News Column

Report: NJ Governor Gives Big Tax Breaks

April 1, 2013

Hugh R. Morley, The Record (Hackensack, N.J.)

New Jersey has awarded corporate tax breaks and grants totaling more than $2.1 billion since Governor Christie took office, a rate that has "skyrocketed" from the previous decade, according to a report from a Trenton group questioning the incentives' value in strengthening the state's economy.

The report for release today by New Jersey Policy Perspective, a liberal think tank, finds that the annual amount of subsidies awarded each year under Christie, a Republican, has averaged five times as much as during the decade before he took office in January 2010.

The state awarded an average $52.9 million each month from 2010 through 2012, compared with $10.4 million a month during the 2000-09 decade and $3.9 million a month in the 1990s, the report says.

The $2.1 billion has been awarded to 171 projects, the report says.

"The question for New Jersey lawmakers remains: Is putting all of New Jersey's eggs in the tax subsidies basket the best course of action to create a strong state economy, now and in the future?" the report asks, adding that incentives should be secondary to other economic development strategies.

Reacting to the report, Michael Drewniak, a spokesman for Christie, called New Jersey Policy Perspective a "notoriously biased ... outfit."

"Let's take objective note of the record job growth during this administration concurrent to expansion of our incentive and job-retention programs," Drewniak said.

Among other things, the tax credit programs forgive companies from paying a certain amount of payroll or other taxes based on the number of jobs they create or retain in the state.

Lawmakers are considering overhauling the state's incentive programs. Pending legislation would merge the five biggest programs into two and would boost the amount of money available.

Instead of incentives that come with stringent job-creation requirements, the state has moved toward issuing awards based on the amount of private money invested and the estimated revenue that will be generated.

The programs enjoy bipartisan support in Trenton, with leaders of both parties saying they are a key tool in the fight -- mainly against other states -- to keep successful companies in New Jersey and to lure new ones.

But critics say incentives reward corporations for doing something they would do anyway -- invest as their business demands -- and enable them to play states off against each other, leveraging more and bigger breaks.

The NJPP report argues that Christie's incentive "surge" has done little for New Jersey's struggling economy.

"Despite the aggressive use of subsidies, New Jersey's post-recession job growth lags behind the recovery experienced by the nation and neighboring states," the report says.

The state's 9.5 percent jobless rate is far higher than the national rate of 7.7 percent. And the number of jobs the state has added comes to only 42 percent of the 257,000 jobs lost in the downturn. (The state did add 66,400 jobs in 2012, the most in 13 years.)

Sen. Ray Lesniak, D-Union, who co-sponsored the overhaul legislation and has long pushed for bigger incentives, dismissed the report.

"We are a high-cost state to do business in," Lesniak said. "And some of those costs are just unavoidable: land, the cost of construction and the cost of environmental cleanup.

"We are in competition not only with other states but countries across the world that don't have those external costs," he said. "In order for us to compete we have to have these tax programs in place."

Source: (c)2013 The Record (Hackensack, N.J.) Distributed by MCT Information Services

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