Saying New Jersey’s corporate-tax incentives shouldn’t be subject to annual evaluations, Gov. Chris Christie yesterday rejected a bill that would have stepped up state oversight of the incentive programs.
Christie issued a late-afternoon conditional veto of legislation, which lawmakers sent him in March, that sought to create rigorous yearly reviews of the incentives and not the “more holistic” method of assessment that Christie said he favors.
The bill’s primary sponsor, Assemblyman Troy Singleton (D-Burlington) responded to the conditional veto by saying he was disappointed and that the top priority for policymakers is to ensure taxpayers know their money is being spent wisely.
“As it was all throughout the process of drafting this legislation originally, our responsibility to make sure hardworking New Jersey families can track their tax dollars will remain our first priority as members of the Legislature thoroughly and thoughtfully review the governor’s recommendations,” Singleton said.
The governor’s rejection of the bill is the latest development in an ongoing argument over the tax incentives, which have been a signature element of Christie’s economic-growth strategy since he took office amid the recession in early 2010.
A key Senate Democrat has also introduced a measure a measure that would place a moratorium on the tax breaks until there is more transparency, and some Republicans have also begun to question the effectiveness of the incentive programs.
In all, more than $5 billion in potential tax breaks have been awarded to companies by the Christie administration since 2010, including more than $2 billion since the incentive programs were revamped with help from Democratic lawmakers in 2013.
Offered through the state Economic Development Authority, companies can secure a break on their future tax bills if they meet certain employment and investment requirements.
Yet despite the significant potential tax breaks that have been awarded by the Christie administration, New Jersey’s unemployment rate still ranks near the bottom among U.S. states and, at 6.5 percent, is more than a full percentage point above the federal jobless rate.
Given that record, lawmakers have sought to get more information about the effectiveness of the incentives, including repeatedly asking for a report that is supposed to be released publicly by the state Department of Treasury under a 2007 law, which stipulated that any company receiving at least $100,000 in incentives must provide details annually on how many jobs have been created, whether they are full- or part-time jobs, how much they pay, and whether they include health benefits.
That report, however, has yet to be compiled because Treasury officials say doing so would violate federal IRS privacy rules.
Singleton’s bill -– which called for the specific goals of each tax incentive to be spelled out, among other requirements — passed the Senate last year and won final approval by the Assembly in March.
But Christie took issue, in his conditional veto yesterday, with the bill’s requirement for an annual review of the tax incentives.
“I cannot support the annual evaluation of certain tax expenditures in a vacuum because these projects often have long durations that will not inure benefits until project completion,” Christie wrote.
He sent the bill back with a series of modifications that removed much of the original language, saying the changes would “take a more holistic view of a project or investment rather than conjuring a series of performance indicators that may skew the actual benefit assessment.”
[related]Lawmakers now have the option of accepting Christie’s changes or letting the measure die.
Singleton said he was “deeply disappointed . . . to say the least.”
“State tax expenditures and preferences are intended to benefit the public by encouraging investment, job creation and economic development, and the state has a fundamental duty to ensure that they achieve these ends,” he said. “This bill sought to assure taxpayers that this duty is not taken lightly.”
Meanwhile, in the Senate, the author of the 2013 tax-incentive revisions, Sen. Ray Lesniak (D-Union), has joined the push for more disclosure, introducing legislation that would place a moratorium on all future tax incentives until the Christie administration releases more information demonstrating their effectiveness.
With all 80 seats in the Assembly up for grabs in November, Lesniak said the effectiveness of the incentive programs could become a key campaign issue in the fall.
“We need that information to have credibility in the program,” Lesniak said.