Biggest Business Incentive Overhaul in State History Wins Final Approval
At 80-plus pages and more than a year in the making, the Economic Opportunity Act offers a surprisingly laser-like focus on one thing: jobs
New Jersey state lawmakers have given final legislative approval to what some are calling the biggest overhaul to the state’s corporate incentives system in history. This, despite the lack of a spending cap on the total award, making it impossible to predict the cost to the state.
Yesterday afternoon, senators quickly and nearly unanimously consented to a conditional veto of the New Jersey Economic Opportunity Act of 2013 -- a bill that streamlines and expands access to tax credits for businesses that create jobs and make capital investments in the state. With approval granted by the General Assembly on Tuesday, the bill now moves to Gov. Chris Christie’s desk for his expected signature.
The 82-page bill took 14 months to wind its way through Trenton. Along the way it encountered bitter opposition from environmentalists, foes of big government, members of the majority party, and even the primary senate sponsor himself. Last spring, it passed both houses in forms too different to be reconciled and, after months of negotiations and the addition of enough amendments to double its length, it met the governor’s conditional veto pen before finally passing both chambers this week.
But the drama didn’t end there. On Wednesday, one day after pushing the act through the assembly, primary sponsor Al Coutinho (D-Newark) suddenly resigned. Yesterday morning, the circumstances surrounding his resignation grew clearer when the attorney general’s office announced charges that the 44-year-old chair of the commerce and economic development committee had stolen funds from his charitable foundation and filed false disclosure statements. Before the announcement, Coutinho, who suffered from cardiac arrest this spring and withdrew his petition to run for re-election last week, had already pleaded guilty.
Fortunately for its supporters, the news didn’t affect the bill’s final outcome. Minutes before yesterday’s vote, primary senate sponsor Raymond Lesniak (D-Union) told reporters that Coutinho’s plea, and the charges filed against him, didn’t damage the credibility of the bill, which went on to pass his chamber by a vote of 35-to-1.
Lesniak did, however, take the unusual step of railing against his own bill and the changes mandated by the governor.
“This is a flawed bill and the governor sent it back with more flaws,” he said to reporters and in open session.
Specifically, he expressed unhappiness that Christie vetoed a provision that would have required a prevailing wage for construction and custodial workers in buildings housing incentivized companies. He has also made known his disappointment over a mandate that subsidized residential housing developers include at least 20 percent affordable-housing units. Although it seems counterintuitive, the long-time advocate for low-income housing feels the continuation of the affordable housing mandate will deter builders from small, impoverished cities because residential builders have to offset the lower rents they collect on affordable units by charging more for market-rate units. It follows that in low-income cities with small populations, there are too few market-rate tenants who can afford to pay those higher premiums to justify the expense of the project.
He promised to address both of these issues at a later date and urged his fellow senators to approve the bill.
“It’s not perfect but it’s necessary for job creation,” he implored them.
Emphasizing Jobs and Lowering Risk
On its most fundamental level, the bill streamlines the state’s incentive programs by phasing out the Business Retention and Relocation Assistance Grant Program (BRRAG), the Business Employment Incentive Program (BEIP), and the Urban Transit Hub Tax Credit Program while boosting the Grow New Jersey Assistance Program (GROW NJ) and the Economic Redevelopment and Growth Grant Program (ERG). Supporters say that by eliminating the majority of programs that incentivize construction and significantly boosting the GROW NJ program, whose requirements emphasize job creation over capital investment, they’re placing the emphasis directly where it should be: on jobs.