A possible replacement for New Jersey’s lapsed corporate tax breaks is in the offing, but the key players in the standoff that’s left the state without an effective inducement for companies to locate here indicated Wednesday they remain far apart on a key sticking point.
The proposal — in the form of a bill written by former state Sens. Ray Lesniak and Joe Kyrillos — embodies reforms designed to prevent abuse, including stricter oversight by the state Economic Development Authority. But it lacks a cap on how much the program can award overall, a key change sought by Gov. Phil Murphy.
Murphy and Senate President Steve Sweeney, a fellow Democrat with whom he’s sparred over the fate of the incentive programs, were both on hand Wednesday at a press event at Newark Liberty International Airport. And they were asked about the reform proposal, which according to news reports has been shared with key officials in advance of a formal public release.
“We believe strongly, and I think the academics and the evidence around the country and around the world suggest caps are smart,” Murphy said. The first-term chief executive has sharply criticized the expired programs, which committed the state to $9 billion in tax credits to companies that took part in the EDA programs.
Murphy’s insistence on a hard overall cap keeps him on a collision course with Sweeney, who asked Lesniak and Kyrillos to draft the bill.
“The governor doesn’t get everything exactly the way he wants it,” Sweeney said. “Compromise means, we compromise. But if it’s, ‘This is my way or the highway,’ well, it’s the highway.”
Murphy said he welcomes much of what’s in the new proposal, including measures that toughen accountability. The governor commissioned a task force that’s investigated the prior programs and uncovered approvals by the EDA based on falsified applications.
Murphy also noted that, although it lacks an overall award ceiling, the new proposal does incorporate limits within individual categories of incentives. “I like what we put forward, which includes caps at each of the categories, I might add, as well,” he said.
Also on hand Wednesday in Newark was Assembly Speaker Craig Coughlin, the third in the triumvirate of state Democratic leaders in New Jersey. Did he see a chance to broker a compromise?
“These things are alchemy to some extent. This is not pure science,” he said. “If it was, it would be a lot simpler. And so, in order to provide for that, I think we’re going to have to have flexibility in many areas of the bill, and caps is probably one of them.”
Lesniak, who also played a key role in the formulation of the now-lapsed economic development incentives, has been a sharp critic of the governor over his call for a cap. During an interview Wednesday, he again said having an overall ceiling on incentives just limits growth and options and is counterproductive to the effort to lure firms.
“It’s a big investment to decide where you’re going to move your company,” he said. “They’ll just cross New Jersey off the list, if we have a hard cap on the entire program.”
The former Democratic lawmaker said that’s why the reform bill he drafted with his one-time Republican colleague leaves that decision to the EDA.
“There’s no overall cap because that wouldn’t make any sense,” he said. “Because these incentives produce billions of dollars of revenue for the state. Why would you want to cap additional revenue coming into the state treasury?”
Any reform plan will need both the Legislature’s and the governor’s approval. For now, New Jersey remains without any major corporate tax incentive program.
