The recommendations on how New Jersey should structure its economic development incentive programs, issued last week by a special legislative committee, have a lot for businesses to like, said NJBIA Vice President for Government Affairs Chris Emigholz.
He singled out recommendations that called for no cap on economic development programs as a whole, targeting high growth industries, using incentives more broadly across the state, incorporating workforce development, and increased transparency on the effectiveness of the programs.
But while there are plenty of ideas on how to structure the programs, what’s really needed is action to put programs in place. New Jersey has been without its main economic development incentive programs since July 1, and the Murphy administration and lawmakers have remained at odds on how to replace them.
NJBIA is open to new ideas to stimulate economic development but is extremely concerned about the impact this lack of incentives will have on the state’s long-term economic outlook. As Emigholz put it, “The bottom line is that we need the reauthorization of a comprehensive tax incentive program very soon so critical job-creating projects around our state are not left languishing and stalled.”
The bipartisan Senate Select Committee on Economic Growth Strategies (SEGS) released its report Feb. 7.
The biggest issue is whether or not to cap how much New Jersey can commit to incentives. NJBIA strongly supports the report’s recommendations of no annual overall cap but using an enhanced net benefit test to make sure the program does not overcommit resources.
“If a net benefit test shows that the state is benefiting, then why would we want to cap success?” Emigholz said.
The cap idea is in response to criticisms of the previous programs being overly generous. NJBIA and others have pointed out that the commitments do not accurately reflect the size of the programs because they are contingent upon companies meeting their job and investment obligations and are spread out over numerous years.
Emigholz said the association also supports targeting high-growth projects and industries but would like to see the manufacturing target broadened beyond just “advanced manufacturing.”
“The report rightfully requests the removal of some onerous aspects of the previous programs, but some new ideas that sound good could go too far in creating new burdens on businesses in a program that is supposed to be reducing those burdens in the first place,” Emigholz said.