N.J. lawmakers, governor agree and disagree on stimulating the economy

Shopping centers wouldn't have to pay an extra 2.5 percent fee to help subsidize affordable housing when they build in New Jersey. Pharmaceutical giants with a major presence in the northern part of the state could pay fewer corporate taxes.

Film studios such as NBC would qualify for more tax credits. Builders could see their permits approved far more rapidly. Investors in biotech start-ups would get tax breaks.

Small businesses would better weather unprofitable years with new changes in the tax code, while corporations could be persuaded to stay with money from a new $50 million fund.

These are just some of the ways corporations came out on top during a legislative cram session this month, but whether the bills will become law without further changes remains in doubt.

Gov. Christie, a Republican, said in his State of the State speech last week that he would support economic incentives only in the context of a balanced budget, and his office said that he was concerned the Legislature had not found a source of funding for the measures. Still, the governor said he would call for a rollback of personal and corporate tax rates when he proposes the budget in February.

How to boost the economy has been up for debate in the Statehouse lately, as New Jersey joins states around the country in trying to advocate for business in the face of massive budget shortfalls that are expected to result in less aid for schools, health care, and social programs.

Florida Gov. Rick Scott promised this month to phase out the state's corporate income tax, while leaders in Iowa are looking at cutting corporate income and commercial property taxes. In New York, Gov. Andrew Cuomo vowed in his first State of the State address that he would use corporate tax breaks to make the state more business-friendly.

Meanwhile, a commission appointed by Missouri Gov. Jay Nixon recently recommended that the state cut tax-credit programs to save $220 million a year. New Mexico Gov. Susana Martinez has called for cuts to the film-production tax-credit program to save money.

And lawmakers in Illinois last week approved corporate income-tax hikes of 45 percent and personal income-tax increases of 66 percent to offset a $15 billion budget shortfall.

Referring to Illinois in his State of the State speech, Christie said, "Is that what we want for New Jersey? No. New Jersey intends to remain the leader, not only in turning around the national trend of out-of-control spending and taxes, but in finding the path to growth."

Gaining consensus on how to improve the battered economy has not been easy. Consider a proposed overhaul of the state's affordable-housing policy, which business organizations told Christie would make New Jersey more attractive for development.

A state appeals court in October invalidated revised rules by the state Council on Affordable Housing and gave the state five months to come back with new ones. The Christie administration said in court papers filed last week that it might not meet the deadline.

In an order released Wednesday, the court told the state "to immediately comply" with its directive from last fall and submit biweekly reports on its progress.

Rewriting the rules could become unnecessary if Christie signs into law a housing bill that passed both houses of the Legislature last week and gained the rare support of both advocates for businesses and low-income residents in need of housing. The governor is expected to veto it in the next few days, having voiced support for an earlier version of the legislation that passed the Senate last June.

Businesses liked the bill because, among other things, it would eliminate COAH as well as a 2.5 percent fee on commercial development. Most towns would see their housing obligations drop under the state-mandated housing quotas in the legislation.

A recent letter to Christie signed by associations representing builders, shopping centers, and businesses said a workable housing policy is a "critical component" of efforts to make New Jersey more attractive for investment and job growth.

Christie did recently sign into law a bill - passed with no opposition - to expand a tax-credit program to encourage businesses to stay in or move to the state, at a cost of up to $18.6 million a year.

Yet leaders in the Democratic-controlled Legislature, where all 120 seats are up for grabs in November, have been criticizing Christie over the last week for not signing other business-friendly bills as they continue pounding the theme of economic development.

Democrats insist their legislation - which in many cases has bipartisan support - will get people back to work in a state where the unemployment rate fell slightly to 9.1 percent and employers shed 16,300 jobs in December, according to figures released Wednesday.

Fiscal estimates have not determined whether their proposals would bring in enough money to offset the immediate loss of revenue, and it is uncertain how the state can pay while also protecting the programs Democrats have derided Christie for cutting in the current budget.

For example, a bill to restore and expand the film-production tax credit, which was suspended in the current budget, would cost up to $45 million - enough to offset reductions last year in the earned-income tax credit for low-income workers.

And a change in the tax code approved by lawmakers allowing people to offset gains in one business-related category of income against losses in another, and to carry forward losses in one year for up to 20 years, would cost about $400 million. That's almost equivalent to last year's municipal-aid cuts, which mayors blame for rising property taxes.

"If we give businesses the ability to do better in New Jersey, we will create jobs, we will create more income, and if we create more income, government will be able to pay its bills," said Assemblyman John Wisniewski (D., Middlesex).

Wisniewski, also chairman of the New Jersey State Democratic Committee, has gone on the offensive over the last week, accusing Christie of putting the economy on the back burner.

"In one breath he'll criticize [Democratic lawmakers] for being anti-business, and in another breath he'll criticize us for being too pro-business," said Wisniewski.

Christie sounded a theme of fiscal austerity in last week's speech, signaling he will trim funding for Medicaid in the next budget and saying the state must continue examining "the amount and structure of municipal and school aid programs."

But he hailed the Legislature's new focus, saying, "You know the debate has changed when my friends across the aisle propose legislation highlighting the need for tax cuts to stimulate economic growth. A year ago, they were advocating tax increases."