Gov. Phil Murphy signed into law a hastily-passed $14.5 billion tax incentive bill Thursday after a process that largely sidestepped public feedback.
The new law replaces troubled tax incentive programs that sunset in July 2019, after a state audit found the Economic Development Authority’s (EDA) oversight of the programs lacking.
A task force launched by Murphy found the old programs lacked meaningful controls to ensure companies who received tens or even more than a hundred million dollars in tax breaks were holding up their end of the bargain.
It also found that some firms linked to South Jersey powerbroker George Norcross received a plurality of awards made under GROW NJ and the Economic Redevelopment and Growth Program, the programs that lapsed in 2019, despite a lack of apparent return on investment for the state.
The new bill includes some reforms on that front, including the creation of an Inspector General within the EDA.
“I know getting to this moment has been long and arduous and not without its bumps, but I thank everyone: progressive allies and grassroots community organizations and stakeholders up and down the state who stayed with us every step of the way,” Murphy said.
Progressive groups that make up the governor’s base opposed the new package, which legislators rammed through both chambers in less than a week and without meaningful opportunity for public comment, taking issue with the $14.5 billion price tag, which eclipses the $8.6 billion in tax incentives the state approved between 2013 and 2019.
“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,” New Jersey Policy Perspective President Brandon McKoy said. “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.”
The measure includes total and annual caps over its six-year lifespan, though the latter are fluid and can be exceeded in any given year.
The vast majority of the $14.5 billion program, $11.5 billion of it, is dedicated to tax breaks for businesses and developers. Another $2.6 billion goes to expand the state’s film tax credit program.
It appropriated $50 million for small business relief amid a pandemic that has sent New Jersey’s unemployment skyrocketing and shuttered many of its businesses. Lawmakers from both parties have criticized that, saying it’d be insufficient to heal the damage done by the pandemic.
“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 job for our residents,” Murphy said.
This story was updated with comment from Brandon McKoy at 11:18 a.m.