Troy Singleton Offers Possible Compromise On Tax Incentives

In a statement released last week, the Burlington County Democrat put forward a framework for a potential compromise that would allow the existing incentives programs to remain in place but with several reforms designed to make them more transparent and accountable.

TRENTON — The dispute over New Jersey’s soon-to-expire tax incentives programs has been described as a political “death match” with billions in tax revenues and the revitalization of one of the state’s poorest cities hanging in the balance.

On one side is Gov. Phil Murphy and progressive groups who argue the current incentive programs are too rich and overused and should be scrapped and replaced with new ones that are capped and targeted toward businesses in growing sectors and startups.

Opposing them are state lawmakers and business groups who want to keep the existing incentives, which they say have proven to be critical for bringing or keeping businesses in New Jersey, particularly the city of Camden and South Jersey counties like Burlington.

So far there has been little common ground between the feuding factions or willingness to compromise.

State Sen. Troy Singleton, D-7th of Delran, wants that to change.

In a statement released last week, the Burlington County Democrat put forward a framework for a potential compromise that would allow the existing incentives programs to remain in place but with several reforms designed to make them more transparent and accountable.

“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,” Singleton said, listing potential reforms to the existing Grow New Jersey and the Economic Redevelopment and Growth incentives programs.

Grow New Jersey is used to lure and retain businesses and promote job creation, and the Economic Redevelopment and Growth program is designed to reward developers who build in desired locations.

Both programs appear likely to expire next week unless Murphy and lawmakers can come to an agreement on an extension or replacements, although there is also a chance that lawmakers could override a Murphy veto of a short-term extension.

Both the Senate and Assembly voted Thursday to overwhelmingly approve legislation extending both programs for another six months. However, Murphy has promised to veto the measure, citing the findings of an audit earlier this year by the state Comptroller’s Office that found not all the jobs promised from a sampling of companies that received tax credits could be verified.

More recently a task force Murphy commissioned to investigate the incentive programs and past awards concluded that special interests played an oversized role in crafting the credits in 2013, and that several companies linked to influential political power broker George Norcross III benefited from how the programs were designed.

The task force has also alleged that companies such as nonprofit Cooper Health, where Norcross is chairman of the board, and Conner Strong, an insurance brokerage firm that Norcross heads, misrepresented that jobs were in danger of being moved out-of-state in order to boost incentives awards for projects in Camden.

Norcross has bristled at suggestions that companies connected to him broke laws or acted improperly and has filed a lawsuit alleging the task force was acting illegally and targeting him for political purposes. He has also said the incentives and the businesses linked to him have played a critical role in helping to revitalize Camden and that the governor’s actions have endangered that progress.

The governor has yet to act on the legislation to extend the incentives program and it’s possible he could be waiting to try to avoid an override.

Thursday’s votes were 28-2 in the Senate and 64-9 in the Assembly. That’s enough support to override a Murphy veto provided that no “yes” votes defect.

Singleton was among the 28 senators who voted in favor of the short-term extension, but he stressed that he would not support an indefinite extension without reforms.

Among the changes Singleton has proposed are:

  • Strengthening the so-called “net benefits test” used to determine eligibility for Grow New Jersey tax credits to require the benefits to continue for the entire time an applicant commits to maintaining the project and its jobs;

  • Requiring tax credit recipients to pay prevailing wage for employees hired for building maintenance, custodial work or security, and providing incentive bonuses to recipients who sign project labor agreements for construction.
  • Imposing a cap on the awards based on the average per job income;
  • Requiring recipients of tax credits in excess of $100,000 to enter into a binding “community benefits agreement” that could include local hiring requirements, area wage and benefits standards and engaging local businesses for the purchase of goods and services;

  • Mandating new reporting requirements, including a review by a nonprofit, nonpartisan entity on the programs’ effectiveness, annual evaluations of data related to the programs, including state costs, and progress reports by tax credit recipients that include information about goods and services supplied by female and minority businesses, small businesses and veteran-owned businesses.
  • A prohibition on awarding incentives to nonprofits that don’t pay state taxes or to a business with an overdue loan to the EDA;

Many of Singleton’s proposed reforms are not new. In fact, the same stricter reporting and evaluation requirements were part of legislation he penned in 2015 when he was a state assemblyman. That bill was approved by both chambers of the Legislature but wound up being conditionally vetoed by then Gov. Chris Christie.

Others incorporate some of the ideas Murphy has championed in the new incentive programs he has proposed, including community benefits agreements, prevailing wage requirements and project labor agreements. He also supports creating a new incentive program within EDA dedicated to encouraging venture capital investment in New Jersey-based startup businesses.

“It’s my belief that this could be the basis of compromise between the competing ideas of scrapping the whole thing and keeping the status quo,” Singleton said Sunday.

Whether Murphy would be willing to enter into such a compromise is unclear. During a Monday afternoon news conference in Newark, the governor reiterated his criticism of the existing programs and promised to veto the extension measure.

“Our current system of incentives ... was designed by a few to benefit a few. Its flaws have been made abundantly clear,” Murphy said. “Its awards are grossly out of line with what our competitor states provides and those states had been eating our lunch in economic terms before we got here. The current system is unfocused and does not target high-growth industries or promising locations. It robs us of our abilities to invest in our people.”

He said the current programs’ shortcomings can’t be ignored but he also said he hasn’t acted yet because he still hopes to convince legislative leaders to agree to hold a vote to install his proposed new incentives, including those targeting growing sectors and others to encourage brownfields redevelopment, historic preservation and venture capital investment.

“There’s an opportunity between now and June 30 to get this right,” Murphy said. “I hope naively between now and June 30 we can find common ground.”

Singleton, who is considered one of Senate President Stephen Sweeney’s and Norcross’ allies in the Senate, has agreed that reforms are needed but that the existing programs should not be discarded.

While Camden has been the largest beneficiary from the changes to the incentives made in 2013, the incentive awards have also widely been credited with creating and retaining thousands of jobs in Burlington County from projects such as Destination Maternity’s Moorestown headquarters, Lockheed investments in its Moorestown office and factory, and Burlington Stores’ Florence headquarters development.

Singleton stressed that cooperation and compromise is required to improve upon the existing programs and correct their shortcomings. “If not, we risk the real and tangible gains made by our tax incentive programs in communities all throughout our state swept away in this current political maelstrom,” he said.

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