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This year’s budget battle starts early, as Sweeney blasts Murphy

Let New Jersey’s tax incentive programs run out with a replacement?

State Senate President Steve Sweeney thinks that would be a horrible idea. But he’s not afraid to call Gov. Phil Murphy’s bluff on the issue.

“He’s the governor — and, if he wants to see the economy really slow under his watch, that’s up to him,” Sweeney (D-West Deptford) said.

Sweeney was speaking after making remarks at a forum sponsored by Garden State Initiative on Thursday night in New Brunswick.

Most of his thoughts were the same as they’ve been for months — he pledged to not support the millionaire’s tax and to fight to make state employees pay a greater share of their health care benefits.

A new wrinkle, however, came with the incentive programs, currently under attack.

Sweeney, looking for comprehensive reform on so many issues, put incentive reform in Murphy’s lap.

“We put a committee together to look at what kind of incentive program we could put in place,” he said. “But, if he wants to be the state with no incentive programs with what’s going on and businesses start moving out of here, he can explain it. He’s the governor.”

Sweeney repeated his calls to lower the cost of government in the state.

He does not want to do so, however, with total giveaways to big business. In fact, he brought up how he not only supported raising the Corporate Business Tax, he wanted to do so more than the state did last budget season.

“Last year, we raised the CBT,” he said. “(Murphy is) the one that fought us on raising the CBT and actually had us reduce the amount of CBT. He fought me over taxing the C-corps, who were the real benefactors of the Trump tax cut.

“You know, companies went from 35% (taxes) down to 21%. They were the people that got more money for doing nothing. So, why am I going after people that are making so much money and I’m taking it away from them rather than focus on the corporations?”

Sweeney said he knows he was right for one simple reason: He didn’t hear a lot of objections.

“You didn’t hear a whole lot of hollering, because how do you holler when you’ve got so much more money for doing nothing?” he said. “That Corporate Business Tax is going to come in almost double what we projected. And if we hadn’t done the Corporate Business Tax and we had just done the millionaire’s tax, we would have a deficit right now.”

Sweeney’s disagreements with Murphy did not stop there.

Sweeney said he plans to counter the state’s EDA Task Force hearings with some of his own.

“We’re going to form a committee on Monday to examine the (Economic Development Authority) tax incentives and allow everyone to come to speak, unlike what Gov. Murphy’s panel is doing,” he said. “Right now, if you want to defend yourself, you only can submit in writing — you’re not given the opportunity to submit publicly like they’re doing.

“I’m a believer — like when we do budget hearings and we do hearings in Trenton — both sides get to present in front of you. So, we’re going to allow everyone.”

Sweeney said he’s open to modifications.

“We’re going to figure out what’s wrong with the EDA, what’s right with the EDA and how do we fix the EDA,” he said. “I agree these payments are too rich, but it’s because our state isn’t such a bad place with tax policy.

“People don’t want to come here unless you’re putting big tax incentives in front of them.”

If you thought you would have to wait until the end of June to see the real budget battles begin, think again.

The fight is on now. Sweeney said he’s not backing down.

He said he has no choice.

“This state is in serious financial trouble,” he said. “And if we don’t start fixing things now, it’s going to be too late.”

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Norcross responds to reports on tax incentives in Camden

The state’s tax incentives were criticized again Wednesday after two scathing news reports revealed the influential role South Jersey Democratic power broker George Norcross and his allies played in the Economic Opportunity Act of 2013 — the law that revamped the state’s incentives to what they are today.

In a statement Wednesday afternoon, Norcross reiterated a sentiment he and others in Camden have expressed before: Without the tax credits, Camden would not be seeing the influx of jobs and general attention from the business community that it has in recent years.

“As one of the foremost champions of Camden’s renaissance, I join with other Camden leaders to thank WNYC Radio for its lengthy story detailing the massive undertaking to help rebuild Camden’s future,” Norcross said in the statement.

“While much of the story has previously been reported by other outlets, this was the first effort to compile all of the hard work that went into getting the city on its current path forward. The story reported that there is at least $1.6 billion of new private sector investment in a city that was, on its good days, merely ‘struggling.’ Now, government statistics reveal that jobs and graduation rates are up, while crime, unemployment and poverty are down.”

The story highlighted Camden’s overwhelming success in obtaining more than $1 billion in awards, as well as securing the largest tax break in the state, which was awarded to manufacturing company Holtec, according to the joint report from WNYC and ProPublica.

