State officials are having another go at revising the New Jersey Emerge tax break program, with the latest round of changes being more granular and not as groundbreaking as those made over the summer.
NJ Emerge offers incentives to companies that set up shop in New Jersey or expand their footprint in the state. A 213-page clean-up bill fast-tracked through the state Legislature loosened compliance rules, provided for larger bonuses and allowed for more workers to telecommute – a popular practice coming out of the pandemic – while still counting as employees that would qualify the business for state tax breaks.
Under the June rules, companies considering a move out of New Jersey also had lower standards to meet in order to keep the tax breaks. Critics of NJ Emerge’s predecessor – Grow New Jersey – allege that businesses abused this practice and made hollow threats to leave the state for the sake of receiving state subsidies.
So far, the state has made two awards. The first was a $9.9 million tax break to Party City, announced in September, to bring in 357 new positions and keep 338 full-time jobs in the state, moving into a 208,911-square-foot office building in Woodcliff Lake.
The second was a $109 million tax break to fintech giant Fiserv – the largest award under the Murphy administration. In return for the incentives, Fiserv will keep or create a combined 3,000 jobs at a newly renovated 428,000-square-foot, four-story office site in Berkeley Heights, a Union County suburb along the Interstate 78 corridor.
“If there is one day we’ve been working for with regard to creating an innovation-based economy, I think we should mark this one on the calendar,” Gov. Phil Murphy said during a September news conference at the site.
The New Jersey Economic Development Authority, which runs the state’s incentive programs, is hashing out a sister subsidy program called New Jersey Aspire aimed at financing development and real estate projects across the state. Those rules were introduced in September and formally adopted earlier in November. The program offers gap financing to developers, enabling them to continue work even if funds aren’t yet available to pay for the whole project.
Both schemes, capped at a total of $1.1 billion per year, are part of the landmark $14.5 billion incentive package Murphy signed in January, after the measure was sent to his desk from the state Legislature the prior month. Comments on the latest revisions are open until Dec. 1, according to a Nov. 17 notice by the NJEDA.
NEW CHANGES EMERGE
Sheila Reynertson, a policy analyst at the progressive think tank New Jersey Policy Perspective, noted that most, if not all of the rules being proposed were first hashed out by the Legislature in the June clean-up bill.
The changes loosen the definition of a full-time employee, and who would qualify as such for a tax break award, and for companies to actually certify that they’re complying with their agreements with the state.
They eliminate the requirement that an employee be paid at least $15 an hour, which will be the state’s minimum wage in 2024, up from the current $12 an hour. And they remove the requirement that a full-time employee be offered health insurance benefits, as well mandates that their workers be unionized.
Another change centers on the creation of an application fee for so-called “mega-projects,” which is one of “special economic importance,” eligible for more lucrative tax breaks. Such projects must create at least 500 new jobs and spend at least $50 million, and the new fees can range in the tens of thousands of dollars.
Lawmakers and state officials suggest that these “mega-projects” would primarily be companies focusing on new and emerging technology and industries, such as clean energy, life sciences, film production and fintech.
This article was updated at 8:40 a.m. EST on Nov. 29 to clarify that the Emerge and Aspire programs are capped at a total of $1.1 billion annually.