It’s been nearly 500 days since Gov. Phil Murphy released his comprehensive economic development strategy, which among a host of initiatives and proposals included a bold, progressive proposal for the next generation of New Jersey’s tax incentive programs.
The governor made a strong case for adopting a new approach to economic development centered on innovation — and designed to reenergize the state’s economy after a decade that saw New Jersey rank 42nd in job creation and 49th in wage growth.
In addition to successors to the then-soon-to-expire Grow New Jersey and Economic Redevelopment & Growth programs, the governor announced proposals for the game-changing $500 million Innovation Evergreen Fund as well as targeted investments in brownfield redevelopment and a historic tax credit program.
In November 2018, the Governor’s Office shared draft legislative language for these programs with legislative leadership — and, over the ensuing year, the governor’s framework was built upon with suggested additions, such as a targeted food desert alleviation program and funding to encourage expansion of anchor institutions, as well as important transparency and oversight enhancements recommended by the Governor’s Task Force.
But, now, despite that progress, it appears that the Legislature is not likely to take up legislation to enact a new incentive program until the spring or early summer — which will be nearly a year after the previous programs expired in June 2019.
While I am disappointed that the Legislature does not seem to share the governor’s urgency to enhance and reform New Jersey’s tax incentive programs, our work to grow the economy, create jobs and revitalize communities continues.
In the short term, that means continuing to make the case, along with our partners at Choose New Jersey, to companies from around the country and around the world that New Jersey is in an unparalleled strategic location with an unmatched workforce and the No. 1-ranked public school system in America. Some of those companies will be disappointed to learn the Legislature has delayed action on a new incentives regime — but, for many decision-makers, incentives are less important than the fundamental value proposition offered by New Jersey. The business media in New Jersey has been reporting regularly since last July on a litany of companies signing leases or moving jobs to New Jersey without incentives.
We have said from the beginning of the governor’s administration that corporate tax incentives should be one tool in the toolkit, in service of a broader strategy. The good news is that, under Gov. Murphy’s leadership, the New Jersey Economic Development Authority and our partners throughout the administration have developed a robust suite of new tools and programs to invest in people, encourage innovation and revitalize local communities.
This winter, the EDA will go on the road across the state updating our partners at the county and municipal levels, as well as the local business community, on these new tools, including:
- An enhanced Angel Investor Tax Credit that provides a 20% credit for qualifying investments in New Jersey startups (up from 10% prior to the governor signing an enhanced bill into law) and a 5% additional credit if the business is women- or minority-owned, or located in one of the state’s 169 Opportunity Zones;
- A $15 million Brownfield Redevelopment Loan program, designed to return legacy industrial sites to productive reuse;
- A $15 million Small Business Access loan program focused on providing access to capital to minority-, women-, LGBT-, veteran- and immigrant-owned businesses that continue to struggle to access capital;
- A $1 million microbusiness loan pilot program targeted to businesses with fewer than 10 employees that contribute great vitality to our communities but who often cannot qualify for “small business” programs;
- A $15 million pool of funding available to support Community Development Finance Institutions in their critical work to support small businesses and neighborhood revitalization;
- Multiple new technical assistance programs to help municipalities, small businesses and entrepreneurs acquire the skills and credentials needed to thrive in the state’s innovation economy;
- The statewide marketing campaign being rolled out by Choose New Jersey;
- A Film and Digital Media Tax Credit that has already become oversubscribed due to a surge in film and television filming (from virtually none several years ago) due to the program’s enactment — film and television production generates significant economic activity and jobs for local industries like food service, construction and security services;
- International business development efforts for 2020;
- NJ Ignite, which provides critical rent support to early-stage New Jersey companies working from one of the 18 collaborative coworking spaces in the Ignite network throughout the state;
- Sector-specific tools for the priority industries outlined in Gov. Murphy’s Economic Development master plan, including offshore wind, life sciences, technology, professional services (including cybersecurity and sports wagering technologies), transportation & logistics, and advanced manufacturing;
- Clean energy financing tools enabled by the state’s reentry into the Regional Greenhouse Gas Initiative, which will accelerate the state’s development of a clean energy economy;
- The 21st Century Redevelopment Challenge, a grant program to assist municipalities in planning for the reuse or redevelopment of so-called “stranded assets” (large-scale corporate campuses or vacant retail);
- New grant opportunities to support cutting-edge research provided by our partners at the Commission on Science, Innovation and Technology.
Durable economic development requires more than incentives — it requires a smart strategy, a comprehensive approach and a broad set of tools. When the governor and Legislature reach an agreement on the right long-term approach to tax incentives, those tools will join a more robust toolkit developed to enhance New Jersey’s long-term competitiveness.
Tim Sullivan is CEO of the New Jersey Economic Development Authority.