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State Street: Sources say delay on incentives reform may torpedo additional Lockheed jobs

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Gov. Chris Christie speaking at Lockheed Martin's Moorestown office last week. While Lockheed won a $100 million contract last month related to the U.S. Navy's Aegis combat system, sources say the availability of more incentives could bring another contract — and more hiring — to the company.
Gov. Chris Christie speaking at Lockheed Martin's Moorestown office last week. While Lockheed won a $100 million contract last month related to the U.S. Navy's Aegis combat system, sources say the availability of more incentives could bring another contract — and more hiring — to the company. - (Governor's Office/Tim Larsen)

Gov. Chris Christie was in Moorestown last week to celebrate Lockheed Martin's award of a $100 million contract to continue as the engineering agent for the U.S. Navy's Aegis Combat System.

Beneath the celebration, however, sources say the event highlighted a growing sense of urgency to pass a sweeping overhaul of the state's economic development incentive programs.

Lockheed won the Aegis contract thanks in part to a $40 million Grow New Jersey grant, awarded last year. The contract is expected to help Lockheed keep some 3,000 jobs in South Jersey, according to a press release from U.S. Rep. Rob Andrews (D-Haddon Heights).

Grow New Jersey is one of two incentive programs that would remain under the Economic Development Act of 2013, the highly anticipated legislation that could move next month. But sources say that may not be soon enough for Lockheed and other companies with projects in the offing.

According to reports, Lockheed is in the running for a second defense contract, and two sources say the company is pushing hard for quick passage of the incentives legislation, believing incentives could aid its chances at winning the contract and bringing more jobs to South Jersey. The company declined to comment.

Assemblyman Albert Coutinho (D-Newark) said he's working quickly to finish last-minute adjustments on his bill, which still needs to clear the Assembly Budget Committee before it could head to the full Assembly. The Senate version, sponsored by Sen. Raymond Lesniak (D-Union), is in the same boat.

Last week, State Street reported economic development officials were hoping for an April special session to pass the legislation, but Lesniak urged backers to "chill out." An Assembly spokeswoman said last week no special session has been planned.

Andrew Sinclair, a lobbyist at Princeton Public Affairs Group, said multiple project developers in the state are seeking quick action.

"I think it's fair to say that Lockheed, among others, their circumstances are contributing to the urgency," he said.

Coutinho, however, said he's not focused on individual projects.

"While there are some very high-profile potential projects that are being thrown about, my issue is to make sure that we don't allow our key incentives to run out and not have something else in its place," he said.

Coutinho noted the original Urban Transit Hub program was tailored for BlackRock — a major reason he said the program wasn't successful until it was substantially amended. Ironically, the legislation wasn't enough to stop BlackRock from relocating its headquarters to Philadelphia.

The new legislation has proven particularly tricky not only because of its technical nature, but also because it involves so many powerful stakeholders. Sources say South Jersey legislators are keen to ensure the legislation benefits their region.

Still, proponents on all sides characterize the issue as a matter of when, not if, the legislation passes. Christie already has indicated his willingness to sign it.

Michael Egenton, senior vice president of the New Jersey State Chamber of Commerce, said he hopes the legislation is passed ahead of the budget battle — regardless of whether there's a special session.

"We don't want them to get whirled into the dialogue and discussion and debate of the budget," Egenton said.

Lobbyist says revenue projections
could be a hot button for 2014, too

The political football of last year's budget season was Christie's proposal to cut income taxes by 10 percent — a plank underpinned by a lofty projection of 7 percent revenue growth this fiscal year.

Neither has come to pass, though revenue has rebounded the past three months.

Richard Kamin, a longtime Assemblyman who's now a lobbyist at MBI-GluckShaw, said Christie's revenue projection could become an issue again in the 2014 budget cycle.

"It's an election year, so yes, of course it's going to be an issue," he said. "But I think the governor's revenue team has been pretty accurate, so we'll see how it plays out."

Christie's 2014 budget calls for a 4.9 percent increase in tax revenue.

Kamin said job numbers also are likely to become a factor, though he agrees with the administration that employment numbers — rather than the unemployment rate — is the best window into the labor market.

Michael Affuso, director of government relations at the New Jersey Bankers Association, said it makes sense to expect higher revenue next year, since billions of dollars of insurance claim money will be coming into the state.

"If there wasn't the Sandy situation, I would say yes, it would probably be a reasonable talking point," he said. "Now I don't know. Who knows?"

Building N.J. support for Canadian
oil pipeline to U.S. plains states

Canada's general consul in New York visited the Capitol last week to talk up the potential economic benefits of a massive U.S. pipeline linking Canadian oil fields with American plains states.

John F. Prato said the jobs of some 226,000 Garden State workers already are dependent on trade with Canada, a number that could only grow with the development of oil reserves in Canada's oil sands and construction of the Keystone XL pipeline to carry that oil southward.

"It's good for our economy, the Canadian economy, and we think it's good for the U.S. economy," Prato said.

Specifically, Prato said, companies working in the oil sands are in need of manufacturing, engineering and environmental services. New Jersey's a good place to find those services, he said; it "excels in all three and has had a history in all three."

Prato's office has been holding regional meetings, including one in East Brunswick, for companies that could benefit from working with the firms developing the oil sands.

"I clearly see distinct benefits to New Jersey and the Northeast and to our energy future by the completion of this needed pipeline," said Jim Benton, executive director of the New Jersey Petroleum Council.

Prato and Benton said the pipeline would help wean the United States off Venezuelan oil, giving the nation a more stable energy ally.

The pipeline, however, has caused significant controversy, mostly from environmentalists who worry about the environmental impacts of the pipeline itself and of the continued use of carbon-based fuels.

Prato said Canada is a big believer in green energy, but with the emerging world quickly industrializing, he said there will continue to be strong demand for oil for decades to come. As for the environmental concerns, Prato said Canada shares them.

"That's inherent in our DNA," he said. "We're environmentalists. We identify with the land."

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