Joe Kelley is hopeful a new economic incentive program will be in place soon. That’s important for two reasons: New Jersey has been without its two main programs for more than three months now, and Kelley is Gov. Phil Murphy’s Deputy Chief of Staff for Economic Growth, making him the point person on the incentives issue.
Many observers from outside the administration see a standoff between Murphy and legislators. The governor has proposed five new or revised incentive programs to replace Grow NJ and the Economic Redevelopment and Growth program, which expired at the end of June. Legislators have been holding hearings on new ideas for incentive programs, but many have defended the old programs in the face of criticism from the administration.
Nevertheless, Kelley says there are some issues the two sides agree on.
“The things we talk about with the Legislature, whether it’s Evergreen venture capital investments, whether it’s mega projects or transformative projects (like a potential Amazon headquarters), these are all things we agree on,” Kelley said. “There are some thornier things that we’re working through, but overall, we’re very bullish and heartened by the conversations we’ve had so far.”
Kelley was speaking at the NJBIA-State Chamber Meet the Decision Makers event in Princeton this morning with fellow members of the governor’s staff, Chief Policy Advisor Kathleen Frangione and Chief Counsel Matt Platkin.
NJBIA is open to the idea of new incentive programs, including what the governor proposed, but is deeply concerned that New Jersey currently does not have any broad incentive program to attract new companies to the state or keep existing businesses from leaving.
Kelley said Murphy wants to shift the focus on incentives to location and the industry sectors that promise the most growth in the future. A key to the plan is the Innovation Evergreen Fund, which would auction off tax credits to leverage venture capital investment in the state and grow the economy by attracting more successful startups.
“Venture capital is leaving the state in droves,” Kelley said, “and we’re not where we need to be in terms of spurring innovation.”
So what’s the sticking point to getting them enacted? “Where things become a little bit more contentious…is over the caps issue,” he said.
The administration wants to cap the dollar amount of incentives that New Jersey can issue in a year, while some legislators either want no caps or a system that allows for flexibility in how much can be allocated in any one year.
In a broader sense, Murphy wants to use more than incentives to bolster the economy, something Frangione addressed in her opening remarks.
She highlighted New Jersey’s aggressive use of federal Opportunity Zones in New Jersey, which offer capital gains tax incentives for people who invest in companies in designated zones.
The Murphy administration has also pursued numerous educational and workforce development initiatives increase the number of skilled workers. Among other things, a new higher education strategic plan is in the works that will, first, address affordability, but also ensure that what students learn in school will benefit them when they enter the working world.
“The governor continually presses us to make sure there are robust connections between our higher education institutions” and the workplace, Frangione said.