New tax incentives are just one of the items on Gov. Phil Murphy’s wish list that he did not get as part of the budget negotiations — or lack thereof — this year, just as two major programs expired Sunday.
With neither new legislation nor an extension, the Grow New Jersey and Economic Redevelopment & Growth programs administered by the state Economic Development Authority ended as of June 30.
The applications received by the end of the day Sunday will still continue to be assessed by the EDA, and awards can potentially be approved. The EDA has indicated it is also waiting on new incentives that could replace the two programs and allow for approval of any old applications under new incentives instead.
But incentives, along with a millionaire’s tax, a tax on opioid makers and a fee for corporations that put their employees on Medicaid, are all something Murphy vowed to continue pursuing Sunday afternoon, even while signing the $38 billion fiscal year 2020 budget.
Some legislators have been working on some of the tax incentive proposals the governor has submitted, but no progress has been made on many of them.
The governor did, however, sign an increase to the Angel Investor tax credit Sunday, through a bill the Legislature passed June 27.
The legislation increases the amount of the corporate business and gross income tax credits that are available for qualified investments, from 10% to 20% of the qualified investment made by a taxpayer in a New Jersey emerging technology business or holding company that makes a verified transfer of funds to an emerging technology business. It also allows a credit of up to 25% of the qualified investment if the business is in an Opportunity Zone or low-income community, or is certified as a minority- or women-owned business.
The bill made it through the Legislature in 10 days.
In a news conference following the budget signing, Senate President Stephen Sweeney (D-West Deptford) said he wasn’t sure why the governor didn’t sign an extension bill that would give legislators more time to craft the new legislation.
Murphy has said he will not sign the bill, because it would extend a program that, based on findings from his task force on incentives, has proved more beneficial for Camden companies tied to South Jersey Democratic powerbroker George Norcross than for other companies in the state.
New Jersey Business & Industry Association CEO and President Michele Siekerka said the move was a bad one for Murphy.
“The decision to not extend New Jersey’s current tax incentive programs until new programs can be established will prove harmful to our economy as we remain challenged to attract and retain both large and small business to our state,” she said.
“While it is appropriate that oversight and reviews of the tax incentive programs are in place to ensure their integrity and effectiveness, the decision to not have a transitional arrangement to help level the playing field will strike hard at New Jersey’s overall competitiveness. We must remember it is because of New Jersey’s extremely high cost of doing business — which no one can argue — that tax incentives are so critical in the first place. We have already heard from our members that the market for those buying tax credits is dissipating out of concern that credit sales cannot be assumed in this climate. In short, there is no certainty about when the credits will be received in order to consummate sales. It is this chilling effect that hurts the type of companies that need the most assistance, and the ones Gov. Murphy would like to grow — smaller pass-through businesses and entrepreneurial startups.”
Sweeney said Sunday that the governor’s pursuit of caps for the new incentives is especially one he doesn’t support, because it shows little faith in the administration.
“He is 1,000% in control,” Sweeney said, of the Governor’s Office’s powers over the EDA.
And, with the corporate business tax increase from last year set to decrease, “he’s going to have to target something” to make up the loss in revenue, which helped boost the state’s coffers this year, Sweeney said.
The Assembly has said it is working on some of the governor’s proposals, but the Senate has not made any such moves.
Siekerka said the impasse is going to hurt the state’s already-damaged business climate.
“Our policymakers all agree that tax incentives are an important and effective tool in New Jersey’s overall economic development toolkit,” she said. “To not have this tool at its disposal for any length of time will render us even less competitive when we already lag behind the region and the nation in economic growth.”