Statement by Senator Troy Singleton Regarding NJ’s Tax Incentive Programs

Trenton – Senator Troy Singleton today issued the following statement regarding New Jersey’s tax incentive programs:

“Reforming our tax incentive programs has been a key priority for me since I first entered elected office in 2011. One of the most expansive proposals that I authored on transparency and accountability made it to former Governor Christie’s desk but was conditionally vetoed with changes that, I believed, undermined the intention the bill.

“Those of us who believe that our tax code can be responsibly used to spur the economy and jobs can also fight for accountability, transparency and a results-based program. If not, we risk seeing the real and tangible gains made by our tax incentive programs in communities all throughout our state swept away in this current political maelstrom.

“Let me be very clear, I will not support an indefinite extension of the existing tax incentive programs. However, in the short term I support a limited extension (7 months) of the existing tax incentive programs. I strongly encourage the Governor and Legislative Leadership to work cooperatively to find a solution that allows our tax incentive programs to flourish in a more accountable fashion.

Below are some of the highlights of the legislative proposals and principles that Senator Singleton has championed over the years. Many of these proposals can serve as the foundation for a more transparent, accountable and economically beneficial tax incentive structure without putting the State at a competitive disadvantage with our neighboring states when it comes to attracting and retaining businesses. They are as follows:

  • Amend the current “net positive benefit” test under the GROW program to ensure that the New Jersey Economic Development Authority’s (EDA) determination of whether an applicant business’s proposed project will benefit the state is based on the period of time that the applicant business commits to maintain the project.
  • Provide that a business receiving incentives under the GROW program or the ERG program must agree that all workers employed to perform building maintenance, custodial, or security services at the business facility shall be paid not less than the prevailing wage rate.
  • Require that the EDA to submit a written report to the Governor and the Legislature providing a comprehensive review and analysis of the GROW and ERG programs and the effectiveness of those programs on private sector job creation and retention and capital investment.  The report is to be submitted within three months of the effective date of the bill and every two years thereafter until the final incentive is awarded under the GROW and ERG programs.  The EDA would be required to contract with a public or private not-for-profit, non-partisan entity to undertake the review and analysis of these programs and to prepare the report.  The EDA is to make the report available on its Internet website.
  • Require an enhanced annual evaluation of specific data collection and improved reporting requirements imposed upon the recipient of tax expenditures, the comprehensive presentation of the state costs of development subsidies, including tax expenditures, and review of the specific data and baseline measurements to be collected and remitted in each year that a tax expenditure is in effect, necessary to measure any change in performance indicators for evaluation of the overall benefit of tax expenditures, and a return on investment analysis.
  • Prohibit the EDA or State Treasurer or any current or former employee of either, or any person who has secured information, from divulging, disclosing, examining for any reason other than required in the performance of official duties, or using for their own personal advantage information obtained from the applications submitted to granting bodies pursuant to that act and from the progress reports filed pursuant to that act.
  • Modify the definition of “State tax expenditure” to specify that for purposes of the State Tax Expenditure Report, currently required by law to be transmitted to the Legislature as part of the Governor’s annual budget message, state tax expenditures are those revenue losses attributable to provisions of state tax law which deviate from the generally applicable tax structure.
  • Change the definition of “tax expenditure” to make the definition of tax expenditure used in the Development Subsidy Job Goals Accountability Act consistent with the definition of “State tax expenditure” for purposes of the state tax expenditure reporting requirements as stated previously in item #3.
  • Require that each recipient entity of a development subsidy include on their progress reports to the EDA,  information concerning the recipient’s supplier diversity goals and policies, including amounts paid, during the previous fiscal year for products and services supplied by a female business, a small business, a minority business, or a veteran-owned business. The supplier diversity information provided is to be summarized and included in the annual Unified Economic Development Budget Report, prepared by the State Treasurer and transmitted to the Legislature as part of the Governor’s Budget Message Require that the Annual State Tax Expenditure Report detail instances in which the benefit of a particular state tax expenditure exceeds 10 percent of the recipient’s State tax liability.
  • Prohibit the NJ EDA from awarding an economic development subsidy to a business that previously received an economic development subsidy that was a loan or loan guarantee if the payment of principal and interest on the loan or loan guarantee is more than 24 months overdue. 
  • Require the NJ EDA, when granting an economic development subsidy in an amount, either alone or in the aggregate, in excess of $100,000 to a developer, to condition the grant proceeds upon the grantee’s promise to enter into a community benefits agreement with the community upon where the project is located.  A “community benefits agreement” is defined to mean a legally binding contract concerning a specific project which requires contractors and developers of the project to make specific contributions for the benefit of the community including, but not limited to, provisions related to local hiring, area wage and benefits standards, or engaging local businesses for the provision of goods and services.
  • Require the EDA to award bonuses for tax incentive recipients who sign project labor agreements on construction projects related to their application.
  • Require there to be a cap on the average per job award in our tax incentive programs to no more than of 50% of the average job income created or preserved by the incentive. The recipient would agree to allow the NJ EDA to receive from the Division of Taxation in the Department of the Treasury or the Department of Labor and Workforce Development any information or documents that the authority deems appropriate for confirming the combined value of the taxable income reported for each new or retained job related to the award of the tax incentive.
  • Prohibit the NJ EDA from providing or approving a tax incentive to any person or entity unless the person has entered into a tax incentive agreement with the authority in which the recipient of the tax incentive waives the right to apply any portion of the tax incentive to any tax liability incurred during a privilege period or taxable year other than for those privilege periods or taxable years for which the tax incentive was initially issued or approved.
  • Prohibit any non-profit entity that doesn’t pay state taxes from being awarded a tax incentive.