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After scandal and delays, massive N.J. corporate tax credit bill gets major push, with scant scrutiny

Business groups and labor unions eager for new economic activity during the pandemic support the package. Others have significant doubts.

The New Jersey State House in Trenton on Jan. 21, 2020.
The New Jersey State House in Trenton on Jan. 21, 2020.Read moreTyger Williams / Staff Photographer

In the waning days of 2020, a bill to update New Jersey’s massive corporate tax credit programs is barreling through the state Legislature, 18 months after the previous programs expired amid an investigation into how companies qualified for large subsidies.

The new proposal would create an approximately $14 billion pool of tax credits for businesses, to be distributed over seven years, state Senate Democrats said Friday. But the contents of the 200-plus-page legislation only began to emerge publicly Wednesday evening. And by the time lawmakers met for a pair of committee hearings on Friday — held simultaneously in the Senate and the Assembly — some legislators had not yet seen more than 100 pages of amendments.

Blessed by Democratic Gov. Phil Murphy and by leaders in the Democrat-controlled state house earlier this week, the legislation, the Economic Recovery Act of 2020, is now headed for a full floor vote on Monday. It has drawn a phalanx of supporters from business groups and labor unions eager for new economic activity during the pandemic.

Vocal opponents, meanwhile — including progressive Democratic groups and environmental organizations — are questioning not only the hurried process, but the sheer size of a program that they fear will come at the cost of investment in education, infrastructure, and small businesses.

State Sen. Troy Singleton, a Moorestown Democrat, said Friday that he applauded the work his colleagues put into the bill, but could not “in good conscience” vote to advance it out of committee, opting instead to abstain.

“As I’m still trying to dissect so much of this, there’s still a lot of unanswered questions,” Singleton said during the nearly three-hour hearing held by the Senate Budget and Appropriations Committee, which voted overwhelmingly to move the bill along. Their counterparts on the Assembly Appropriations panel voted likewise.

Concerns over the bill’s speedy path also made for some unlikely allies. Republican State Sen. Declan O’Scanlon Jr., of Monmouth County, said he joined Brandon McKoy, head of the left-leaning think tank New Jersey Policy Perspective, in “indicting this process.”

“I’m going to cast a vote to get it out of committee today,” O’Scanlon said. “But it’s deeply concerning to me that we’re going to vote on extensive, complicated legislation that people haven’t had a chance to digest.”

Sue Altman, a prominent critic of the previous tax credit programs and state director of New Jersey Working Families, said she was surprised to find herself in agreement with O’Scanlon: “We need details before we can have a vote on this, and we should push the floor vote back. It should not happen in 2020.”

The specter of the 2013 Economic Opportunity Act has factored heavily into critiques of the new legislation. The 2013 law passed with broad legislative support and was signed by Republican Gov. Chris Christie, revamping New Jersey’s tax credit programs.

The changes attracted fresh scrutiny under Murphy, who appointed a special task force last year to investigate the design and implementation of the multibillion-dollar programs, and the tax breaks awarded to companies by the state’s Economic Development Authority.

The task force published three reports on how the 2013 legislation was shaped by special interests, as well as alleged deceptions and misstatements companies made in their tax credit applications, and problems in the EDA’s approval process. The investigators issued recommendations for improving oversight at the agency, and recommended that the EDA suspend, terminate, or review $578 million worth of tax credit awards.

Tim Sullivan, who became chief executive of the EDA under Murphy, insisted Friday that the current proposal represents a “new approach to economic development” in New Jersey, aimed at incentivizing the creation of “good-paying jobs.”

The bill contains better anti-corruption safeguards, such as a new inspector general position, Sullivan said, and the tax credit awards to individual companies will be smaller and more targeted than they were in the past.

For small businesses, a new “Main Street investment fund” would make available $50 million for grants, loans, and technical assistance, “with a significant reservation of funds for minority- and women-owned business,” Sullivan said. Specific tax credit programs will support start-up firms, offshore wind energy, the remediation of contaminated brownfields, and bring fresh, healthy grocery options to neighborhoods deemed to be food deserts.

The legislation also requires companies to meet a higher bar when it comes to the benefits they are expected to generate for the state, Sullivan said.

“This bill is a strong recovery and reform package that will position New Jersey to build a stronger and fairer economy, one that invests in innovation, in our communities and our small businesses, and does so the right way, with the protections and oversight taxpayers deserve,” Sullivan said during his testimony to the Senate committee Friday.

State Sen. M. Teresa Ruiz, an Essex Democrat and a sponsor of the legislation, said she would work through the weekend to answer any questions for her colleagues.

“Why is it moving so quickly?” Ruiz said. “Because everyone recognizes the need to do something before the year is out so we can be sure that we take up the next phase of what New Jersey has to be there for: addressing education, addressing economic development, addressing unemployment.”