But proponents of the act say like it or not, that’s how the modern corporate real estate market works, and New Jersey needs to do better in keeping up with places like Pennsylvania, New York, North Carolina, and even France, where incentives are larger or the cost of doing business is smaller. They cite New Jersey’s 8.6 percent unemployment rate, which exceeds the national average by 1.3 percentage points, and they highlight companies like Hertz, which are being lured elsewhere.
But opponents argue that the high unemployment rate proves precisely that incentives don’t work. NJPP has found that between February 2010 and January 2013, New Jersey has awarded $2.1 billion, as compared with $1.25 billion throughout the previous decade. NJPP’s deputy director, Jon Whiten, notes in a report that not only have the aforementioned companies moved out, but that companies like Panasonic, Goya and Burlington Coat Factory accepted incentives to “move down the street.”
On top of that, they argue that incentives don’t bring business. Instead, groups like NJPP reference studies and surveys that show CEOs instead look for locations with good schools, low-crime, modern infrastructure, and a “well-trained, highly-educated workforce.” They insist that the more the state loses on tax credits, the less it has to spend on improving these quality-of-life measures.
Deriding the act as pure corporate welfare, the liberals who posit these arguments find themselves siding with libertarians, who smear it with the same label. But even though their arguments get them to the same place, the fiscal conservatives’ reasons are in direct opposition to those given by the people-first contingent.
Yesterday, the lone dissenting vote came from Republican senator Michael Doherty (R-Washington), who likely summed up the sentiments of the five members of his party who voted against the identical assembly bill on Tuesday: “Let the free-market system operate,” he said. “I don’t think this bill is doing anything to address [the state’s] high regulatory burden, high taxes, and energy costs, and the fact that the New Jersey Department of Environmental Protection is making it extremely difficult for businesses to operate.”
Whatever their motivation, opponents fear the loss of revenue to the state may reach skyscraper proportions. The measure would raise the maximum per-company subsidy to $350 million, more than seven times the current cap of $40 million under GROW NJ. And by eliminating the existing limits to tax expenditures doled out by the Economic Development Agency (EDA), which administers these programs, there’s no predicting their cost.
The nonpartisan Office of Legislative Services wrote in a fiscal analysis of the bill that it “cannot project the direction or magnitude of the bill's net fiscal impact on the State and local governments” in part because “the bill will produce an indeterminate multi-year State revenue loss.”
Lesniak said he has “lots of confidence in the EDA” and noted that companies won’t be able to take unfair advantage, given that CEOs threatening to leave New Jersey for greener incentives elsewhere will be required to prove that they “have another credible location” outside the state.
And although supporters like Sen. Joe Kyrillos (R-Monmouth) sent out self-congratulatory statements yesterday lauding their bipartisan efforts to write and pass this landmark piece of legislation, an unscientific NJ Spotlight readers’ poll showed that as of 7:30 last night, only 15 percent of respondents approve of the legislation. Half of those not in favor called it “corporate welfare at its worst” and the remainder split evenly in their opposition, with half fearing it will lead to too much sprawl and half remarking that it’s a “big grab-bag with something for everybody."
"Something in this case is spelled p-o-r-k.”