January 9, 2021Reading Time: 5 minutes
On Thursday, January 7, 2021, New Jersey’s Governor Murphy signed the economic recovery bill establishing tax credits (see below). AIA New Jersey’s Historic Preservation Representatives Michael Calafati, AIA and Michael Hanrahan, AIA, along with Executive Director, Joseph Simonetta, Hon AIA, CACE; were the main force in including the historic tax preservations credit.
Murphy signs bill reviving New Jersey’s controversial tax incentive programs
By Katherine Landergan
01/07/2021 12:53 PM EST
New Jersey Gov. Phil Murphy on Thursday signed into law a sweeping, multi-billion-dollar bill that revitalizes the state’s controversial tax incentive programs after years of intense debate and investigations.
“I know getting to this moment has been long and arduous and not without its bumps, but I thank everyone — progressive allies, grassroots community organizations and stakeholders up and down the state who stayed with us every step of the way,” Murphy said at a bill signing event in Hamilton Township attended by lawmakers, as well as labor and business leaders.
“One of the things that kept us going was the knowledge that we all have the same result. A stronger fairer and more resilient economic future for our state. Now we have to put these incentives to work,” he said.
New Jersey had been without a major corporate subsidy program for 18 months, ever since the Legislature and governor failed to reach a deal before the previous program‘s expiration date. Lawmakers and Murphy struck a deal in December to award up to $11.5 billion in tax breaks to corporations over seven years.
The new programs include annual caps, something Murphy had long sought, including a $2.5 billion cap over the length of the programs for “transformative” projects, such as an Amazon facility locating to New Jersey. The law also expands the state’s film tax credit program by a couple billion dollars and extends the length of it from six years to 13 years.
Some estimates say the total bill offers about $14 billion in incentives.
The new law includes a litany of smaller incentives, including a program that aids in the redevelopment of environmentally contaminated properties, as well as another program that encourages the restoration of historic buildings.
Murphy said the programs will help small businesses as they recover from the pandemic. The Main Street Recovery Finance Program, part of the overall incentive package, will provide a direct $50 million appropriation for grants, loans and other assistance to small businesses.
Republicans have argued the bill doesn’t go far enough for small businesses that have been ravaged by the pandemic. Business groups championed the new law but also said they’d like to see more done for New Jersey’s mom-and-pop shops.
“We believe this is a comprehensive and balanced plan that comes at a most opportune time, as we work to recover from the pandemic. We are encouraged by the flexibility, depth and richness of the programs,” Michele Siekerka, president and CEO of the New Jersey Business & Industry Association said in a statement after the bill signing. “Going forward, NJBIA will continue to encourage revisits of the programs by our policymakers to ensure there is an appropriate balance of opportunity for businesses of all types and sizes in New Jersey.”
The state’s previous tax incentive programs became one of the most divisive issues in Trenton during Murphy’s first term. An investigation by a task force appointed by Murphy found examples in which companies that either already planned to locate in New Jersey or stay in the state falsely threatened to leave in order to qualify for millions in incentives.
It also found that staff at the New Jersey Economic Development Authority, the agency that administered the now-expired programs and will oversee the new programs, had a culture of “getting to yes” on tax incentive applications and did little to verify corporations’ job creation claims or threats to leave the state.
The probe pitted Murphy against South Jersey lawmakers and Democratic power broker George Norcross, as the task force delved deeply into how the previous incentive programs were designed by relatives and associates of Norcross. Norcross has defended the programs as being key in bringing development to Camden.
The Murphy administration says the new law imposes a number of safeguards to prevent corporations from taking advantage of it, including requiring that CEOs certify tax break applications under penalty of perjury, the highest possible standard. The bill creates a role of an inspector general who is independent from the EDA and will be a permanent oversight body. Moreover, the awards are for shorter periods of time, and for lower amounts per project.
Senate President Steve Sweeney, who attended Thursday’s bill signing, said the new programs are “not a giveaway.”
“This has been talked about by the opponents completely wrong. This is about investing in the state of New Jersey’s future,” Sweeney said. “We went a long time without an incentive program and it didn’t help us. But it brought us to the table to make a better deal.”
Assembly Speaker Craig Coughlin, celebrated the bill for, among other things, offering incentives for supermarkets to move into food deserts.
“The bill allows us to have an incentive program to eliminate the shame of people living in a food desert gives them the opportunity to have healthy and nutritious food and across the state,” Coughlin said.
Murphy said everything contained in the bill had been discussed in some form for the better part of a year. However, he and lawmakers continued to face blowback for rushing the bill through committee right before the holidays. Progressive groups also decried the high award amounts for businesses.
“To those who keep saying that this bill has been ‘out there for over a year.’ No, it hasn’t. A solid $3 billion proposal was switched out for a bloated, meandering $14.4 billion deal at 11:59,” Sheila Reynertson, senior policy analyst for the left-leaning think tank New Jersey Policy Perspective, said in a tweet<https://nam10.safelinks.
The controversy surrounding the programs isn’t likely to go away anytime soon. Regulations will now be drawn up by the state and are subject to comment period, and progressive groups have pledged to continue to give their input.
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By Stacey Ruhle Kliesch, AIA, AIA NJ Advocacy Consultant | Posted in AIA-NJ News, Historic Resources | Tagged: #AIANJHistoricPreservationCommittee, #GovernorPhilMurphy, #HTC, #JosephSimonettaHonAIACACE, #MichaelCalafatiAIA, #NewJersey, HistoricPreservation, MichaelHanrahanAIA | Comments (0)
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