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New Jersey lawmakers pass multiyear $14B tax break bill

Mike Catalini | Hagadone News Network | UPDATED 3 years, 11 months AGO
by Mike Catalini
| December 22, 2020 12:03 AM

New Jersey lawmakers on Monday overwhelmingly passed legislation authorizing more than $14 billion in tax breaks for businesses.

The Democrat-led Assembly passed the bill 68-11, while the Democrat-controlled Senate voted 38-1 in favor.

The legislation is designed to give an incentive to companies to rehabilitate historical properties, clean up brownfield sites, attract grocery stores to areas without them, invest in innovative projects and more.

Democratic Gov. Phil Murphy on Monday hailed the bill's passage, citing the painful impact of COVID-19 on the state's economy. He's expected to sign the bill, but it's not clear when.

“We're going to need this,” he said. “I'm grateful we're going to have this as a weapon."

New Jersey has been without a business tax incentive program since July 2019 when the previous legislation signed under Republican Chris Christie in 2013 expired.

The legislation comes after lawmakers and Democratic Gov. Phil Murphy had stalemated over incentives, but it follows months of tough economic news stemming from COVID-19. The state's unemployment rate is at 10.2% and businesses shuttered because of the governor's coronavirus public health orders are struggling.

The legislation is massive, at 249 pages, with more than 100 pages of amendment introduced late last week. It also moved at lightning speed with the vote Monday coming just days after Murphy and legislative leaders said they reached an agreement.

Assembly Republicans chafed at the pace the bill was moving.

“The rush is incredible to get this bill through," Assemblymember John DiMaio said.

GOP Assemblymember Serena DiMaso sought to amend the legislation to further help small businesses, but was rebuffed by the Democrat-led majority.

Murphy has said the scope of the economic crisis warranted the size of the program. He also defended the speed of its passage.

“It’s a little bit like we’re describing a painting that we’re painting and we’ve finally unveiled the painting. The only thing I can say is, it’s probably a larger painting than we would have predicted a year ago. Guess what? We’re in an economic reality comparable only to the 1930s and the 1860s, so it better be bigger," Murphy said.

A big difference between the bill passed on Monday and the expired legislation is caps on awards. For example, under the legislation, an incentive aimed at redeveloping brownfields, or potentially contaminated areas, is capped at $50 million annually for six years.

Under the legislation, the awards can be extended for a seventh year if the cap hasn't been met. The Legislature's nonpartisan analysts calculate the bill authorizes up to $11.5 billion in credits over seven years for new incentive programs and up to $2.6 billion of film tax credits over 13 years, along with additional smaller awards.

Another change contained in the bill is the creation of an economic development inspector general to watch over the incentives.

Murphy made redoing New Jersey's business tax credits a central feature of his 2019 agenda. He commissioned a task force after state comptroller and auditor reports suggested companies were gaming the tax credits. The task force said in its final report it found businesses applied for lucrative tax credits saying they planned to relocate out of state but never intended to move, among other findings.

The state attorney general has said he’s investigating after the task force reported its findings, though the results of the investigation haven’t been announced.

Business groups and labor unions have applauded the bill. The progressive think-tank New Jersey Policy Perspective opposed the legislation, arguing it's too big and could give away too much in forgone taxes.

Monday voting is expected to be the final session of the year. It's not a lame-duck legislative session in New Jersey, as it is in Congress, because the state has elections in odd-number years.

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