Corporate Subsidies, Open Space Come to Fore at Second Public Budget Hearing

Critics raise questions about NJ’s faltering recovery, lawmakers agree that more transparency needed when awarding corporate incentives

Speaker at second public hearing on Christie's proposed budget held in Collingswood and hosted by Assembly Budget Committee.
The condition of New Jersey’s economy and government efforts over the past several years to generate jobs took center stage yesterday during the second public hearing on Gov. Chris Christie’s proposed budget for the next fiscal year.

Christie’s $33.8 billion budget includes the next installment of a $2 billion business-tax cut initiative that will result in an estimated $660 million in lost revenue during the fiscal year that begins July 1. Christie, a Republican exploring a run for U.S. president in 2016, also bragged during his budget address last month that he’s held firm against tax hikes while working with a Democratic-controlled Legislature.

But Deborah Cornavaca, legislative director of the New Jersey Working Families Alliance, said during yesterday’s public hearing hosted by the Assembly Budget Committee in Collingswood that those policies aren’t working.
She pointed to credit-rating downgrades, an unemployment rate that trails the national average, and an increasing poverty rate as evidence.

“It’s no secret that our economic recovery since the recession never really happened,” Cornavaca said.
She also criticized billions in revenue lost to corporate-tax subsidies that have been offered through the state Economic Development Authority in addition to the business-tax cuts.

“There is absolutely no evidence that the path towards prosperity is paved with corporate incentives,” she said.

Though Cornavaca also testified during the first public hearing on Christie’s budget, hosted on Tuesday by the Senate Budget and Appropriations Committee in Paramus, her comments yesterday drew a much longer and more spirited debate.

Assemblyman Jay Webber (R-Morris) called for more transparency and accountability when it comes to the incentive programs, telling Cornavaca “you are right to highlight these issues.”

Webber said the incentives often benefit the largest corporations, not the small businesses who may also have a compelling need for assistance.

“Tax policy needs to be fair,” Webber said. “And I think that’s a problem.”

But Assemblyman Chris Brown (R-Burlington) told Cornavaca to be careful how she describes the incentive programs. Using the word “subsidy” makes it sound like companies are being handed grants, he said, but the state is offering breaks on future tax bills only if certain benchmarks are met.

“We have to be careful when we use the word subsidy,” Brown said.

But Committee Chairman Gary Schaer (D-Passaic) challenged Brown to explain the difference if the ultimate outcome of the tax incentives means less money coming into the state budget to pay for other priorities.

“The net result of the two (approaches) to me is equal, in the sense the state is not collecting the money, the state is issuing the money, it’s a net loss,” Schaer said. “It would seem to me the net result is the same.”

Schaer also said he believes the current approach to economic growth “is not working.”

“We’re hearing in the loudest and strongest terms that something is woefully amiss,” Schaer said.

In addition to Cornavaca, the lawmakers heard from more than a dozen other residents during the lengthy hearing, which stretched from the morning into the afternoon. The event was one of several being held this month by lawmakers as they begin to more closely evaluate Christie’s budget proposal.

Jack Abgott, a board member from Preservation New Jersey, told the committee members that funding for historic preservation could fall below the amount needed to keep the New Jersey Historic Trust viable.

And sticking with the theme of economic growth, Abgott said historic preservation is something that deserves more attention because it can also stimulate the economy.

“Historic preservation is more than just our heritage,” he said. “It’s actually an economic issue.”

His testimony came as lawmakers are considering legislation to determine how at least $71 million in corporate-tax revenue will be split up to preserve open space, farmland, and historic sites in New Jersey under a referendum approved by state voters last year.

Haddon Heights architect Margaret Westfield said the roughly $1.4 million under consideration for historic preservation is not nearly enough.

“Maintaining our historic buildings is just as important as maintaining our open space,” she said.

Assemblyman John McKeon (D-Essex) told Westfield that the legislation allocating the preservation funds is a “work in progress,” and he thanked her and other witnesses who raised the issue for their input.

“We’re all collectively and in a bipartisan way working on an implementation bill,” McKeon said.

There were also several who made pleas during the hearing for more money for charter schools, saying the funds they currently receive from public school districts for their students do not keep up with costs.

“I know firsthand how vital equal funding is to charter schools,” said Theresa Baylock, the parent of a charter school student from Camden. “Charter schools are public schools too.”

“The charter schools are being penalized in this budget and I need to know why,” said Ann Garcia, executive director of Vineland Public Charter School.

Three more public hearings on Christie’s proposed budget are scheduled for later this month. The Assembly committee’s next hearing will be held at Passaic County Community College in Paterson on March 18. The panel will also hold a hearing at the State House Annex in Trenton on March 24. And the Senate Budget and Appropriations Committee is holding another public hearing on March 25 at Rowan College at Gloucester County in Sewell.

After those hearings are finished, a series of public meetings on the budget will be held in Trenton with Christie administration members appearing before the committees to discuss specific department allocations.

Schaer said yesterday the input from those who testify at the hearings helps guide the way lawmakers will question Christie administration officials when they appear before them.

“They are extremely helpful in terms of this budget process,” Schaer said.
Lawmakers will ultimately have to decide whether to adopt Christie’s budget proposal unchanged or send the governor their own budget bill. The state constitution sets a July 1 deadline for the adoption of a balanced budget.