Though largely unpopular, Gov. Chris Christie's initial decision in September to end a nearly 40-year-old reciprocal tax agreement between New Jersey and Pennsylvania wasn't a novel idea.
Gov. Jim McGreevey, a Democrat, kicked the idea around in 2002 before ultimately being persuaded against scrapping the agreement, which allows commuters between the two states to pay the tax rate in their home state.
Last week, Christie also reversed course on the matter, claiming a newly signed bill that calls for adjustments to the state’s pharmacy benefits system will yield more than $200 million in new taxpayer savings, freeing up space in the budget for the agreement.
Speaking Thursday at a news conference on the issue at Campbell Soup Co. in Camden, state Senate President Steve Sweeney (D-West Deptford) said he hopes this will be the last time the agreement, in place since 1977, is called into question.
“I think we’ve put it to bed this time,” Sweeney said.
Assembly Majority Leader Lou Greenwald (D-Voorhees) said that, while leaders would be “fooling” themselves if they didn’t think the argument over the agreement had an impact on the economic momentum seen in Camden and the surrounding region since the signing of the Economic Opportunity Act in 2013, he believes the city is back on track and those in the know will recognize the business-friendly efforts in place.
“We are making tremendous progress,” said Greenwald, who added that success in Camden is a sign that similar results can be achieved in other New Jersey cities like Atlantic City, Paterson, Newark and Trenton.
The threat that ending the agreement posed to the region was real, said Sweeney.
“Nobody was bluffing,” Sweeney said.
Most notably, that included Subaru of America, which formally broke ground on its new national headquarters complex on Campbell-owned land in Camden last December.
In October, company President and Chief Operating Officer Thomas Doll told the Philadelphia Inquirer that Subaru 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.
Doll reassured U.S. Rep. Donald Norcross (D-Cherry Hill) last week that the company had recommitted to its plans in Camden following Christie’s reversal on the agreement.
On Thursday, Subaru Vice President and Chief Human Resources Officer Dan Dalton added that, with up to one-third of the employees soon to be based in Camden being comprised of Pennsylvania residents, the company was seriously considering its options, particularly in regards to the second phase of its project, which calls for a state-of-the-art training center.
Dalton added that the issue has often come up in the hiring process over the last several months.
“I would expect that we lost some candidates along the way,” Dalton said.
Ronald Masciantonio, executive vice president and chief administrative officer for Destination Maternity, which left Philadelphia in 2014 and brought over 600 jobs to Burlington County with the help of EDA incentives, said that the proposal to end the agreement complicated matters for a considerable number of employees who transitioned with the company across the Delaware River.
“Without reciprocity, we would’ve been hard-pressed to make our move into South Jersey,” Masciantonio said.
Campbell Vice President for Government Affairs Kelly Johnston added that, while discussions remained informal, even the longtime Camden-based soup giant was concerned with its future without a tax reciprocal agreement. Johnston noted that, of the company’s roughly 1,200 employees, some 40 percent are Pennsylvania residents.
“We began exploring options,” Johnston said.
Chamber of Commerce Southern New Jersey CEO and President Debra DiLorenzo commended Christie, Sweeney, Greenwald and the rest of the Legislature “for keeping this issue a priority at a time when there are so many other competing concerns and groups who need attention.”
Sweeney also thanked Christie, who he said “kept an open mind” on the matter.
“It’s not easy to reverse a decision,” Sweeney said.