Holtec’s CEO came under fire last year for negative comments about the Camden workforce.

He also told ROI-NJ at the time that the plant in Camden “is costing us millions right now.”

Norcross said the turnaround story Camden currently tells is due to the tools it was given through tax incentives to help boost the economy.

“In its reporting, WNYC highlighted the legislative back-and-forth that reformed the Grow NJ program in 2013 to ensure that Camden, America’s poorest and most dangerous city, was given the tools it needed to attract the private investment needed to rebuild the city’s tax base,” Norcross said.

“But even with the surge of interest and investment in Camden, the record is clear: Over the last two decades and, until recently, Camden and South Jersey have received just a small percentage of the state’s economic incentives, while companies like Goldman Sachs, UPS, Siemens, Forbes, JPMorgan, Prudential, Panasonic and Verizon received eight- and nine-figure tax credits for locations in North Jersey. The $1.6 billion for Camden projects identified by WNYC is just a fraction of the $5 billion recently committed to Amazon if it would move to Newark.

“The fact that private investment is returning to Camden is no accident — it was planned and fought for. As WNYC and other media outlets have reported, the commitment to rebuilding Camden’s future began years ago and focused on the city’s three biggest challenges: improving public safety, reforming education and bringing jobs and economic investment to the city. While the work is not done, by all accounts the city is making real progress. That’s why, when President Barack Obama toured the city, he praised it as a ‘symbol of promise for the nation.’

“As the WNYC story makes clear, this dramatic change wasn’t due to luck or happenstance. It is the product of thoughtful planning and hard work by many people over the course of almost a decade. We are not nor will we be deterred from realizing the full potential of this great city for its residents and businesses. Camden is truly rising.”

Meanwhile, a New York Times article revealed that a lawyer associated with Norcross’ brother’s law firm had influence in crafting the bill, although he was not a lobbyist.

Gov. Phil Murphy released a statement in response to both articles Wednesday afternoon.

“I am deeply troubled by the findings outlined in both the WNYC report this morning and the New York Times story this afternoon,” he said. “Coupled with what we already know about how the tax incentive program operated over the past six years, I believe now more than ever in the importance of the task force I commissioned.

“Until we’ve taken a good hard look at the entire process, I don’t believe we can be sure that all taxpayer money has been properly spent and accounted for. If there was fraud in this program, I expect the task force will uncover it and those individuals will be held accountable.

“Given the breadth of these findings and those so far reported by the task force, I believe anything short of a total revamp of the tax incentive program is a disservice to the hard-working taxpayers of New Jersey.”

Tom Bracken, CEO and president of the New Jersey Chamber of Commerce, said that all the negative stories about the tax incentives will affect the future of the Economic Development Authority, which has been the target of a recent onslaught of negative news, including an ousting of its board chair by Murphy as well as an audit by the Office of the State Comptroller highlighting problems with the very incentives in Wednesday’s news reports.

“It’s a very difficult situation, because there are so many people taking shots at the EDA,” Bracken told ROI-NJ on Wednesday.

“And a lot of stuff that is being aimed at the EDA is anecdotal and has very few facts.”

Bracken said that, in its 42-year history, the EDA has done its fair share to help promote business in New Jersey and kept the state competitive.

“We need to take a pause and we need to take the time to do the EDA programs correctly,” he said.

Bracken also referred to recent news that lawmakers are trying to extend the current programs in order to take a longer time to work on the new programs that Murphy outlined in his economic vision in November.

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With clock ticking, lawmakers could split incentives vote from budget process

Legislators have been discussing an extension for the timeline to vote on and implement new tax incentive programs in the state, separating it from the budget process, as the start of the new fiscal year approaches.

Assemblywoman Eliana Pintor Marin (D-Newark), the Assembly budget chair, suggested as much Tuesday while speaking on a tax incentives panel at an Edison event held by the New Jersey chapter of real estate group NAIOP.

She said the incentives are too complicated to craft and pass in the 60 days left until the state has to finalize its Fiscal Year 2020 budget, and is requesting an extension to set up five new incentive programs proposed by Gov. Phil Murphy.

“We’ve been having a lot of discussions, and I’ve approached (Assembly Speaker Craig Coughlin, D-Woodbridge) … because I would hate to have this jumbled up with the budget,” Pintor Marin told ROI-NJ.

