TRENTON – The Senate Budget Committee advanced an economic development bill Tuesday that is designed to reduce the number of tax incentive programs but increase the efficiency and effectiveness of the ones that remain.
S2583/A3680 expands two economic development incentive programs: the Grow New Jersey Assistance Program and the Economic Redevelopment and Growth Grant Program.
The bill phases out the Urban Transit Hub Tax Credit Program, the Business Retention and Relocation Assistance Grant Program and the Business Employment Incentive Program.
In the process, the proposal will take aim at job-creation opportunities throughout the state.
The bill passed with bipartisan support. Most of the committee members were absent from the room at the end of the day by the time the vote was taken because the bill underwent a lengthy period of negotiation and amendments, but it passed with 12 yes votes and one abstention from Sen. Kevin O’Toole.
Despite raising concerns about prevailing wage issues on building maintenance services, Republican Sens. Jennifer Beck and Steve Oroho voted for the bill.
Senate President Steve Sweeney said that among other things, the restructuring of these tax incentive programs will help struggling cities such as Trenton, which in the past often couldn’t make the threshold to qualify for programs but now will be able to do so.
The bill, in restructuring and streamlining the incentive programs, recognizes the different economic challenges in North and South Jersey, Sweeney said. While it is easier for North Jersey to lure business out of New York, in South Jersey businesses are easily lost to Pennsylvania because of that state’s incentive programs, according to Sweeney.
Among other aspects of the bill:
*Prior to the Transit Hub program phase-out, the overall cap on the tax credits to businesses would increase from $1.75 billion to $2.5 billion.
*The Grow N.J. program would become the state’s primary business attraction program. Its $200 million tax credit cap would be lifted.
*Among other things, a requirement of a minimum of 100 new or retained jobs would be changed for a number of jobs applicable to the business in question;
*And the current $5,000 tax credit per year for each job would be replaced with a $1,500 to $5,000 tax credit per year for each job.
*The ERGGP would be the state’s sole redeveloper incentive program, scaled to readily close project financing gaps and build public infrastructure critical to redevelopment projects while also providing bonuses to achieve public policy objectives, such as bringing fresh produce to urban “food deserts,” and rebuilding tourism destinations that were destroyed due to the effects of Hurricane Sandy.
The value of all credits are not to exceed $600 million, of which $250 million is set aside to qualified residential projects in urban transit hubs, $200 million to those projects in distressed municipalities and deep poverty pocket areas, and $75 million for those projects that are disaster recovery projects and are in any other incentive area.
In addition, the bill targets redevelopment of old, closed hospitals by making them eligible for incentives if 50 percent of the site is still going to be used for a medical purpose.
Also, the bill will target so-called areas of deep poverty and areas in the vicinity of transit facilities.
Supporters of the bill included the state Chamber of Commerce, and various labor and business groups. Opponents included environmental groups such as Sierra Club and the N.J. Environmental Federation.
Beck said “We’re incentivizing job growth, rewarding people for creating new jobs, and for keeping jobs in the state.”
Her concern about prevailing wage is that if one tenant of a multistory site benefits from the incentive programs and has to pay prevailing wage for the maintenance, then other tenants – even though not benefiting from the tax incentive programs – will also have to pay that prevailing wage, and she expressed hope that clause could be dealt with before the bill is passed on the floor.