Several states are rethinking their business incentive programs. Here’s a synopsis of the direction two states are taking.

Connecticut

  • Move to performance-based, pay as you go (or “earn as you grow”) business incentives and away from upfront grants or tax credits
  • Create the CT Grow incentive to allow companies creating 25 or more jobs to retain 25% of their withholding taxes for up to 7 years
  • Emphasize select industries that are “key to the state’s future”
  • De-emphasize business retention incentives
  • Adapt the Small Business Express program into a loan guarantee program, while still engaging in some direct lending for select types of businesses 
  • Increase focus on the Urban and Industrial Site Reinvestment Tax Credit and the Sales & Use Tax Relief Program
  • Provide greater transparency and simplicity 

New Jersey

  • Annual caps for total spending on incentives
  • Greater focus on accountability
  • Incorporation of community benefits agreements and hiring agreements into incentive packages
  • New incentives for startups 
  • Incentives for both brownfields and historic building redevelopment
  • NJ Forward would replace Grow NJ as a jobs-based incentive, that would target certain business activities, include an annual cap on spending, and provide “bonus criteria” for local employment, above average salaries, and location near transit.
  • NJ Aspire would replace ERG (Economic Redevelopment and Growth) as a real estate incentive. It is intended to “support the innovation economy and target urban centers and transit-rich downtowns.” 

New Jersey’s incentive reform conversations are taking place in the context of work by the state’s Tax Incentive Task Force to conduct a performance audit of New Jersey’s past tax incentive programs. 

For sources and more information, please see:

https://www.hartfordbusiness.com/article/decd-commissioner-david-lehman-bares-cts-new-economic-incentives-playbook

https://www.courant.com/business/hc-biz-economic-development-incentives-20200128-gwutyh4uerazdchgio3avibvmy-story.html

https://ctmirror.org/2020/01/30/lamont-offers-two-new-job-incentive-programs/

https://njbiz.com/no-lame-duck-deal-tax-breaks-sources-say/

https://www.nj.gov/governor/news/news/562019/approved/20191121b.shtml

https://www.nj.gov/governor/news/news/562019/approved/20190116a.shtml

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