“We’re probably going to have disagreements on the taxing portion of it or whether or not we can find savings. The program is just very complicated. If we’re really trying to help businesses, and we’re trying to reduce some of the red tape, let’s just do two (programs). If I have to work through the summer on this, I will.”

Pintor Marin, who has sponsored one of the incentive bills, suggested focusing on the replacements to the Economic Redevelopment and Growth and the Grow New Jersey programs, which are set to expire on June 30 — the same day the new budget needs to be passed.

The governor has also outlined three other incentive plans, including a brownfields tax credit, historic preservation credit and an innovation fund.

“I think there’s a lot of room to negotiate,” Pintor Marin said.

“The innovation fund, the tax credits for historical sites, obviously the brownfields is such a huge issue especially with my district … so, I think there is a lot of room.”

State Sen. Troy Singleton (D-Moorestown), who spoke on a separate panel at the NAIOP NJ event, said he, too, supports an extension.

“This is something we have to get done right and we shouldn’t rush it by any deadline, so I would be inclined at this juncture to make sure we have enough runway to get this done, so an extension is appropriate,” he said.

“If the legislative leaders and the Governor’s Office can come together — and I think substantively they’re not as far apart as people think — if they come together and we can meet that deadline, then we should. But the devil is in the details.”

Singleton added that he, as a prime sponsor of the economic act in 2013, believes in tax incentives and their use as tools, but that bad actors should be held accountable.

“We need to make sure we have a framework, a policy framework and a statutory and regulatory framework that allows us to hold individuals accountable,” he said. “Not just for the jobs that are promised and economic growth that is promised, but, when they cheat the system, they are also held accountable.”

Several legislative sources, who spoke to ROI-NJ on background since they were not authorized to speak publicly, said legislative leaders have, in fact, been discussing the idea of the extension as recently as Tuesday, and that some key leaders are on board with the idea.

To-date no bills have been introduced, despite drafts existing as early as November for all five programs.

A spokesperson for the governor said entertaining the idea of an extension is unlikely because the legislature has had enough time to pass the needed bills.

“The governor proposed his economic development package in October and his plan is to move forward with that package,” spokesman Darryl Isherwood told ROI-NJ.

“Two audits and a task force hearing have outlined the flaws in the current system and the bottom line is substantial changes need to be implemented.  Gov. Murphy has made reforming tax incentives a central goal of his administration since day one. The economic development initiative proposed last fall achieves that goal. ”

But Murphy’s task force, which will have its second hearing this week to continue investigating alleged abuses of the existing and previous tax incentive programs, has yet to complete its task.

When setting it up, Murphy previously said it’s role was, in part, to, “help provide a roadmap for how tax incentives can be responsibly designed and implemented going forward.”

But some said that can be resolved through amendments if the new incentives have already been set up before the task force is complete with its investigation.

Michael Egenton, executive vice president of the New Jersey Chamber of Commerce, who attended the event, said the chamber would support an extension.

“We have to have an extension,” he told ROI-NJ.

“Tomorrow is May 1. I know what the next five weeks is going to be. That, and if they try to jump-start marijuana, nothing against the Legislature, but when you put that pressure on somebody to do … the complexity and magnitude of something like that, we need time to get all the right stakeholders, involve the Governor’s Office — but this cannot get embroiled in some of the other major legislative issues that are going to happen.”

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Updated: Murphy picks ex-Goldman Sachs exec as EDA chair

(Editor’s Note: This report was updated Friday morning after the official statement from the Governor’s Office.)

Gov. Phil Murphy has chosen a new chairman for the embattled Economic Development Authority.

Kevin Quinn, the founder of the Genki Advisory investment firm and, like Murphy, a former Goldman Sachs executive, was named to replace Laurence Downes in the role Friday morning.

Two administration officials had earlier confirmed the appointment to ROI-NJ. The news was first reported Friday morning by NJ.com.

One administration official, who could only speak on background because they were not authorized to speak publicly, said Murphy and Quinn knew each other at Goldman Sachs.

The official also said Quinn is a Trenton outsider, which is sorely needed at the EDA.

Murphy asked Downes to resign in the wake of an audit of EDA tax incentive programs, and the New Jersey Resources CEO did so — although four other members of the board appointed by Gov. Chris Christie have not.

