State economic development
subsidies 2008-12Less than $500,000 $500,000 - $1.2 million $1.2 million - $3 million $3 million - $15 million More than $15 million
Source: Analysis of data from Good Jobs First’s Subsidy Tracker
New Jersey has given some $1.9 billion in economic subsidies to companies of various sizes over the last five years in an effort to get them to relocate to or expand within the state, according to data from a national nonprofit policy research group.
That’s not necessarily a good thing, contend Good Jobs First — which on Thursday released a report titled “The Job-Creation Shell Game” and has made economic subsidy data for all the states available on its Subsidy Tracker website — and New Jersey Policy Perspective, a nonpartisan nonprofit organization studying state issues.
The report says that a number of states, including New Jersey, and metropolitan areas across the country waste billions of dollars every year giving out economic development subsidies to entice companies to move from one state or one area to another. The study contends that money would be better spent to create new jobs.
“What was long ago dubbed a Second War Between the States is, unfortunately, raging again in many parts of the country, and New Jersey is one of the leading participants,” said Greg LeRoy, executive director of Good Jobs First and principal author of the report. “The result is a vast waste of taxpayer funds, paying for the geographic reshuffling of existing jobs rather than new business activity. By pretending that these jobs are new, public officials and the recipient companies engage in what amounts to interstate job fraud.”
The report cited New Jersey specifically, saying the state “has doubled down on both job piracy and job blackmail payoffs, continuing to lure firms from New York City — many of them Wall Street firms that were likely to come anyway.”
A spokeswoman for the New Jersey Economic Development Authority, which administers most of the subsidies — grants, loans and tax credits or rebates — did not reply to a request for comment.
“Engaging in this kind of race to the bottom may look like a modest boost to New Jersey’s jobs numbers, but it’s not sound policy for two main reasons,” said Gordon MacInnes, NJPP president and a former state senator. “First, there is no other effort being emphasized by New Jersey to grow new jobs in the state — the only arrow in the state’s quiver is to pass the tax obligations of businesses onto the backs of individual taxpayers. And second, we are increasingly seeing New Jersey companies using supposed offers from other states as leverage to obtain tax breaks for staying put — even if they truly had no intention of leaving in the first place.”
To cool down the job wars, the report recommends that states stop subsidizing companies for existing jobs that are treated as “new” simply because their location has changed and stop recruitment activities designed to steal jobs from other states. It also suggests the federal government give a small amount of economic development aid to states that no longer engage in job piracy.
Some of New Jersey’s subsidies have been controversial because they have gone to companies moving from one municipality to another within the state – for instance, Panasonic is getting a $102 million Urban Transit Hub Tax Credit for moving from Secaucus to Newark.
An analysis of subsidy data from 2008 through 2012 from Subsidy Tracker shows incentives went to at least one company in 87 of the state’s municipalities. The only county that got no help was Cape May. The most money went to Newark – 15 companies got 18 subsidies totaling more than $500 million. The largest individual subsidy, though, was a 2011 $261 million Economic Redevelopment and Growth Program tax rebate to the struggling Revel Casino in Atlantic City.
To see details of subsidies for businesses within a community, click on it. If more than one business within a municipality got an incentive, clicking on the link within the box will take you to a spreadsheet listing all the subsidies. There are explanations of all the programs at the EDA’s website.