Gov. Phil Murphy made two things clear regarding tax incentives during his budget address Tuesday:
- He likes incentives (especially the ones he has introduced);
- He would like to cap their value at $400 million annually.
“Tax incentives, transparent and accountable, smartly devised and strategically deployed, have a vital role to play in a focused economic growth plan,” he said.
“They are a needed step in undertaking structural fiscal reform and restoring middle-class affordability. I am a pro-growth progressive. I want the world’s biggest and best technology, clean energy and life-sciences companies to come and expand here — but I am even more committed to the next generation being born and growing here.
“Reforming how we jump-start job creation needs to be about both creating jobs and more wisely investing taxpayer money.”
Incentives would be capped at $400 million per year, and new parameters for accountability and transparency will be implemented, according to the proposal.
These proposals are based on implementing the new tax incentives the governor unveiled in his economic vision last October, which are similar to existing incentives.
NJ Forward would replace NJ Grow and would be capped at $200 million annually. NJ Aspire would replace ERG credits and is capped at $100 million, along with an additional $20 million in brownfield and historic preservation credits.
The governor said his proposed capped incentive reforms that will go into effect, if passed, on June 30. They will replace some incentives that will expire on that date.
Murphy said the state must stop what he feels are excessive incentives.
The governor echoed recent comments from State Treasury Elizabeth Muoio that the state would see a loss of $1 billion in revenue annually for the next three years due to incentive obligations. It’s a number, Murphy said, that will increase, too.
“The simple fact is that we are currently obligated — I repeat, obligated — to corporate tax breaks totaling $11 billion through at least Fiscal Year 2031,” he said.
“Even under a capped program, yes, we would see some loss in corporate business tax revenues. But, it would be predictable and sustainable.”
Read more from ROI-NJ on the budget:
- Murphy, in budget address, said he will save N.J. more than $1B while pursuing new revenue sources
- Governor aims to slice N.J.’s health costs by $800M, but not by cutting benefits
- Murphy, saying N.J. could net $30M, proposes to fine firms of 50-plus workers that don’t offer health insurance (at $150 per employee)
- Business, policy leaders mostly agree: Budget proposal is bad for business