NJ already revamps plan to dole out $14B in business tax breaks
TRENTON – Sweeping changes have already been approved for the 7-year, $14 billion tax incentive programs enacted in January.
At least one is directly related to the pandemic, making it a bit easier for businesses to receive credits even if their employees are working from home. But nearly every new incentive program was tweaked in some way in the 213-page bill, which Gov. Phil Murphy signed into law Friday.
Business tax incentives had been allowed to go dormant, in a standoff between the executive and legislative branches as the Murphy administration hired outside counsel to investigate the previous incarnation of the program. The Legislature refused to act on Murphy’s economic development plan until finally reaching a compromise late last year.
It’s already being substantially amended just six months later. Assemblywoman Eliana Pintor Marin, D-Essex, said no bill is perfect in explaining the need for the updates.
“We tried really hard to get everyone a little bit of what they wanted and based on a lot of the COVID restrictions that were presented to us in the last year and a half,” Pintor Marin said. “So, I hope this is the last of it, but I’m sure it’s not.”
The changes provide $10 million for fellowship grants of up to $350,000 to entrepreneurs who open businesses in targeted industries in some cities. They make more small businesses eligible for financing and boost support for offshore wind and film production.
Former Sen. Ray Lesniak, D-Union, who helped negotiate the program’s return, said the changes will include more small businesses that don’t currently qualify. Small businesses with less than $1.5 million in annual gross revenue, rather the current $1 million threshold, will qualify for Main Street Recovery Finance program grants and loans.
“This incentive legislation is a scaled-down and fine-tuned version of the incentive legislation signed into law in January of this year,” Lesniak said.
The new law also expands how historic property reinvestment credits work in Trenton, Atlantic City and Paterson, which were deemed to be “government-restricted municipalities.”
“We really want to see those three cities kind of take the lead next and bloom,” Pintor Marin said.
Businesses with tax incentives to settle or remain in New Jersey have a COVID-related problem: Those credits are in jeopardy if their employees work remotely.
Tax credits now apply for workers whose primary office is at a qualified facility and spend at least 60% of their time there, meaning three days out of five in a typical workweek. Chris Emigholz, vice president of government affairs for the New Jersey Business and Industry Association said that change is welcome.
“The 60% is definitely better than the EDA’s current 80%,” Emigholz said. “We have heard from companies that that still could be a challenge. But we do appreciate the improvement there.”
Laura Gunn, vice president for government relations for the New Jersey Chamber of Commerce, said the economy has changed in the last 15 months and that even the new threshold may be too high.
“Potentially placing more in-person workplace restrictions on the legacy awardees such as the requirement to be in the office 60% of the time could really jeopardize the successful economic development we’ve seen in places like Newark and Jersey City and Camden,” Gunn said.
The new law was approved 38-0 in the Senate and 65-9 with one abstention in the Assembly. The original ‘New Jersey Economic Recovery Act of 2020’ passed 38-1 and 68-11. Democrats and a majority of Republicans supported the bill, but there were some changes in the two votes among GOP members.
Sen. Michael Doherty, R-Warren, opposed the original law but supported the update, as did Assembly members Brian Bergen, R-Morris; John Catalano, R-Ocean; John DiMaio, R-Warren; and Ryan Peters, R-Burlington.
Assembly members Bob Auth, R-Bergen; DiAnne Gove, R-Ocean; Kevin Rooney, R-Bergen; and Brian Rumpf, R-Ocean, supported the original law but opposed the update.