Morale at the agency has been low due to the Office of the State Comptroller’s audit, which highlighted old problems of accountability at the EDA, one ROI-NJ source said.

“Reclaiming New Jersey’s status as an economic power requires a strong and focused EDA that will work tirelessly to implement the policies our economy needs to grow,” Murphy said in a prepared statement. “Economic development is much more than providing tax incentives to a few big corporations, and requires investing in our diverse people, ideas and businesses. With Kevin’s wealth of experience, I am confident that he will be able to advance our vision for a new economy in which companies flourish and workers prosper.”

Quinn founded his Short Hills firm in 2013 after spending more than 20 years at Goldman Sachs, from 1991 to 2012, including serving in multiple leadership roles working with high-tech companies in the investment banking division.

“I’m honored to be appointed by Gov. Murphy as the new chairman of the New Jersey Economic Development Authority,” he said in a statement. “It is clear that the Economic Development Authority is in dire need of reform, and I am committed to realizing Gov. Murphy’s vision of a stronger and fairer economy, and rebuilding our economy from the middle class outward. I am excited to take on this new challenge and bring my experience to the agency during this critical juncture.”

EDA CEO Tim Sullivan, a Murphy appointee, added: “Under Gov. Murphy’s leadership, the EDA is working to reclaim New Jersey’s leadership position in the innovation economy, and Kevin’s experience and expertise will be invaluable in pursuing that critical goal. I’m thrilled Gov. Murphy has chosen him to chair the EDA board and am looking forward to working with him to advance the governor’s economic development agenda.”

The appointment does not need legislative approval. The EDA’s board includes eight public members, with four named by the governor, two recommended by the Senate president and two by the Assembly speaker. Another five are members of the administration, with alternate public members and nonvoting members. The board currently has several vacancies.

The remaining gubernatorial appointees are consultant Louis Goetting, lobbyist Bill Layton, attorney Thomas Scrivo and alternate John Lutz.

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Why Gottheimer’s charitable deduction plan has new backers — and chance to give N.J. tax relief

U.S. Rep. Josh Gottheimer seemingly has been calling out all the states that get more back from the federal government than they give in taxes since he was elected to his House seat from New Jersey’s 5th District in the fall of 2016.

“Moocher States,” he has called them.

Now, he calls them something else: friends.

Gottheimer, who has never given up in the fight against the $10,000 state and local tax cap that was part of President Donald Trump’s new tax bill that was passed at the end of 2017, is finding a lot more of his colleagues are interested in the issue after a provisional ruling by the IRS last summer hurt New Jersey’s efforts to do an end-around.

The IRS — in what Gottheimer calls a regulatory overreach — blocked the state’s effort to count state and local taxes (aptly named SALT) as a charitable contribution. In doing so, the agency also hurt the 33 other states that have been using this provision for tax relief for other reasons.

On Monday, Gottheimer announced he soon will be introducing the “Preserve the Charitable Deduction Act.”

The act will enable New Jersey to count state and local taxes as charitable contributions, as well as restore similar plans in other states.

“We have some interesting allies in the fight,” he told ROI-NJ. “It’s just not just New Jersey, New York and Connecticut and some of the states that were really affected by the gutting of SALT. It’s all these red states that have been utilizing the charitable tax deduction now for decades.

“You have 33 states that have been utilizing this provision for decades. A lot of them have been getting 100 percent charitable deductions on certain things, such as tuition to private schools. Now, the IRS has said to them, ‘We’re going to cap it out at 15 percent.’ That’s a huge hit for them.

“It’s not just us, in New Jersey, where we passed new legislation, but now all these states that are utilizing it for decades to provide relief to their residents are getting hit, too.”

It’s made for interesting conversations in the past few months.

“Suddenly, I’m talking to some of my colleagues in the Moocher States who just woke up and said, ‘Wait a second, this is going to affect my constituents,’” Gottheimer said. “This is a regulatory overreach from the IRS. That’s why they are in a bit of a jam.

“The IRS now realizes that, if they’re going to take away the charitable tax deduction there, they can’t just pick a New Jersey, they have to go after the other states, too.”

Gottheimer said the crux of the issue is constitutional.

“Simply put, Congress didn’t give the IRS permission to interpret the tax law as they see fit, which they are trying to do by dismantling the charitable tax deduction,” he said.

“Their new, proposed cap is not in last year’s tax legislation — no one told them to do it.”

The impact of the tax bill is being felt in New Jersey this tax season.

