Gov. Phil Murphy’s administration had for months been laying the groundwork for the ambitious economic master plan it unveiled Oct. 1.
“The big focus was getting ready for the launch,” Tim Sullivan, CEO of the New Jersey Economic Development Authority, told NJBIZ in a recent interview.
The plan had taken baby steps until then — in the weeks leading up to the announcement, Murphy frequently touched upon what he said was a need to shift away from the reliance on tax credits, which had been awarded to the tune of $8 billion over the past eight years.
Under former Gov. Chris Christie, lawmakers vastly expanded the tax credit programs with the enactment of the New Jersey Economic Opportunity Act of 2013, which created the Grow New Jersey Assistance Program and the State Economic Redevelopment and Growth Grant Program.
Murphy said he wanted to rein in the programs of the prior administration and use tax credits as part of a broader plan.
To that end, the proposal calls for a new program called the New Jersey Forward Tax Credit, which would cap the number of credits the state awards and focus instead on high-growth, high-wage industries.
“I think Forward seeks to maintain the best features of the Grow NJ program, but brings it a little more in line with what other states are doing. It brings it a little bit more in line with what our fiscal capacity to the executive program is,” Sullivan said.
“A lot of it absolutely requires a partnership with the Legislature around authorizing either new programs or amending old ones,” he added.
Another program, the New Jersey Evergreen Fund, would need legislative action. Through it the state would auction off tax credits and use the proceeds to partner with venture capital funds for a 50-50 investment in state-based startups. About $250 million would come from the auction of tax credits and another $250 million from private venture capitalists.
New Jersey Aspire, a proposed gap-financing program to fund redevelopment of underutilized or abandoned properties, also would require legislation, as would a historic preservation tax credit program to finance the revitalization of historic buildings, Sullivan said.
The Murphy administration has already gone ahead with some Legislative-backed action, such as a pilot program for free community college, part of another tenant in the plan called Investment in People.
In late September, Murphy announced 13 community colleges will take part in the state’s first free tuition program, slated to have 13,000 participating students. The 2019 fiscal year budget includes $25 million for the program.
Sullivan is part of a New Jersey contingent currently on a nine-day trip to Germany and Israel, joining Murphy and other senior administration officials to make the case for foreign businesses to invest in the state and build a footprint here.
But the trip, sponsored by the nonprofit Choose New Jersey, is hardly the first effort under Murphy for the state to project its presence abroad.
On Oct. 1, Murphy and representatives from 14 Latin American countries got together in a meeting facilitated by the Statewide Hispanic Chamber of Commerce of New Jersey, Sullivan said. They included Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Paraguay, Peru and Uruguay.
“There’s enormous opportunities to be had,” with the state’s Hispanic population and its connection to Latin American business and governments, Sullivan said.
Another plus is the access to New York City, where many of the diplomats for these countries are based.
Exports and imports between Latin America and New Jersey result in billions of dollars of business each year.
In addition to the chamber, Wesley Mathews, the director of the EDA’s newly established Office of International Trade and Investment, also helped broker the meeting.
“That’s his job, to help be the relationship manager for the diplomatic community,” Sullivan said. “Diplomatic and international relations representatives, foreign representatives from our trading partners — that’s an important piece of the equation too.”
And over the summer, Murphy held a dinner with European Union officials in New York City that was organized with the German Consulate, said Choose New Jersey President and CEO Jose Lozano.
Sullivan said that Germany’s booming sector in offshore wind energy presents a great opportunity for New Jersey.
That was borne out during the Germany trip when wind energy company EnBW Energie-Baden-Württemberg AG said it plans to open an office in Jersey City with its national subsidiary EnBW North America Inc. by the end of the year.
Also, Israel’s cybersecurity market and startup economy, which Sullivan called “the envy of the world,” is another potential opportunity.
“The governor, having been the ambassador to Germany, he’s got an extensive network of connections and relationships in Germany that we’ll be harvesting and mining to the extent we can,” Sullivan said.
Choose New Jersey, the private, nonprofit marketing arm of the state, just tapped Nicola Michels, a 15-year veteran of the German American Chamber of Commerce, to serve as its envoy in promoting the state’s business and investment opportunities across Western Europe.
Meanwhile, the EDA and Murphy administration plan to roll out a series of proposals through the executive branch.
First among them is Access, a 12-month pilot lending program that will have a total cap of $15 million to provide financing to small businesses.
And Sullivan said he wants the EDA to push ahead with efforts to streamline the bureaucracy that makes it more difficult for businesses to set up shop in New Jersey.
“This isn’t about changing rules,” Sullivan said. “It’s about doing a better job, making it easier for projects to comply and get their permits in a more organized, 21st-century kind of way. So using technology, using a better process. And that’s something that [Chief Innovation Officer] Beth Noveck is going to play a big role in.”
Noveck’s hiring, announced in August, is itself a key part of the master plan. Sullivan said he envisions a paperless permitting process, where applicants can set up online portals and fill out the necessary forms via laptop or mobile phone.
“It’s using technology and better processes and more coordination to enable more projects to get the approvals that they deserve faster,” he said.