Economic progress doesn’t guarantee life, liberty or the pursuit of happiness. But it does create the social, cultural and personal conditions that help to position us as we try to attain our dreams while serving as positive, contributing members of our local communities...
As legislators, it is our responsibility to create plans and to introduce proposals that will help foster a climate to generate broad economic growth for those we are privileged to represent. While I have long supported the creation of tax incentives, we must never forget the needs and requirements of the community that offers those benefits. The key in my opinion is to offer programs that have as their guidepost transparency and accountability, while creating the broadest of tangible economic benefit. Those of us who believe that our tax code can be responsibly used to spur the economy and create jobs must be the loudest voices calling for an accountable, transparent and results-based program.
In today’s climate, every state faces increased competition to expand our economic horizons. That competition comes from our neighboring states and those all across our country and around the globe. And, while the fight for a more affordable and efficient New Jersey remains, we cannot lose sight that reasoned tax incentive policies have a place in the overall construct of our state’s pro-growth agenda.
During my tenure in elected office, I have advanced proposals to create a balanced and fair approach to economic development that looks to foster a hospitable climate for businesses, while maintaining the safeguards that protect New Jersey communities.
Here are some of the highlights of the legislative proposals and principles that I have championed over the years. I still believe these can form the framework for a more defined, open, responsible and economically beneficial tax incentive structure without putting New Jersey at a competitive disadvantage with our neighboring states when it comes to attracting and retaining businesses:
The Time Test. Redefine the current “net positive benefit test” (under the GROW NJ program) that the New Jersey Economic Development Authority (EDA) uses to judge the worthiness of businesses’ application so that it ties directly to the period of time the applicant commits to the project.
Increasing Employee Wage Growth. Businesses receiving incentives under the GROW NJ program must pay prevailing wage rates to all employees that perform building maintenance, custodial or security services. This ensures that companies pay a decent, livable rate of pay to what are often the lowest wage earners in a company.
Permanent Report Card. One of the most consistent criticisms of state tax incentives is that they do not follow up to judge the efficiency and the true impact of the program. I would require a comprehensive written report to the Governor and Legislature on a yearly basis that provides a comprehensive review and analysis of the GROW NJ and Economic Redevelopment Growth programs, the effectiveness of these programs on private sector job creation, and the retention of capital investment. I would further require the EDA to post their report on the internet.
Judging Fiscal Responsibility. This would prohibit the EDA from awarding any economic development subsidy to a business that is overdue more than 24 months on any principal or interest payment on any previous award by the state.
Keeping it Local. Any subsidy of $100,000 or more to a developer must include a guarantee that they would enter into a community benefits agreement in the community of the project’s location.
Diversifying the Pool. 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.
This isn’t an exhaustive list and other proposals I have written in this space can be found by visiting the New Jersey Legislature’s website. That said, plenty of good ideas on this topic can be found elsewhere. Recently, Josh Goodman and Khara Boender, with Pew Charitable Trusts, wrote an article, How States Can Consider and Design Effective Tax Incentives, suggesting three guidelines that states can follow regarding tax incentives. These are:
- Establish principles for designing tax incentives.
- Develop procedures to consider proposed incentives in a deliberative manner.
- Conduct upfront analysis of proposed incentives to forecast their effectiveness.
As stated previously, I believe that our tax code can be responsibly used to grow New Jersey’s economy. However, by ending and not amending our current programs in a reasoned manner, we risk seeing the real and tangible gains made by our tax incentive programs in communities throughout our state swept away in this current political maelstrom.
However, let me be crystal clear on this point. I do not support an indefinite extension of the existing tax incentive programs as currently constructed. The recently released report regarding the New Jersey EDA was troubling in many ways, and pointed out some glaring issues that warrant immediate corrective action. However, the report was also an incomplete picture of the total landscape of our state tax incentive policies and the successes that have been achieved. I look forward to the conclusion of the Attorney General’s report on this matter, and support unequivocally holding accountable anyone who has cheated New Jersey taxpayers through their actions with respect to defrauding our state by illegally gaining access to tax incentive benefits. 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, free from short term political attacks that hold our state’s economic fortunes in the balance.
That’s my take, what’s yours?