State officials are aiming to fast-track a key economic incentive program and open up applications this May offering corporate tax breaks for businesses eyeing a move into New Jersey.
The program is called NJ Emerge, which has a budget of $1.1 billion a year, and is part of the broader $14.5 billion economic incentive package Gov. Phil Murphy signed into law in January.
Altogether, the economic package is meant to set the stage for the state’s economic recovery coming out of the COVID-19 recession, which many public officials and economists have described as the worst economic conditions since the Great Depression nearly a century ago.
NJ Emerge is meant to replace a prior version of the program, known as Grow New Jersey – a controversial incentive program under which the state awarded more than $4 billion between 2013 and 2019 to hundreds of businesses that moved to the state, or expanded their existing footprint rather than leaving.
A task force Gov. Phil Murphy put together in 2019 investigated allegations of unethical and improper political influence over how the program was crafted and how tax breaks were awarded, with the focus on businesses with close ties to George Norcross, a South Jersey political powerbroker.
“We have to do this the right way. We have no choice,” Tim Sullivan, head of the New Jersey Economic Development Authority, which oversees NJ Emerge and many of the other incentive programs signed into law, said in a December interview.
Sullivan tweeted on March 15 that the NJEDA will issue “temporary rules” for NJ Emerge in late May, triggering an application process governed by those rules.
“Those Emerge regulations will in parallel go out for public comment that will be considered before adoption of final regulations,” he continued.
It is not immediately clear how the interim rules and the final rules might differ. Sullivan assured that the NJEDA will conduct “listening sessions in April to get specific input.”
“In advance of the Board’s consideration, we expect public details on concepts of language to be proposed.”
Under the terms of the legislation, NJ Emerge has a six-year lifespan, and lawmakers can extend it for a seventh year to tape into any unused tax incentives.
The program has a higher “net benefits test,” which is a complex formula the NJEDA employed with the Grow NJ program to ensure the amount the taxpayers ultimately spend on the tax break awarded is less than the economic benefit for the state.
There are lower job creation requirements for “targeted industries” – those like advanced manufacturing, finance, film and digital media, “food innovation,” clean energy and life sciences.
Applicants have to shell out more money on new construction or the rehabilitation of existing buildings. Individual awards are still not capped at a given amount, but state officials contend the higher requirements would serve as a buffer for massive tax breaks, like those in the hundreds of millions of dollars awarded under Grow NJ.
The economic incentive package includes another $1.1 billion a year for a program called NJ Aspire, which creates tax credits for real estate development.
There’s $2.5 billion for five large-scale “transformative projects,” $2.6 billion for 13 years of film and television production tax breaks, and $200 million to extend NJ Aspire’s predecessor, the Economic Redevelopment and Growth gap financing program.
And the package includes $400 million for some of Murphy’s long-touted priorities, including financial support for supermarkets in so-called food deserts, start-up support, incentives for developers cleaning up polluted properties or working on historic buildings, and support for “anchor institutions” such as universities, hospitals and performing arts centers.