Massive $11.5B business tax break bill quickly advanced by N.J. lawmakers, set for full vote Monday
A bill that would revive New Jersey’s controversial tax incentive program aimed at attracting small and large businesses over the next six years was approved by two powerful state legislative committees Friday, just a few days after a deal was announced by lawmakers and Gov. Phil Murphy.
The full state Senate and Assembly are expected to vote Monday on the 219-page bill, which would set up an $11.5 billion program to update and expand corporate tax breaks. The program expired 18 months ago during a fierce fight between Murphy and his fellow Democrats who control the Legislature.
Just as the three-hour committee hearings for the New Jersey Economic Recovery Act of 2020 (S3294/A4) began Friday, aides read out a brief summary of 10 new amendments —142 pages — that most officials still hadn’t seen more than two hours into public testimony.
State Economic Development Agency CEO Tim Sullivan admitted he also hadn’t seen the final draft of amendments while testifying to the Senate Budget Committee.
“This is a big legislation, it’s complicated, it’s over 200 pages. I know this has been talked about for a long time, but there’s a lot of important minutia,” said state Sen. Declan O’Scanlon, R-Monmouth.
“We’ve had 18 months to deal with this, talk about this, hash it out in public, yet here we are last minute doing so,” O’Scanlon added. “Only in New Jersey can we take too long and vote too quickly at the same time.”
Still, O’Scanlon and other Republican senators who stressed their reservations voted to move the bill out of the Senate committee, with state Sen. Troy Singleton, a Democrat, voting to abstain. It was approved by the Assembly Appropriations committee 7-4, with all Republicans voting no.
“This bill has more transparency and more accountability than any bill I’ve seen in my time in the Legislature,” said former state Sen. Ray Lesniak, a Union County Democrat who helped craft the 2013 version of the bill, and worked with Sens. Theresa Ruiz, D-Essex, and Paul Sarlo, D-Bergen, to create the bill.
At the hearing, some raised questions on how funds to lure or keep businesses would be allocated and suggestions that the tax breaks are too generous. But much public testimony focused on the sudden speed legislators are passing a new program to attract business on the heels of a previous one that was mired in scandal.
A task force appointed by Murphy found that businesses misused some of the $11 billion in tax breaks the state doled out over the last decade, and questioned whether money went to political insiders or was awarded to businesses that had no intention of leaving New Jersey.
The audit led to Murphy urging more oversight, and to revamp the program by focusing on small businesses on Main Street and boosting historically underserved communities.
And as a result of the probe, the EDA will create its own inspector general to ensure applicants are following the rules, and could refer cases back to the agency, or in severe cases, the state Attorney General.
Progressive groups that criticized the previous business incentive program condemned the bill and its fast track to meet what they called an arbitrary Jan. 1 deadline.
“Ultimately, this bill represents a doubling down on the failed strategy of the 2013 Economic Opportunity Act and will weaken our ability as a state to afford our existing obligations and emerging needs — especially as we recover from the COVID pandemic and recession,” said Sheila Reynertson, Senior Policy Analyst of NJ Policy Perspective, a progressive think tank.
“The proposal is not sufficiently targeted to the areas of New Jersey’s economy that will need the greatest support and will weaken our ability to bolster proven economic drivers and pay down our oversized obligations.”
Murphy, who has worked with the progressive group, defended the bill and the size of the new program at his latest coronavirus briefing in Trenton.
“It’s a little bit like we’re describing a painting that we’re painting and we’ve finally unveiled the painting,” the governor said. “And the only thing I can say is it’s probably a larger painting than we would have predicted a year ago. Guess what? We’re in an economic reality comparable only to the 1930s and the 1860s. So it better be bigger.”
“But it’s everything we said it would be and then some,” Murphy added. “It’s capped. It has an inspector general, so it’s gonna be monitored like a hawk.”
As legislators, officials and economists made their way through the bill, the details of the $11.5 billion package were being unveiled.
About $2.5 billion would be geared toward 10 “transformative projects” like large-scale affordable housing, capped at $250 million each. Another $50 million would go to grants, loans and assistance to support Main Street.
About $5 million in grants will be dedicated to helping cities and towns do “comprehensive community-based planning needed to make these investment tools really work for the people who call them home,” Sullivan tweeted earlier this week.
There’s also a $400 million a year package set aside for incentives, including a Brownfield tax credit program that encourages the clean-up and revitalization of vacant or polluted properties, and funds supporting new grocery stores in “food deserts” in low-income communities.
And the bill reforms a program to set tax credits aside for high-growth industries that pay good wages, but with per-job and per-project caps to ensure awards would be significantly lower than previous programs.
It also aims to encourage businesses to locate to urban areas like Paterson, Atlantic City and Trenton.
While New Jersey is reeling from the economic effects of the coronavirus pandemic, none of the programs in the measure are specific to the pandemic. Still, Sullivan noted he predicts some shops would use this money as a band-aid from the pandemic’s effects.
Michael Egenton of the state Chamber of Commerce said that while this “is not the perfect bill... we know the trials and tribulations of businesses on Main Street.” He urged critics to speak to deli shops and dry cleaning shops that are having trouble making ends meet.
“Over the past decade, our region has seen the benefits of what tax incentive programs can do for the depressed areas in the state,” said Cristina Renna, president of the South Jersey Chamber of Commerce. “Certainly not to say previous programs were perfect, but overwhelmingly the benefits outweighed” the consequences.
Media Contact : Sophie Nieto-Munoz | NJ Advance Media for NJ.com | http://connect.nj.com/staff/s_munoz/posts.html
Source : https://www.nj.com/politics/2020/12/massive-115b-business-tax-break-bill-quickly-advanced-by-nj-lawmakers-set-for-full-vote-monday.html