Trenton – Today’s hearing by the special Senate committee reviewing tax incentives revealed that only $400 million in credits have actually been distributed – not the $11 billion figure used by critics – and that many businesses have not received their promised credits for 2018, Senator Bob Smith, the chair of the Select Committee, and Senator Joe Pennacchio, the panel’s vice chair, said today following the hearing.
“We learned today that the $11 billion figure is inaccurate and that the true cost of the Grow NJ and ERG tax credits issued to date is really less than $400 million,” said Senator Smith. “The misleading figures are harming future economic investments and job creation. We also learned that the failure to distribute 2018 credits already approved and certified is putting jobs and businesses at risk. A true accounting of the incentive programs must include the real numbers.”
The $11 billion figure is a total compilation of incentives from five different programs going back to 1996 and includes cancelled awards and credits awarded but not being distributed. Three of the programs expired more than five years ago. The distribution of tax credits from the two more recently expired GROW and ERG programs will occur over many future years, if they are distributed at all, Senator Smith said.
Also, business representatives told committee members that businesses awarded incentives last year are still waiting to receive them from the EDA, putting them at risk of financial failure and job loss, an increased danger for small businesses that operate on a tight margin, Senator Pennacchio noted.
“The state made a commitment to these businesses and it is built into their financial plans,” said Senator Pennacchio, who asked the EDA to provide a listing of the stalled tax credits. “The state’s credibility is on the line at the same time the businesses are put on the brink. We must work expeditiously to make sure that grants are in compliance and get businesses the money they are owed.”
Senator Smith also noted that, with the expiration of the state’s last two programs, New Jersey may be one of the only states without incentives.
“This leaves us at a competitive disadvantage at a time when economic competition among the states is fierce,” said Senator Smith. “It’s like fighting a war without weapons.”