NJ’s New $14.5 Billion Economic Plan Enacted by Murphy
HAMILTON (Mercer) — Gov. Phil Murphy enacted a law Thursday authorizing nearly $14.5 billion in tax breaks, loans and grants for businesses, part of a long-stalled economic plan he says will support “thousands of good jobs.”
Murphy signed the law in a ceremony outside Carella’s Chocolates & Gifts in Hamilton to highlight that the wide-ranging plan includes $50 million for a Main Street Recovery Finance program providing grants, loans and loan guarantees to small businesses.
“After all, incentives are set aside only for big corporations, right? Well starting today, that could not be more wrong. That’s the old way of thinking. That doesn’t mean that it won’t apply necessarily to big corporations, but the days when it only applied to big ones are over,” Murphy said.
“Our future rides on the backs of the small businesses who employ the majority of our fellow residents, especially those owned and operated by women, people of color and veterans,” he said.
Left unspoken was that the tax incentives that make up the bulk of the new law are more than 288 times larger, at $14.4 billion over a span of six to seven years for most of those individual programs.
Senate President Steve Sweeney, D-Gloucester, who had clashed with Murphy over planned caps on the programs, called the restoration of tax incentives after an 18-month absence “a huge day for the state of New Jersey.”
“This is not a giveaway,” Sweeney said. “This has been talked about by the opponents completely wrong. This is about investing in the state of New Jersey’s future. This is critically important.”
Critics of the new law include progressive groups that are typically Murphy’s biggest boosters.
“With a stroke of a pen, New Jersey has chosen to repeat the mistakes of the past by giving away billions of dollars in corporate tax breaks,” said Brandon McKoy, president of the progressive New Jersey Policy Perspective. “This is a bloated economic development strategy that has failed to work, not only in New Jersey but in every other state that participates in this costly race to the bottom.”
Most of the programs are authorized for six years, with the option to extend them for a seventh year if less than $11.5 billion in credits are awarded in those. Others vary, from a one-year extension of the Economic Redevelopment and Growth Grant Program to 13 years of film production tax credits.
The law includes:
New Jersey Aspire and Emerge programs: Aspire provides tax credits to encourage redevelopment projects by covering certain project financing gap costs. Emerge provides tax credits to encourage economic development, job creation and the retention of significant numbers of jobs in imminent danger of leaving the State. Combined, their tax credits are capped at $1.1 billion annually for six years, with $715 million for North and Central Jersey projects and $385 million for South Jersey projects.
An additional $2.5 billion over six years is allowed for Aspire and Emerge ‘transformative projects,’ which aren’t covered by the $1.1 billion yearly cap.
Film Production Tax Credits: Amends the existing tax credit program to include provisions for “New Jersey film partners” and “New Jersey film-lease partners” and allow an additional $200 million of tax credits annually over 13 years.
New Jersey Community-Anchored Development Program: Tax credits to anchor institutions to incentivize the expansion of targeted industries and the continued development of certain areas of the state. Capped at $200 million annually for six years, including $130 million of tax credits for areas in the 13 northern and central counties and $70 million for areas in the eight southern counties.
New Jersey Innovation Evergreen Program: Auctioning tax credits for cash, which will be used “to invest in innovation as a catalyst for economic growth and to advance the competitiveness of the state’s businesses in the global economy.” Capped at $60 million annually for six years.
Historic Property Reinvestment Program: Tax credits for part of the cost of rehabilitating historic properties. Capped at $50 million annually for six years.
Brownfields Redevelopment Incentive Program: Tax credits to compensate developers of redevelopment projects located on brownfield sites for remediation costs. Capped at $50 million annually for six years.
Food Desert Relief Program: Tax credits in order to incentivize businesses to establish and retain new supermarkets and grocery stores in food desert communities. Capped at $40 million annually for six years.
ERG program: Amend the existing Economic Redevelopment and Growth Grant Program by extending deadlines and allowing an additional $220 million of tax credits to be awarded through Dec. 1, 2021.
PPE program: Allow tax credits for hiring employees for the manufacture of personal protective equipment. Capped at $10 million annually for three years.
Angel Investor Tax Credit: Revise the tax credit established in 2013 to increase its annual tax credit cap from $25 million to $35 million and add provisions for venture funds.
The bill also appropriates $55.5 million in state funds, including:
- $50 million for a Main Street Recovery Finance program providing grants, loans, and loan guarantees to small businesses.
- $5 million to award grants for zoning and economic planning services or economic redevelopment plans.
- $250,000 for the New Jersey Ignite program, a public-private partnership providing start-up rent grants to collaborative workspaces to support early-stage innovation economy businesses.
- $250,000 toward the creation of an Office of Economic Development inspector general and the employment of a chief compliance officer to manage the Division of Portfolio Management and Compliance.
“Now we have to put these incentives to work,” said Murphy, who said the Economic Development Authority is also working on the food-desert program. “We have to make this vision and promise a reality. I have no doubt these incentives, implemented fairly and equitably, will power us forward and support directly and indirectly thousands of good jobs.”
Bill Mullen, president of the New Jersey State Building & Construction Trades Council, said union contractors are now finishing up projects that were financed and obtained permits before the COVID-19 pandemic hit and that it’s likely there won’t be future projects on the immediate horizon.
“I hate to say this but looking forward for the next six months ahead or a year, for the 150,000 men that we represent and women, I think unemployment is right around the corner for us,” Mullen said. “So, this couldn’t be come at a better time for our men and women.”
Other lawmakers who sponsored the bill said it would help with the state’s post-COVID recovery.
“What this bill does is because it is so broad in its scope and coverage, so many potential areas for growth and development and bring so many jobs to New Jersey, it was important that we position ourselves to be ready for the inevitable recovery from the COVID-19 pandemic,” said Assembly Speaker Craig Coughlin, D-Middlesex.
“This legislation in totality will make us a much more competitive state and sends a strong message to everybody post-pandemic, our doors are open for business,” said Sen. Paul Sarlo, D-Bergen.