ESSEX COUNTY, NJ — New Jersey’s massive, $14 billion tax break plan has officially gotten a thumbs-up from Gov. Phil Murphy. And despite concerns from some opponents, it may mean a big boost for businesses in Essex County struggling in the coronavirus pandemic, some officials say.
The New Jersey Economic Recovery Act of 2020 uses tax incentive programs to help spur the growth of businesses and keep them from leaving the state. It also creates new programs to encourage historic preservation and brownfield remediation.
Some of the tax breaks will give a boost to ailing small businesses, such as the Main Street Recovery Finance Program, which provides $50 million for grants, loans, loan guarantees and technical assistance.
Other tax breaks will make it less costly for companies to place grocery stores in areas designated as “food deserts,” where healthy options are limited by a lack of places to shop.
Some critics have raised red flags about the lack of debate for the bill, which was signed into law only three weeks after it was introduced. But after Murphy gave the green light on Thursday, the law’s supporters offered praise for a wave of economic support that’s expected to boost the economy for much of the next decade. READ MORE: COVID-19 Bills Signed Into Law As NJ Hits Highest Case Total Ever
They included Lt. Gov. Sheila Oliver, an East Orange resident.
“This incentives package will not only help strengthen our economy, but it will help address some of the longstanding inequities faced by the most distressed communities in our state,” Oliver said.
A pair of Essex County lawmakers instrumental in the bill’s passage, Sen. M. Teresa Ruiz and Assemblywoman Eliana Pintor Marin, also gave it high praise on Thursday.
“This is comprehensive legislation which will grow new industries and foster innovation,” said Ruiz, its prime sponsor.
According to Ruiz, the law will create greater investment in New Jersey communities by providing more incentives for businesses to locate in distressed municipalities, build affordable housing and redevelop brownfields.
“This law will help increase access to employment in high-growth industries, drive sustainable economic development and most importantly help our state to recover from the economic impact of the COVID-19 pandemic,” Ruiz said.
Pintor Marin, chair of the Assembly budget committee, said lawmakers worked to develop a “comprehensive piece of legislation” that will put New Jersey on a path to economic recovery post-COVID-19 and beyond.
“New Jersey has been without an incentive program for over a year and a half, and this measure will make our businesses competitive with those in other states again,” Pintor Marin said. “When combined with incentives to invest in technological innovation, developing brownfields, and eliminating food deserts, among others, we can help those struggling and drive the entire state forward.”
Ruiz and Pintor Marin both represent the state’s 29th District, which includes Belleville and Newark.
“These programs are the product of nearly three years of hard work, during which we received input from hundreds of voices on how best to structure our state’s recovery and growth,” Gov. Murphy said.
“I am immensely proud of the result, which will not only provide much needed relief for our small businesses, but will also fundamentally change economic development in our state while creating thousands of high-paying jobs for our residents,” Murphy added.
‘NEW JERSEY DESERVES BETTER’
The sweeping law will revamp a laundry list of programs, including the Film and Television Tax Credit and the Offshore Wind Manufacturing credit. Several existing New Jersey Economic Development Authority (NJEDA) programs have been folded into the legislation as well, including the Angel Investor Tax Credit, the Net Operating Loss Credit, and the New Jersey Ignite Program.
And that’s part of the problem, its opponents say.
The law comes a year after a bitter outcry involving tax incentives given out by the NJEDA. At the time, Gov. Murphy said the state “squandered” nearly $11 billion in tax breaks for corporations, many of which weren’t able to prove they created and retained the types of jobs that they said they would.
Murphy pointed out that the NJEDA’s corporate tax incentive programs saw $8 billion doled out during the administration of his predecessor, Chris Christie.
The governor’s office said the New Jersey Economic Recovery Act creates more safeguards to ensure the tax breaks are a good deal for the state.
“The legislation reforms the state’s two main tax incentive programs, placing caps on the amount of incentives awarded each year, as well as over the life of the programs. The programs, which incorporate many of the recommendations of the Governor’s Task Force on EDA’s Tax Incentives, greatly enhance compliance restrictions to ensure that money is being well-spent and jobs are being created, including the creation of an inspector general post to investigate claims of abuses within the programs.”
But according to Brandon McKoy, president of New Jersey Policy Perspective (NJPP), there’s more than meets the eye when it comes to the massive, 100-page tax break package.
“With a stroke of a pen, New Jersey has chosen to repeat the mistakes of the past by giving away billions of dollars in corporate tax breaks,” McKoy said Thursday. “This is a bloated economic development strategy that has failed to work, not only in New Jersey but in every other state that participates in this costly race to the bottom.”
McKoy said that corporate tax breaks of this scale are likely to shortchange the state Treasury for decades to come.
“These super-charged programs will leave the state with far fewer resources for a robust recovery,” he said. “It will also crowd out revenue in future budgets to invest in proven building blocks of a state economy, like education, health care, child care support, mass transit, and job training.”
Despite its name, there is “little to nothing” targeting small businesses and the state’s economic recovery from the ongoing COVID-19 pandemic in the new law, McKoy charged.
“While a number of laudable reforms and innovative incentives are included in the Economic Recovery Act, its size and scope actually surpass that of the expired programs,” he said. “Simply put, size matters.”
“Instead, the New Jersey Economic Recovery Act mirrors some of the most egregious elements of the previous generation of economic incentives: overly generous tax subsidies for corporations that typically sell them for cash, a program design that favors businesses with the resources to navigate the application process, a deliberate disconnect between the NJEDA and the annual state budget, and a refusal to entertain the idea of a ceasefire agreement with neighboring states. New Jersey deserves better.”
‘BACK ON THE ROAD TO RECOVERY’
Despite the doubts of some critics, there are others in Essex County who believe the law will ultimately be a good deal for the region.
In December, Newark Mayor Ras Baraka said the package will help put New Jersey’s largest city back on the road to recovery from the coronavirus pandemic.
“Cities like Newark require significant development and redevelopment projects that will return revenues to our budget, as well as help our small businesses return to their vibrancy and keep their rightful place,” Baraka said.
Baraka praised “notable programs” such as the Main Street Recovery Finance Program, Brownfields Redevelopment Incentive Program, Food Desert Program and the New Jersey Community-Anchored Development Program, which he said “signify a true commitment to rebuilding and revitalization,” especially in the Black and LatinX business community.
Maplewood Mayor Frank McGeehee said the law will lead New Jersey forward from the pandemic.
“Focusing on supporting our downtown districts, creating jobs and stimulating responsible development are key pillars to continuing to position New Jersey as a leader among states in our country,” McGeehee said.
“This is crucial for our economic recovery and job creation in our towns across the state,” agreed Bloomfield Mayor Mike Venezia.
Irvington Mayor Tony Vauss also said he was in favor of the tax break package. He wrote:
“Amongst the many initiatives created, reformed or expanded by the act, Irvington will undeniably benefit from the creation of new, high-paying jobs, the availability of financing that is used to support commercial, industrial, mixed-use and residential real estate development projects, grants, loans and technical assistance being provided to our small businesses, and expanded access to fresh food.”
“Essex County stands to benefit immensely from the economic recovery and tax incentives included in the New Jersey Economic Recovery Act of 2020,” Essex County Executive Joseph DiVincenzo Jr. said.
“This innovative and groundbreaking initiative will bring more high-growth businesses to our county and create good, high-paying jobs for our residents,” DiVincenzo said.
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