Author: Michael D. DeLoreto

Governor Murphy Signs New Economic Incentive Legislation

Governor Murphy signed into law the New Jersey Economic Recovery Act of 2020 (NJERA), opening a new chapter in the Murphy Administration’s efforts to incentivize businesses to invest in New Jersey and to assist the State in recovering from the economic downturn caused by COVID-19. NJERA’s enabling legislation, almost 250 pages long, creates new economic development programs, amends existing programs, and makes operational changes to the New Jersey Economic Development Authority (EDA). New Incentive Programs NJERA 2020 creates nine new incentive programs: The Historic Property Reinvestment Program provides tax credits for part of the cost of rehabilitating historic properties in this State. Tax credits under this program are capped at $50 million annually for six years. Qualified historic properties potentially eligible for tax credits include those designated on the National Register of Historic Places or the New Jersey Register of Historic Places, by the Pinelands Commission, or by municipalities under certain criteria approved by the State Historic Preservation Officer. The Brownfields Redevelopment Incentive Program provides tax credits to compensate developers for remediation costs of redevelopment projects located on brownfield sites. Tax credits under this program are capped at $50 million annually for six years. Brownfield sites include any former or current commercial or industrial site that is currently vacant or underutilized and on which there...

Congress Reaches Agreement on Additional COVID-19 Relief

On Sunday, December 20, 2020, Congressional leaders announced an agreement on a fourth major COVID-19 response bill. Although the legislative language is being finalized, statements from the parties involved in negotiations indicate the agreement includes focused relief for businesses, individuals, and families. For businesses: Expansion of the Paycheck Protection Program (PPP). The proposal includes more than $284 billion for first and second forgivable PPP loans. PPP will now be accessible to nonprofits, local newspapers, TV, and radio broadcasters. Dedicated PPP set-aside for small businesses and lending through community-based lenders like Community Development Financial Institutions (and Minority Depository Institutions). $15 billion in dedicated funding for live venues, independent movie theaters, and cultural institutions. $20 billion for additional grants under the Economic Injury Disaster Loan Program. Provision of a tax credit to support employers offering paid sick leave. Extension and improvement of the Employee Retention Tax Credit. $82 billion in funding for colleges and schools, including support for HVAC repair and replacement to mitigate virus transmission and reopen classrooms. For individuals and families: A new round of direct payments worth up to $600 per adult and child. $25 billion in rental assistance for families and an extension of the eviction moratorium. Enhancement of the Low Income Housing Tax Credit to increase affordable housing construction and provide greater...

Governor Murphy Issues Executive Order Creating Mandatory Health and Safety Requirements at Businesses

Governor Murphy’s Executive Order 192, issued on October 28, 2020 (the “Order”), requires every business, nonprofit, and governmental or educational entity in the State “that requires or permits its workforce…to be physically present at a worksite” to follow a uniform set of public health measures to slow the spread of COVID-19. The Order becomes effective at 6:00 a.m. on November 5, 2020. The Order mandates ten specific actions that businesses must take: Enable employees to remain at least six feet apart at all times. When employees cannot maintain this distance, businesses must require employees to wear face masks and shall install physical barriers between workstations wherever possible. Require that employees, customers, visitors, and other people entering the worksite wear cloth or disposable face masks while on the premises, in accordance with Centers for Disease Control and Prevention (CDC) recommendations. The only exceptions to this directive are for individuals under two years of age or where it is impracticable for a person to wear a face mask, such as when the individual is eating or drinking or where a service being provided by the employer cannot be performed on someone wearing a mask. Businesses must make face masks available, at the businesses’ expense, to their employees. Businesses may permit employees to remove face masks when the...

