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Dividing New Jersey: Budget woes stir new controversy around big-ticket tax breaks

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The debate over corporate incentive programs is nothing new.

But it's been reignited in recent weeks, as New Jersey officials grapple with an $800 million budget shortfall — one that's taken center stage alongside a 10-year, $82 million tax credit offered to the Philadelphia 76ers for a new practice facility and team headquarters in Camden.

That has advocates of the state's incentives programs coming back swinging.

Incentives are “certainly an easy target” for legislators and policy groups whose “knees uncontrollably start to jerk” when budget and fiscal issues present themselves, said Sills, Cummis & Gross real estate attorney Ted Zangari.

“Everything needs to be looked at under the microscope,” said Zangari, one of the architects of last year's Economic Opportunity Act, the landmark overhaul of New Jersey's incentives program. “It's an easy, tempting shot for a lawmaker or a think tank person to begin attacking incentives.”

The latest outcry is somewhat attributable to the nature of the 76ers project, he said. But few people come out of the woodwork to complain about other awards given on a monthly basis to companies based in manufacturing, retail, food service and everything else under the sun.

“I'm really amused and bewildered that given the nature of the company, in this case a sports company, there's this hysteria,” Zangari said.

It's a debate that rages anytime a large or high-profile project comes before the state Economic Development Authority. Like last November, when the agency awarded a $390 million tax grant to the American Dream Meadowlands project — the largest in the history of the Economic Redevelopment and Growth program.

So it was no surprise that the tax credit for the 76ers, awarded June 10 under the Grow New Jersey program, quickly became a lightning rod.

State and city officials including Gov. Chris Christie immediately applauded the project, saying it was a win for Camden and proof that the incentives overhaul was working. Meantime, the chorus of dissidents quickly formed on the other side — from liberal think tank New Jersey Policy Perspective, to Americans for Prosperity, a conservative nonprofit political advocacy group.

Those are the normal battle lines, but the controversy has caused at least one lawmaker to have second thoughts about supporting the Economic Opportunity Act.

At a June 12 press conference, Sen. Loretta Weinberg (D-Teaneck) said that in the backdrop of New Jersey's budget crisis and slow economic recovery, she's developing a “growing concern” about incentive programs and wondering why the state is “not seeing any payoff on this investment.” Weinberg last year voted to concur with Christie's recommendations on the incentives bill and send it back to his desk for final approval.

“We've invested a tremendous amount of taxpayer money into these programs,” Weinberg said at the press conference.

The event was organized by Working Families United for New Jersey, which called on the governor to enact a corporate business tax and millionaire's tax rather than hand out more subsidies during a time of budget crisis.

Still, state Sen. Raymond Lesniak (D-Union), a lead sponsor on the Economic Opportunity Act in the Senate, said he believes much of the criticism being directed towards incentive programs is “grossly unfair.” He added that while he's a big supporter of a proposed millionaire's tax, tying it to incentives in order to move it through is also inappropriate.

“It's easy to say, 'Hey yeah, we've given all these tax breaks to businesses. Why don't you support the millionaire's tax?'” Lesniak said. “That's mixing apples and oranges and it just doesn't add up.”

E-mail to: andrewg@njbiz.com
On Twitter: @andrgeorge

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