Gottheimer estimates the new rules have cost New Jersey taxpayers $668 billion, money that could be put back in the local economy.

And, while this fight seemingly is about individual taxes, you can be sure businesses are watching it closely, too.

Companies that already are struggling to bring employees here — or justify moving here — because of the high cost of living certainly didn’t need this added on to the pile of reasons the state struggles to be affordable.

The New Jersey business community, Gottheimer said, cannot figurately afford having a cap on SALT deductions.

“I’m very concerned about its impact (on the business community),” he said. “Last year, we had the largest outmigration in the country. It’s a huge problem.

“I think we have to do everything to get tax cuts to these folks. And we need to cut unnecessary regulations to help the private sector expand and build in a responsible way.

“We’ve got to find a way to make it more affordable. We’ve got a lot of the right ingredients, but we have to address the cost side of the equation.”

His bill, he said, will help do that. But don’t expect it by tax day in 2019. Gottheimer is aiming to have new regulations in place a year from now.

“What we’re doing now is just building cosponsors,” he said. “I’m visiting with some of my colleagues who I’ve been talking about this now for a couple of months and actually sitting down with them. You have to work with the legislative council doing the actual bill text, which takes time.

“I think this could be a bipartisan piece of legislation and I think it’s going to be a fight going into the next tax season. That’s my goal: to make sure we resolve this and get some certainty for people.”

Another goal: Make sure the bill has bipartisan support, so it is veto-proof. On that, Gottheimer is cautiously optimistic.

“I don’t have that crystal ball, but I think this is one of those things where we can build enough support and put together a bipartisan coalition,” he said. “You’ve got those 33 states, many of whom are not SALT states — so you could see where you can get 218 votes here.”

Gottheimer said he’s sensing he’s on the right side of the argument.

“It’s interesting,” he said. “They put out the provisional rules in August and put out for comment. Usually you go to final rule within 60 to 90 days.

“I think they’ve gotten a lot of negative feedback on this, especially from some of those states that have been utilizing this provision for decades. Now, suddenly, they are raising their hands and saying, ‘You stuck it to them on the tax hike bill, no one said anything about sticking it to us.’”

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Murphy signs law creating state-managed Secure Choice retirement plan

About 1.7 million New Jersey workers do not have access to a retirement plan through their employers.

But that’s going to change.

Gov. Phil Murphy on Thursday signed into law the New Jersey Secure Choice Savings Program Act at the senior center in Saddle Brook.

The plan, which is meant to confront the state’s retirement security crisis by giving workers greater control over their financial future, will give private-sector workers the option to automatically enlist in a state-managed Individual Retirement Account, or IRA.

The act also makes it mandatory for employers with 25 employees or more to partake in the retirement savings program administered through automatic payroll deductions.

“The Secure Choice bill gives private-sector employees a convenient and an efficient way to save for their retirement,” said Saddle Brook Mayor Robert D. White.

Established as part of the bill is the New Jersey Secure Choice Savings Board, which will manage the fund. The board includes the state treasurer, comptroller, director of the Office of Management and Budget, two public representatives, a business trade organization representative and a representative of the enrollees.

Statewide Hispanic Chamber of Commerce of New Jersey Chairman Luis De La Hoz said this piece of legislation is an important step for New Jersey people, as the bill makes it possible to save money for retirement without generating any additional cost for the employer. And this, De La Hoz said, will help small businesses and their owners, in particular.

“Today, New Jersey is taking a bold step toward building the retirement security of millions of residents,” Murphy said to the room of local and state government officials and community advocates.

But he said the bill is three years overdue.

“Former Gov. (Chris) Christie vetoed the 2016 proposal while he was running for president, and I can’t for the life of me figure out why, because this is not a Democrat or a Republican thing, this is a smart thing,” Murphy said.

Murphy said that, after all other expenses, writing another check into an IRA just doesn’t happen for most, so they look to Social Security. But, while it’s a nice safety net, Murphy said, it is not a retirement plan.

“When companies do not offer automatic savings deductions, employees are less likely to save,” said Assemblyman Roy Freiman (D-Hillsborough).

An important point Murphy made sure to make was how a Secure Choice IRA is completely portable, so as residents change workplaces along their career paths, they won’t have to open a new IRA each time.

