspective.
Emigholz instead felt that the revisions would make the incentive programs more accessible to smaller businesses. For example, the definition of microbusinesses are expanded in the bill, meaning that more employers could qualify for small business subsidies under the Main Street recovery programs.
In addition to NJ Emerge, the state’s other primary incentive program is NJ Aspire, which is also capped at $1.1 billion a year and geared toward real estate and redevelopment.
Under the bill, the state would take $350 million in unused NJ Aspire and NJ Emerge tax credits and put it toward subsidizing offshore wind. And there would be awards to subsidize new film studios.
Current requirements call for businesses eyeing a move out of the state to retain 1,000 full-time jobs, or 500 in some of the state’s poorest communities. Under the bill, that would be lowered to as few as 150 full-time jobs at a minimum, or up to 500 jobs depending on the community’s poverty level.
