NJ lawmakers back idea of tax deal with border states

Some top Democratic legislators are endorsing the notion of entering into a so-called tax break truce with New York and Pennsylvania to keep the neighboring states from using such incentives to poach businesses from one another.

The idea is being floated after two Midwestern states entered into a similar pact and follows the June 30 expiration of New Jersey flagship economic incentive schemes — Grow New Jersey and the Economic Redevelopment and Growth gap financing program. Murphy has promised to veto a measure that would temporarily extend Grow NJ and ERG and the lack of incentives is stoking fears that businesses will be lured across the Delaware and Hudson rivers by tax break offers.

Speaking at an unrelated event in Edison on Thursday, Murphy said he was “open-minded.”

“As a broader matter, yes, the European Union has done that, one country cannot use tax incentives to compete against another country,” the Governor said. “I think it would need to be more than the neighborhood, it would need to be a broader moratorium.”

“If we could get the governors of New York and Pennsylvania to agree to a tax credit ceasefire on ‘border wars,’ that would free up more tax incentive money for us to compete to bring new jobs into our region, particularly cities like Paterson and Trenton that need help the most,” said Senate President Steve Sweeney, D-3rd District, in a statement. “But first, we need a tax incentive program in place in New Jersey because we’re no longer in a border war.”

Earlier this week, Kansas and Missouri agreed to a cross-border cease-fire. Both states share the Kansas City metro area, which straddles the border and boasts a population of 2.1 million residents.

“By signing this memorandum of understanding, Kansas [Gov. Laura Kelly] and I have officially ended the Kansas City Border War,” Missouri Gov. Mike Parson tweeted on Aug. 14. “Incentivizing companies to move a few miles doesn’t result in new jobs.”

The agreement will bar the states from offering subsidies to companies seeking to relocate within the same labor market, such as from Kansas City, Mo. to Overland Park, Kan. But it would be up to the individual municipalities to comply with the agreement.

The New York City and Philadelphia metro areas are considerably larger, with populations of 20.3 million and 6.1 million respectively.

In his statement, Sweeney reiterated his call for Murphy to approve the tax incentive extension measure. “Once the Governor signs the bill, we need to work together on long-term reforms – including a multi-state tax credit ceasefire like the one that the governors of Kansas and Missouri just signed,” he said.

Sen. Troy Singleton, D-7th District, said a tax break agreement between Gov. Phil Murphy, New York Gov. Andrew Cuomo and Pennsylvania Gov. Tom Wolf would be “worth exploring.”

A tri-state agreement “makes sense and is worth exploring,” said Sen. Loretta Weinberg, D-37th District. “We share TV markets. We could do joint ads for things like public health ads … so many ideas should be reviewed.”

Sen. Joe Cryan, D-20th District, said he “couldn’t agree more” that the tax break agreement between the three states could “end this costly race to the bottom.”

New Jersey and New York offered competing incentive packages worth  $5 billion and $1.5 billion in an effort to persuade Amazon.com Inc. to locate its second North American headquarters in one of the states.

“It would help solve one of the biggest issues with existing corporate subsidy laws: states giving money to  companies to ‘retain’ jobs by relocating their headquarters only a few miles away,” said Louis DiPaolo, communications director for the progressive research and advocacy organization New Jersey Policy Perspective.

“There’s no real return on investment for those deals because you have the same workers before and after the relocation. The only thing that changes is the workers’ commute,” DiPaolo added.

Representatives for Cuomo and Wolf could not be immediately reached for comment.

This article was updated at 4:25 p.m EDT on Aug. 15, 2019 to add a statement from Senate President Steve Sweeney.