Legislative leaders like the Murphy administration’s idea of creating new incentives to attract and retain smaller businesses and entrepreneurs, but they don’t want to abandon the traditional role of incentives —offsetting the state’s uncompetitive tax structure.
New Jersey has been without its two major economic development programs since Grow NJ and the ERG Program expired at the end of June. Unfortunately, the administration and the Legislature are still far apart on what a new incentive package should look like, despite news reports to the contrary. NJBIA continues to advocate for a workable incentive program that will allow New Jersey to offset the impact of its business tax climate.
“When I read that we’re close, I’m sorry, but we’re not,” Senate President Stephen Sweeney said this morning at NJBIA’s Public Policy Forum. He was participating in a panel discussion with Assembly Majority Leader Lou Greenwald, Senate Republican Leader Tom Kean and Assembly Republican Budget Officer John DiMaio. Renowned political consultants Mike DuHaime and Julie Roginsky moderated the discussion.
“There’s points where I absolutely agree with the governor and am willing to work with him, but there are points where I’m not going to sacrifice my beliefs because I want a strong program that creates investment,” Sweeney said. Those points include not capping the funding amount for the incentive programs and making sure they are at least 10 years.
“If we don’t have an incentive program, who’s coming here? We’re a high tax state,” Sweeney said.
Kean added that a more competitive tax structure would make it easier to attract businesses here with or without incentives.
“Only Connecticut has a less stable tax structure when it comes to the business community than does New Jersey,” Kean said. “We have to have a tax climate that is better than our peers. We have to have predictability over time.”
Greenwald argued that the expired incentive programs, despite the criticisms from the governor and the others, actually functioned pretty well.
“The tax incentive program has been, in my humble opinion, a success,” Greenwald said. “And I define success as a city like Camden.…”
DiMaio pointed to North Carolina as an example of how smarter tax policy can serve as an economic stimulus. The state, he said, set its corporate tax rate at 6.5%, but as it hit revenue projections, it reduced the rate until it dropped to its current level of 3%.
“That type of program, if we could find a way to do it, would help all of us in the long term,” DiMaio said.
For Greenwald, however, taxes and incentives both need to be changed in New Jersey.
“I think everyone on this panel would embrace reform around those programs,” Greenwald said. “For me personally, we should embrace that along with a shakeup of the tax structure that’s fundamentally broken in New Jersey.”