Governor Phil Murphy has issued a conditional veto of S-3901, returning the bill to the Legislature with recommended changes to reform the state’s tax incentive programs. S-3901 would have extended the Economic Opportunity Act in its entirety to January 31, 2020, seven months beyond its sunset date of June 30, 2019. Due to that sunset, New Jersey is currently without a tax incentive program to encourage investments in economic development. The Governor views the State’s current incentive regime as flawed and subject to abuse.
The recommendations outlined in the Governor’s conditional veto would replace the current tax incentive. In their stead, the Governor has asked the Legislature to concur with his conditions, which include the following five new initiatives:
* NJ Forward – This jobs-based program would provide credits to companies engaged in high-growth industries, U.S. businesses creating a Northeast headquarters, foreign businesses creating a U.S. headquarters, and major job retention projects.
* NJ Aspire – This program would encourage investments in commercial, residential, and mixed-use projects through a place-based gap financing program.
* Brownfields Redevelopment Program – This program would augment EDA's Brownfields Loan Program, promote more remediation projects, and increase job creation.
* Historic Preservation Tax Credit Program – This program, modeled after the National Historic Tax Credit program, would partially reimburse developers who revitalize income-producing historic buildings.
* Innovation Evergreen Fund – This fund would be designed to boost venture capital investment into Garden State startups.
The Governor’s alternative proposal would cap the combined total annual value of the incentives at $400 million. The legislation provides flexibility for the state to award additional tax credits for certain transformative projects, including for projects that deliver food sources to food deserts as designated in consultation with the Departments of Agriculture and Community Affairs.
Hoping for a compromise with the Governor, Senate President Steve Sweeney indicated that he intends to consult with former State Senators Joe Kyrillos and Ray Lesniak. The Senate President has called them ‘the architects of all of the incentive bills over the last two decades.’ Former Senators Lesniak and Kyrillos have already met with the Governor’s staff to discuss incentive reform.
As discussions continue, at this time, the Senate President does not intend to move toward an override of the Governor’s conditional veto. We will keep you posted.
Contact: Jon Moran, Senior Legislative Analyst, email@example.com, 609-695-3481, x121.