Business incentives boom in New Jersey since 2010

New Jersey this year has promised $1.8 billion in tax breaks for companies planning to move to the state or stay in it using a redesigned program that puts an emphasis on Camden, a city that's struggled for generations to attract jobs.

The state has accelerated its use of business incentives since Republican Gov. Chris Christie took office in 2010, committing nearly $5 billion, about three times as much as the state promised to try to lure companies from 1996 through 2009, according to an Associated Press analysis of state data. This year's commitments promise an average of about $75,000 per job.

The deals face criticism from some activists who don't like the idea of the government picking winners and losers in business. But the Democrats who control the state Legislature have been happy to join with Christie, a possible 2016 presidential candidate, to adopt the structure for the state's business tax breaks.

"It's done exactly what was hoped," said Assemblyman Lou Greenwald, a Democrat who was a prime sponsor of a bill to increase the benefits last year.

Seventy-two companies have been awarded tax credits under one major program, and those numbers "equate to an individual, a job, a family," Greenwald said.

It's too early to tell how many jobs will be delivered. Many of those promised since Christie took office - 55,000 new ones plus 33,000 retained and 44,000 construction positions - are years away. Companies get the credits only after they have made investments and created the jobs they promise.

Since the state began its first business tax incentive 18 years ago, lawmakers have added programs to encourage development in transit hubs and to entice tech firms. They were overhauled last year with the Economic Opportunity Act, which Christie hailed as an example of bipartisan cooperation and a game-changer for some cities.

The 2013 legislation streamlined the incentive programs and gave bonuses for projects in Camden, one of the most impoverished cities in the country.

Camden, which barely benefited from earlier business incentives while places including Jersey City's financial district boomed, has seen a rush of interest. This year, the state Economic Development Authority has approved more than $500 million in tax credits for businesses with plans in Camden.

Holtec International, which makes components for nuclear power plants, announced it would add a plant to the city's waterfront, a former industrial powerhouse. The Philadelphia 76ers, the only NBA team without its own facility, agreed to build practice courts and offices in the city. And Lockheed Martin, already a big employer in suburban southern New Jersey, announced it would take 250 jobs to the city.

Part of the attraction is a generous benefits test for firms willing to go to Camden. Elsewhere in the state, projects have to be shown to be able to bring back to the state and local governments taxes worth 110 percent of their grants over 20 years. In Camden, the projects have to have returns of only 100 percent, and they have 35 years to bring it in.

Holtec's application projected its net benefit to taxpayers would be $156,000, a return of just 0.06 percent over 35 years for tax credits totaling $260 million. The company is more optimistic about its future in Camden, saying it expects to have 3,000 jobs there, meaning far more returns to taxpayers than $156,000. But to get the credits, the company, which didn't return a call seeking comment this week, needs to maintain a more modest 395 jobs.

That's one of the features of the incentive programs that troubles Jon Whiten, deputy director of the liberal think tank New Jersey Policy Perspective. He says the company should be accountable for meeting its full projection. He also faults the less-stringent 100 percent benefit test that applies only in Camden.

"Both of those are totally out of whack," Whiten said.

But Camden Mayor Dana Redd, a Democrat, said those conditions are important to helping build the city.

"There are always going to be critics of what we do, what we should have done," she said. "I say it was necessary to stimulate interest in Camden in the global market."

Source: Philly.com