With less than 15 days until the state’s existing tax incentives expire, the governor’s task force on Economic Development Authority incentives released its first report — summarizing the previous task force hearings, providing recommendations on future incentives and revealing that companies’ voluntarily returned money or rescinded tax credits total more than $500 million.
“The aggregate value of the awards that were either voluntarily terminated or may be subject to such suspension/termination actions exceeds $500 million,” the report said.
The task force’s report, which was originally slated to be released earlier this month, was delayed due to a lawsuit brought by lawyers representing South Jersey Democratic powerbroker George Norcross, his business interests and his brother’s law firm, which sought to stop the release of the report.
A ruling by a Mercer County Superior Court judge late Monday allowed the release of the report.
The report focused on the influence of special interests from Camden in helping shape significant portions of the 2013 Economic Opportunity Act, which significantly benefited areas like Camden, Newark and Jersey City.
(READ THE REPORT BELOW.)
The purpose of the report is to help inform the state Legislature in crafting new incentives — something which has not been done yet. The Legislature is, however, pushing a bill through that would extend the current programs for at least another year, rather than allowing them to expire June 30.
Gov. Phil Murphy has said he will not approve any sort of extension, which is setting the stage for a lapse in broad-based tax credits available to companies that seek to move to or grow in the state.
The report also outlines its next steps, including looking at what type of incentives the state should use in place of programs like Economic Redevelopment & Growth and Grow New Jersey, and whether or not the incentives should be capped — a policy the Murphy administration is currently pursuing for its proposed replacements.
Many of the details in the report already have been reported or revealed during the task force hearings, including the influence of a lawyer at Parker McCay, where Philip Norcross is a shareholder.
The task force was created by an executive order from Murphy to identify problems with the existing Grow NJ and ERG tax incentives.
The task force acknowledged it has spent most of its time focusing on Grow NJ to date, but said it will also focus on the ERG program as it continues its work.
Here is what the task force will be looking at going forward:
- Whether the state should consider targeting its tax incentives to businesses that will increase the state’s economic growth by serving national and international markets, rather than local markets;
- Whether the state should shorten the timeframes for receiving tax incentives;
- Whether the programs’ approach to awarding tax incentives in distressed areas sufficiently benefits the residents of those areas and what steps, if any, could be taken to fine-tune New Jersey’s approach to using tax incentives to help;
- Relatedly, whether to revise the method for calculating the net benefit to the state for companies moving to distressed areas;
- Whether capping the tax incentives by setting annual cost limits would improve the programs, and what other options for increasing fiscal protections might be undertaken;
- Whether New Jersey should regularly conduct independent evaluations of the effectiveness of the tax incentives programs;
- Whether the state should limit or prohibit the transfer of tax credits awarded under the programs.
