Legislature Votes to Extend Business Tax Breaks, Inviting Veto
Though it’s not going to be signed by Gov. Phil Murphy in its current form, the Legislature on Thursday approved a seven-month extension for New Jersey’s business tax incentive programs, which are due to expire at the end of June.
Murphy last October proposed a new set of incentive programs that would be more targeted with annual caps on tax credit to replace the Grow New Jersey Assistance Program and Economic Redevelopment and Growth Grant. His plan hasn’t been taken up by the Legislature.
Grow NJ, in particular, and ERG have been at the center of controversy over an audit by the state comptroller, requested by Murphy, and a series and hearings and interim report from a task force appointed by the governor that were critical of the programs’ development and oversight.
Nevertheless, the extension was approved 28-2 by the Senate and 64-9-3 by the Assembly.
“The extension of this flawed legislation that not only has not served its intended purpose, but has resulted in potential fraud on a huge scale, is nothing more than politics at its worst,” Murphy said in a statement.
“Since the Legislature has elected to pass this extension without much-needed reforms, I have no choice but to veto this bill,” he said. “There is a better solution than continuing an indefensible status quo and I’m ready to work with the Legislature to reform these programs for the long-term success of New Jersey’s economy.”
Senate President Steve Sweeney, D-Gloucester, said Murphy controls the Economic Development Authority through appointments and veto power so he shouldn’t oppose an extension.
“We need to extend it until we come up with a new program. It’s really critically important. But if you got control of it, what’s the issue?” Sweeney said.
“You don’t have to approve projects if you don’t want to. You can take longer to scrutinize projects if you want to. You can slow the process down all you want. He’s running the show,” he said.
“Listen, he doesn’t have to have meetings. He can cancel meetings if he wants. But shutting down the program completely, I wouldn’t want to go into another year without a program if I’m the governor,” Sweeney said. “I absolutely wouldn’t want to do that.”
Assembly Speaker Craig Coughlin, D-Middlesex, said the purpose of the extension is to maintain an incentive program “for a limited period of time while we work together to put together an economic development package that we can all agree on.”
“If the governor chooses to veto it, then the governor will do that,” Coughlin said. “We’ll continue to work to try to find, you know, a package that everybody can get to ‘yes’ on.”
“We are open and welcome to having conversations with the governor about how to expand this to entrepreneurialship, how do we expand it to small businesses, how do we expand it in a way that it is 1,000 percent transparent,” said Assembly Majority Leader Louis Greenwald, D-Camden. “But we don’t want to throw the baby out with the bathwater.”
State Sen. Dick Codey, D-Essex, a former governor, was cheered by opponents of the current system when he spoke against extending the programs.
“We obviously have a huge issue over at EDA that has grabbed the headlines, each and every day. And for us to move forward with an extension is the worst possible time to do that,” Codey said.
Codey noted the governor’s task force is continuing to meet. A special Senate committee is scheduled to begin its own hearings about the benefits of the tax incentives next Monday.
“And from those reports and from the investigations, when they come in, sit down and do whatever we need to do to change that agency, to make sure that whatever the things that did or did not happen could never, ever happen again,” Codey said.