“We’re facing a retirement crisis,” Murphy said. “The fact is, more and more New Jerseyans are facing the prospect of retirement without adequate savings to ensure dignity throughout their retirements. We must do more.”

AARP has long been lobbying for this bill, since before it was sent through Christie’s administration. Evelyn Liebman, AARP director of advocacy, believes the state took a monumental step to help New Jersey workers enjoy a more secure financial future.

“Secure Choice has now passed twice with bipartisan support in the New Jersey Legislature — and, thanks to Gov. Murphy, the dogged determination of advocates across the state and legislative champions, this time, it’s for real,” said Liebman.

According to AARP, 72 percent of workers employed by businesses with fewer than 100 employees do not have a pension or retirement plan. Additionally, the average Social Security benefit for a 65-plus family is approximately $19,000 a year although, on average, older New Jersey families spend $23,000 a year on food, utilities, and health care alone.

The law was introduced in June of last year, passed by the Senate in February of this year and passed by the Assembly a few days later. It is to take effect immediately, but Murphy said it’ll take about a year and a half to get the Secure Choice Savings Program up and running.

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Murphy, top Dems reach broad agreement on adult-use marijuana

An agreement has been made by Gov. Phil Murphy and top New Jersey Democrats on the  legalization of adult-use marijuana in New Jersey.

Murphy, along with Senate President Steve Sweeney (D-West Deptford), Assembly Speaker Craig Coughlin (D-Woodbridge), Sen. Nicholas Scutari (D-Linden) and Assemblywoman Annette Quijano (D-Elizabeth) jointly announced Tuesday they have settled on a broad outline for adult-use marijuana legislation.

Murphy said the legislation should establish an industry that brings fairness and economic opportunities to the state.

“Legalizing adult-use marijuana is a monumental step to reducing disparities in our criminal justice system,” Murphy said. “After months of hard work and thoughtful negotiations, I’m thrilled to announce an agreement with my partners in the Legislature on the broad outlines of adult-use marijuana legislation. I believe that this legislation will establish an industry that brings fairness and economic opportunity to all of our communities, while promoting public safety by ensuring a safe product and allowing law enforcement to focus their resources on serious crimes.”

Under the agreement:

  • Adult-use marijuana will be subject to an excise tax of $42 per ounce;
  • Municipalities that are home to a cultivator or manufacturer will receive revenue from a 2 percent tax on the product;
  • Municipalities that are home to a wholesaler will receive the revenue from a 1 percent tax;
  • Municipalities that are home to a retailer will receive the revenue from a 3 percent tax.

“This plan will allow for the adult use of cannabis in a responsible way,” Sweeney said. “It will create a strictly regulated system that permits adults to purchase limited amounts of marijuana for personal use. It will bring marijuana out of the underground market so that it can be controlled, regulated and taxed, just as alcohol has been since the end of Prohibition. This plan will also advance important social justice reforms to help reverse the discriminatory impact that drug laws have had on diverse communities.”

The bill calls for a Cannabis Regulatory Commission to govern all aspects of recreational cannabis. The commission will have five members, all appointed by the governor, but two will be chosen from recommendations by the Speaker and Senate President. The commission will also promote all regulations and govern the industry, and will oversee the applications for licensing dispensaries.

“The prohibition on marijuana has long been a failed policy,” Scutari said. “This plan will bring an end to the adverse effects our outdated drug laws have had on the residents of our state. As a regulated product legalized marijuana will be safe and controlled. It is time to legalize adult use marijuana in New Jersey and this is a well crafted legal reform that will advance social policy in a fair and effective way.”

Bill provisions include an expedited expungement process for people convicted of low-level marijuana offenses and a virtual expungement process.

Additionally, there are provisions to ensure broad-based participation in the industry for minority- and women-owned businesses, low- and middle-income individuals, and disadvantaged communities.

Coughlin said he’s proud of the social justice components of the bill.

“The agreement reached to legalize adult-use cannabis is the result of incredibly hard work by many people over many months,” Coughlin said. “Getting to this point wasn’t easy. We talked and we negotiated in good faith, but most importantly, we listened. I want to thank Governor Murphy and Senate President Sweeney for their tireless efforts and willingness to compromise so we could put forth the most responsible legislation possible. I believe this new, regulated industry will help boost our economy, but I’m particularly proud of the critical social justice components included in the bill.”

