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Christie reverses course on ending Pa. reciprocal tax agreement

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Gov. Chris Christie, shown at a recent cabinet meeting, said Tuesday he would keep a tax agreement with Pennsylvania.
Gov. Chris Christie, shown at a recent cabinet meeting, said Tuesday he would keep a tax agreement with Pennsylvania. - ()

After announcing in September that he planned to end a nearly 40-year old reciprocal tax agreement between New Jersey and Pennsylvania, Gov. Chris Christie reversed course Tuesday and now plans on keeping it intact.

In a statement, Christie said his administration was able to “save” the agreement due to a bipartisan bill he signed into law Monday that calls for adjustments to the state’s pharmacy benefits system.

Christie said the bill will lead to over $200 million in new savings for taxpayers, making the reciprocal tax agreement viable again.

In place since 1977, the agreement allows commuters between the two states to pay the tax rate in their home state.

“This action will save state taxpayers hundreds of millions of dollars in health care benefit costs, and I’m proud my administration was again able to work with elected officials from both sides of the aisle and many labor union representatives to achieve these savings,” Christie said Tuesday. “By addressing a potential $250 million budget deficit from growing health care costs, we are now able to save an income tax reciprocity agreement with Pennsylvania that protects tens of thousands of hard working New Jerseyans from having to pay more income taxes.”

Christie’s initial plan to scrap the agreement was met with hard criticism from Democrats on both sides of the Delaware River, with a spokesperson for Democratic Pennsylvania Gov. Tom Wolf saying at the time that Christie seemed “committed to making Pennsylvania and our residents working in New Jersey suffer the consequences of his failure to enact a responsible budget.”

Officials held a news conference in West Deptford to talk about the reciprocal tax agreement.
Officials held a news conference in West Deptford to talk about the reciprocal tax agreement. - ()

State Senate President Steve Sweeney (D-West Deptford), U.S. Rep. Donald Norcross (D-Cherry Hill) and Assembly Majority Leader Lou Greenwald (D-Voorhees) held a news conference in West Deptford to address Christie’s decision.

Sweeney had previously said that, by his calculations, ending the agreement would have led to more than 100,000 people paying over $1,000 more annually in taxes.

“We need agreements like this,” Greenwald said. “We need thoughtful public policy.”

Norcross said he spoke with Subaru of America President and Chief Operating Officer Thomas Doll on Tuesday morning and was reassured that the company “has recommitted to start their construction again” on a new national headquarters complex in Camden.

In October, Doll told The Philadelphia Inquirer that Subaru, which formally broke ground on the site on Campbell Soup Co.-owned land in the city’s Gateway District last December, was in the process of re-evaluating its construction plans after being “blindsided” by Christie’s plan to end the tax agreement.

Subaru initially chose to move its headquarters from Cherry Hill to Camden after securing approval in 2014 for a $118 million Grow New Jersey award from the state Economic Development Authority. The company planned on creating 100 new jobs at the site in addition to the relocation and retention of another 500 state-based employees. The EDA has previously estimated the project’s net benefit to yield roughly $168 million back to the state over a 35-year period.

“They were stopping,” Sweeney said of Subaru. “It wasn’t a bluff.”

With several other large projects in the pipeline for South Jersey, given the influx of state incentives and other factors, putting the agreement back on the table not only helps those who have already committed to the area, but those companies that might be eyeing a move, as well.

“Not only does it impact those who already made the decision, but now there’s predictability going forward,” Norcross said.

Chamber of Commerce Southern New Jersey CEO and President Debra DiLorenzo said Tuesday’s development was “wonderful news for our state and region” and thanked state leaders from both sides of the aisle for coming together on the issue.

“They said they would find a way to do it and they did,” DiLorenzo said.

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Write to the Editorial Department at editorial@njbiz.com

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