Fine Print: New Jersey Economic Opportunity Act (A-3680)
Legislation would expand and increase financial incentives aimed at spurring growth.
Sponsor: Assemblyman Albert Coutinho (D-Essex)
What it does: The bill expands eligibility for various economic development incentives administered by the New Jersey Economic Development Authority to more areas of the state. By expanding geographic boundaries and lowering eligibility thresholds for these programs, it aims to increase the ability of existing businesses in the state, including small and mid-size companies, to expand their businesses and create and retain jobs.
How it works: The legislation is designed to better match, and, in certain circumstances, surpass financial incentive packages being offered by neighboring and competing states. It does so by expanding areas of the state where businesses can qualify for certain tax credits and reduces the capital investment or employment eligibility requirements for participation in the program. It also provides for bonuses to drive development or redevelopment to “smart growth” areas in the state.
Amount of tax credits: The bill caps the maximum value of the tax credits that can be approved by the EDA at $600,000.
What is driving the bill: New Jersey’s 9.3 percent unemployment rate, which is the fifth-highest in the country. While the state’s job picture has improved in recent months, it figures to be a top issue in this fall’s gubernatorial election and legislative races. The bill also provides additional bonuses aimed at helping to rebuild tourism destinations battered by Hurricane Sandy, a priority of both the Christie administration and the Legislature.
What’s happened so far: The bill appears to be on the fast track in the Democratic-controlled Legislature. Just introduced in January, it was unanimously cleared by the Assembly Commerce and Economic Committee last month and is already up for a vote by the Assembly Budget Committee tomorrow. An identical bill is sponsored by state Sen. Raymond Lesniak (D-Union), the powerful chairman of the Senate Economic Growth Committee.
What’s not to like about the bill: It continues a trend of offering generous tax credits and other incentives to businesses to either remain in New Jersey or relocate here. A study released this week by the New Jersey Policy Perspective found that the state has awarded $2.1 billion in tax breaks to businesses since 2010, a practice that critics say has further weakened the state’s revenue base at a time when budget deficits loom large. The tax incentives have been supported by both the Legislature and Christie administration.
Why clean-energy advocates don’t like the bill: The bill also taps into a clean- energy program fund, which is financed by surcharges on customers’ electric and gas bills. The measure will allow developers to be repaid money they pay into that fund, dubbed the societal-benefits charge, and other utility taxes. Lawmakers and administrations have repeatedly diverted funds from the clean-energy program to help balance the state budget. With another $151 million proposed allocation in next year’s budget by the Christie administration, the total amount of clean-energy funds diverted will rise above $800 million, if the legislation is approved.