“After months of discussions and debate, I am proud that we have come to an agreement on a bill to legalize adult-use cannabis,” Quijano said. “We learned from stakeholders and listened to opponents. The final product is fair, responsible and focused on social justice. I want to thank Speaker Coughlin for his leadership in the Assembly and express my gratitude to Governor Murphy and Senate President Sweeney for partnering with us in this daunting endeavor.”

Scott Rudder, president of the New Jersey CannaBusiness Association, said adult-use legalization is the right choice for New Jersey.

“I want to thank Governor Murphy, Senate President Sweeney, Speaker Coughlin, Senator Scutari, and Assemblywoman Quijano for coming together and doing the right thing for New Jersey. The time for legalization has come. The old ‘reefer madness’ myths have been dispelled. We know legalizing recreational adult-use cannabis and expanding medical cannabis in New Jersey will address issues of social justice, help the state’s economy, and create a new, thriving workforce.

“It is time. Time to bring New Jersey in line with other states that have moved ahead with legalization and realized the numerous benefits it brings. I look forward to working with leadership to ensure legislation passes as soon as possible.”

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At EDA audit hearing, lawmakers voice concerns about scope — and why it scrutinized programs no longer in effect

A joint legislative committee hearing Monday raised questions about the state comptroller’s recent audit of incentives administered by the New Jersey Economic Development Authority.

Notably, legislators were concerned by the limited scope of the audit (which looked at just 48 companies out of about 400 that actually have received incentive awards or payments) and the significant weight given to older programs that are no longer in effect (though the awards from those are still being provided, and will for years to come).

State Comptroller Philip Degnan testified Monday and defended the limited scope as intending to provide a thorough analysis in time for the sunset of the Grow New Jersey and Economic Redevelopment Grant incentives in July.

When asked if he thought the report struck a negative tone about business in the state, Degnan said that was not the intent.

The goal, he said, was to simply analyze the EDA’s handling, and ability to handle, incentive programs in a way that holds the state accountable for taxpayer money.

“The report was carefully written to stay in that lane,” Degnan.

That raised criticism from legislators that it was a skewed report — a sentiment echoed by testimony from EDA Chairman Lawrence Downes.

Downes said the EDA is moving in a new direction under CEO Tim Sullivan.

Legislators pointed out the audit did not include the competitiveness of New Jersey as a factor in the programs, or if any companies have in fact violated the rules of the incentive programs.

In the history of the state, Sullivan said, there has been no case referred to the Attorney General’s Office for violations, a point which surprised some legislators.

But there already have been instances of clawing back (getting money back) incorrectly approved incentives either because of a mistake on the company’s part or on the EDA.

“We have clawbacks that happen with some frequency,” Sullivan said.

And the EDA has been working on modernizing the agency.

Sullivan said the agency is implementing a new data and documentation process and will be working with the Department of Labor and the Division of Taxation in the Treasury Department to “triangulate” and verify information provided by companies.

The EDA has taken the comptroller’s report seriously, Sullivan said, but it already was working on some of the issues the audit highlights — and is looking at which issues to address immediately and which need longer-term attention.

The agency also has been less generous about approving incentives, with applications approved reach a total of $400 million in calendar year 2018 — a decrease from previous years.

According to the comptroller’s audit, a total of $11 billion has been approved since the start of incentive programs in the state, but actual awards have only totaled about $700 million.

Sullivan said the problems identified in the audit should be kept in mind as legislators and the governor consider changing the types of incentives the state offers.

Specifically, he said, the state should consider supporting startups and young companies, which are more in need of growing in New Jersey than larger companies.

New Jersey Policy Perspective also testified Monday, saying the state has been too generous with its incentives and that it supports the governor’s proposal to introduce caps on new incentives.

“Some changes made in 2013 were positive — like more stringent standards for subsidies given to corporations shifting jobs around the state,” according to NJPP senior policy analyst Sheila Reynertson.

“But, on the whole, the Economic Opportunity Act greatly expanded the size and scope of these offerings while eliminating several key financial protections for taxpayers and the state of New Jersey.

“New Jersey must restrict corporations’ ability to sell their tax credits. The very idea of a secondary market for tax credits should give the Legislature pause. New Jersey’s tax subsidy program is so overly generous that it enables the sellers to receive far more money in subsidies than they actually owe in taxes.”

For now, the EDA will have 90 days to create a corrective action plan to address the findings of the audit, and the comptroller’s office will follow up again in three years to examine improvements.

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