A Look at the Nine-Month State Budget Proposed By Governor Murphy

Governor Murphy presented a nine-month budget on August 25, 2020, for the abbreviated State Fiscal Year starting October 1, 2020. Relying on a mix of borrowing, tax increase, and budget cuts, the Governor’s proposal for the nine-month fiscal year proposes $32.4 billion in spending, with a proposed budget surplus of $2.2 billion. Coupled with the temporary three-month budget effective July 1 to September 30, 2020, total spending over the twelve-month period would total slightly more than $40 billion. The Governor’s Budget Proposal estimates that roughly $6.2 billion of funding is required to offset anticipated lost revenues from COVID-19. To make up for that shortfall, the Governor is proposing to borrow $4.0 billion as authorized by the “COVID-19 Emergency Bond Act.” The New Jersey Supreme Court recently upheld the Act as constitutionally permissible under the Emergency Exception of the Debt Limitation Clause. An additional $1.0 billion in tax increases and $1.2 billion in programmatic cuts are also proposed. The two main tax increases proposed include a tax of 10.75 percent on income over $1.0 million and an extension of the Corporate Business Tax surcharge of 2.5 percent. The Budget Proposal does maintain some programmatic spending at levels equal to that of the prior fiscal year and proposes new spending. For example, there are no cuts to...

Explanation of Governor Murphy’s Executive Order 107 Regarding Non-Retail or Manufacturing Businesses

Governor Murphy issued Executive Order 107 on March 21, 2020 (the “Order”), which requires the closure of all non-essential brick-and-mortar retail businesses, and requires all New Jersey residents to remain at home or at their place of residence unless engaging in one of nine exempted activities. Order at ¶ 2. One of the exempted activities permitting travel within the State is when a person is “reporting to, or performing, their job.” Id. However, and as it relates to this exemption, the Order requires that “all businesses or non-profits in the State, whether closed or open to the public, must accommodate their workforce, wherever practicable, for telework or work-from-home arrangements.” Order at ¶ 10. In the event that the functions of a particular employee or employees cannot be performed through a telework or work-from-home arrangement, the Order allows those employees to be at the place of employment, but the business or non-profit must make its “best efforts to reduce staff on site to the minimal number necessary to ensure that essential operations can continue.” Order at ¶ 11 (emphasis added). The Order specifically identifies certain types of employees that may need to be physically present at their place of businesses. These include the following: Law enforcement, fire fighters and other first responders; Cashiers or store clerks;...

Governor Murphy Proposes the Fiscal Year 2021 Budget

Governor Phil Murphy presented the outline of his spending plan for Fiscal Year (FY) 2021 to the State Legislature on February 25, 2020. The FY 2021 Budget proposes total revenues exceeding $42.7 billion (a 4.3 percent increase from FY 2020), and $40.8 billion in total appropriations (a 2.2 percent increase from FY 2020). An additional $1.6 billion is dedicated for surplus and $300 million is directed into the State’s “rainy day” fund. If enacted as proposed, this would be the largest budget in New Jersey history. One of the biggest expenses is the annual payment to the State’s pension system; a proposed total of $4.9 billion for FY 2021. If funded at this level by the Legislature, the contribution to state pension system would consume 12 percent of all state appropriations. This contribution is still only about 80 percent of what is actuarially required. Additional priorities for the Governor include increases to the state education funding formula by $336 million; another $132 million for NJ Transit; creating the Garden State Guarantee to provide two years of tuition free higher education; funding for lead service line replacements; and expanding eligibility for the Earned Income Tax Credit Program and the Pharmaceutical Assistance for the Aged and Disabled and Senior Gold programs. The Governor proposes to pay for...

Highlights from the Swearing-In of the 219th Legislature and Governor’s State of the State Address

The 219th Session of the New Jersey Legislature started on January 14, 2020 with the reorganization of the Legislature and the Governor’s State of the State Address. Legislative Reorganization The General Assembly welcomed seven new members, with Democrats still retaining a significant 52-28 majority. Speaker Craig Coughlin (D-19) retained his post for another two-year term, as did Majority Leader Louis Greenwald (D-6) and Minority Leader John Bramnick (R-21). The State Senate is also controlled by the Democratic Party with a 25-15 majority. Senate President Steve Sweeney (D-3) became the longest-serving Senate President in New Jersey history, starting his sixth term as leader of the Senate. Senator Tom Kean (R-21) returns as Senate Minority Leader for another term. In their respective speeches, legislative leaders struck similar messages of unity, compromise, and improving the quality of life for all residents. Senate President Sweeney focused on school funding, higher education, water quality, and the need for improvements to New Jersey Transit. Speaker Coughlin and Majority Leader Greenwald highlighted their priorities which included water quality, as well as tax reform and affordability, behavioral health, and food insecurity. Assembly Republican Leader Bramnick took a different approach and specifically addressed cooperation, and condemned hate and violence at all levels. He did, however, put forth a proposal to cap legislative spending increases...

