New Jersey Governor Chris Christie has awarded $2.1 billion in tax breaks to businesses in three years, a strategy that has failed to close the gap between the state and U.S. unemployment rates, according to a report.
The incentives are 40 percent higher than the $1.5 billion given in the previous 10 years, according to New Jersey Policy Perspective, a Trenton-based nonprofit group that advocates for measures that would benefit the poor. Its president, Gordon MacInnes, is a former Democratic state lawmaker.
Christie, 50, a Republican seeking a second term, gave tax credits and grants to companies, including electronics-maker Panasonic Corp. (6752) and casino-operator Revel Entertainment Group, in an effort to create jobs. While the state unemployment rate fell to 9.3 percent in February from 9.5 percent in January, it is 1.6 percentage points above the U.S. average. Job growth after the 18-month recession that began in December 2007 lags behind neighboring states, the report found.
“Efforts to spur economic growth through aggressively awarding subsidies have not borne fruit,” Jon Whiten, deputy director of the policy group, wrote in the report. “While it is important to take the long view on economic-development tools, one would expect some short-term gains to be realized by the sheer volume of grants awarded in the past three years.”
Michael Drewniak, a spokesman for Christie, dismissed the group as “notoriously biased” and “simply not credible.” The report uses estimated employment figures, rather than actual jobs created, and fails to mention private investment made as a result of the awards, Drewniak said in an e-mail.
The state’s Business Employment Incentive Program, which has awarded $1.5 billion since its 1996 creation, has led to $12.7 billion in non-government spending, Drewniak said. Those grants have supported the creation of 101,900 jobs, according to the Economic Development Authority, which awards them.
“States are competing aggressively to keep companies, attract new ones and to retain and grow jobs,” Drewniak said. “This ‘study’ simply fails to consider the disadvantage we’d be in without effective job retention and business-incentive programs.”
Since Christie took office in January 2010, the business- incentive program awards have included $25 million to Bayer HealthCare Pharmaceuticals LLC; $12.4 million to Citibank (C:US); and $9.2 million to Pfizer Inc. (PFE:US) The state channels back to the employer as much as 80 percent of personal income taxes paid by each new employee.
Such programs were created with bipartisan support and sponsorship in the legislature, Drewniak said. Democrats control both houses.
Panasonic, based in Osaka, Japan, got $102.4 million from Christie to move its North American headquarters and 1,000 jobs to Newark from Secaucus after the company had threatened to move out of the state. The governor promised Revel $261 million in tax reimbursements to help restart construction of the first new Atlantic City casino in nine years. The owner filed for bankruptcy last month, 11 months after the resort opened.
In all, Christie has given $2.1 billion to 171 projects by businesses that promise to create jobs, the study found.
“This is the only strategy being employed” for economic development, MacInnes told reporters at a news conference in Trenton today.
“It is a strategy which says that if we give incentives that are not realized for years to come in the form of jobs created and taxes forgiven, that that would be sufficient to get us out of this mess,” MacInnes said. “It’s not.”
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