Gov. Phil Murphy spoke Wednesday at 1776, an incubator facility in Cherry Hill, to detail the legislation behind his proposed overhaul of New Jersey’s tax credit incentive programs. — Courtesy: Edwin J. Torres/Governor’s Office
By Joshua Burd
With less than four weeks to go until New Jersey’s tax incentive programs expire, Gov. Phil Murphy on Wednesday unveiled a bill to establish new subsidies for developers and businesses that would include annual caps on awards and requirements tied to union labor.
The 83-page bill — which covers five tax credit programs with a combined annual limit of $400 million — provides new details about a proposal that Murphy first highlighted last fall. The proposal includes replacements for the Grow New Jersey and Economic Redevelopment and Growth programs that will sunset on June 30, along with new tax credits tied to venture capital funding, brownfields redevelopment and historic rehabilitation.
The bill also comes amid an investigation into the state’s current incentive programs by a task force appointed by Murphy and clashes with fellow Democrats about the future of the subsidies. While the incentives are popular for their role in driving investment to cities such as Newark and Camden — and for saving many of the state’s outdated commercial properties — Murphy has blasted the volume of tax credits awarded under his predecessor, Gov. Chris Christie.
“To be clear, many good companies and many good people played by the rules and used the incentives program the right way,” Murphy said during an event at 1776, an incubator facility in Cherry Hill. “We value each of them and they should know that New Jersey is better because of their presence in our state.
“So, I am not here today to debate whether we have a business incentive program. We should and we will. Rather, I am here to talk about what kind of business incentive program we must have.”
The governor’s bill offers new guidelines about his proposed New Jersey Forward and New Jersey Aspire programs. NJ Forward would replace Grow New Jersey as the main subsidy for companies proposing to create or retain jobs in the state, with a base annual award of $2,400 per job and the opportunity to unlock bonus amounts.
Meantime, NJ Aspire would replace ERG as a key source of gap financing for major redevelopment projects, according to Murphy’s proposal. The base amount of an award would be 12 percent of the total project cost, with bonuses available if the project meets criteria such as bringing a supermarket to a food desert or providing health care to an underserved area.
The combined value of all credits approved under New Jersey Forward and New Jersey Aspire would be capped at $200 million and $100 million annually, respectively. Projects under both programs must meet certain affirmative action and prevailing wage requirements, which essentially mandates union labor.
The proposals come amid budget negotiations with powerful state lawmakers and a looming battle with those who are against wholesale changes to the incentive programs. Meantime, Murphy’s task force is now reportedly targeting companies tied to the powerful South Jersey Democratic leader George E. Norcross III, among others, who received large incentive packages under Christie and are now facing scrutiny about their applications.
The governor’s new package of incentives is anchored by a proposed Innovation Evergreen Fund, which he says is “designed to supercharge venture capital investment into Garden State startups.” The fund would leverage tax credit auctions of up to $60 million annually to help lure investors, who would also pledge to commit private capital alongside their purchase.
It was unclear Wednesday how top lawmakers in the state Senate and Assembly had received the proposal. But in pitching the programs, Murphy also noted that the options would “give businesses tremendous options to stack incentives in a smart way.”
“This isn’t about qualifying for one incentive or another,” he said. “NJ Aspire, for example, will work best when it can be paired with either a Brownfields credit or a Historic Preservation credit. Or, perhaps, both. And, NJ Forward will attract the fully scaled corporations that will mentor our startup community through the Innovation Evergreen Fund.
“This is how we will create good jobs not just at the businesses who receive an award, but for the men and women of the building trades who will construct them, the doormen and janitors who will operate them, and the warehouse workers, and so many others, who are in the trenches every day, rebuilding our economy,” he added. “We will ensure recipients honor prevailing wage laws, and we will provide a bonus for those who sign project labor agreements and hire union labor.”