Budget Matters, Incentives, and Cannabis Will Be This Summer’s Hot Topics in Trenton

The Summer is here and the halls of the Legislature are quiet, but three topics that controlled much of the debate in Trenton this year are expected to drag into the Fall: the state budget, economic incentives, and cannabis. Fiscal Year 2020 Governor Murphy signed the Fiscal Year 2020 budget on June 30, avoiding a government shutdown, but not ending the debate on taxes and spending. After the Legislature sent the Governor a budget that did not include a millionaire’s tax, corporate responsibility fee, and tax on opioid manufacturers, the Governor line-item vetoed several appropriations and signed an Executive Order authorizing the State Treasury to place in reserve approximately $235 million in state appropriations. In 2016,Governor Christie took similar action when his Administration froze approximately $100 million in spending as the state health benefit plan design committees considered cost reductions. Prior to the July 4th holiday, the Murphy Administration announced the full list of spending items placed in reserve. The funds will only be released after the Treasurer certifies that certain revenue objectives are met, meaning this issue will linger for several months. Economic Incentives Also on June 30, the State’s two main economic incentive programs, the Grow NJ Assistance Program (GROWNJ) and the Economic and Redevelopment Growth Grant (ERGG) Program, expired and new applications...

NJ Department of Health Issues Alternative Treatment Center Request for Applications

The New Jersey Department of Health issued a Request for Applications today that would license up to 108 Alternative Treatment Centers (ATCs) for the cultivation, manufacturing, and dispensing of medical marijuana. Unlike the currently licensed ATCs, this call for applications does not require a licensee to be vertically integrated. The Department will, instead, issue endorsements for the various functions: cultivation, manufacturing, and dispensary. In total, the Department will seek up to 24 cultivation endorsements, up to 30 manufacturing endorsements, and up to 54 dispensary endorsements. Licenses will still be issued regionally, with up to 38 licenses available in the northern and central region, and 32 licenses in the southern region. The number of endorsements by region is as follows: Northern Region Cultivation endorsements: 8 Manufacturing endorsements: 10 Dispensary endorsements: 20 Central Region Cultivation endorsements: 8 Manufacturing endorsements: 10 Dispensary endorsements: 20 Southern Region Cultivation endorsements: 8 Manufacturing endorsements: 10 Dispensary endorsements: 14 Applications will become available on July 1, 2019 and will be due on August 15, 2019. A pre-submission webinar will be hosted by the Department on July 16, 2019. Please contact us should you have any questions about the endorsement and application process.

Four Things to Watch After Legislature Cancels Votes on Marijuana

To the dismay of advocates and the cheers of opponents, the New Jersey Legislature canceled its scheduled votes on a three-bill package to legalize marijuana for adult use, expand the State’s medical marijuana program, and expunge the records of certain marijuana offenders. For the time being, New Jersey will not become the eleventh state to legalize cannabis for recreational use. But with legislators still committed to moving the issue in the future, here are four things to watch in the coming months. Will the Governor Take Action to Expand the State’s Existing Medical Marijuana Program? Marijuana is legal for medical use in New Jersey, and the State’s medical program has seen a rapid expansion under the Murphy Administration. Under the current framework of the “Compassionate Use of Medical Marijuana Act,” the Governor has the authority to permit more alternative treatment centers (ATCs) in the State, and to continue to expand the list of qualifying medical conditions that marijuana can be prescribed for. Governor Murphy and his Department of Health did a call for applicants in August 2018, and issued permits for six new vertically-integrated ATCs. The Governor expressed his desire to expand the medical marijuana program aggressively if legislation did not move forward. Administration officials have walked back the Governor’s statement in order to focus...