Are economic incentives and tax credits actually helping New Jersey?
A state report by the Rutgers University Bloustein School of Planning and Public Policy said “it’s too soon to tell if the tax deals are helping New Jersey’s economy.”
But the report also suggested that the state might be giving out too many tax credits and gave out redundant bonuses. During the past five years, the state has awarded $5.4 billion in tax credits of various sorts.
“Redundancies in the Grow NJ base and bonus award structure are potentially providing more generous incentives than intended by the statute,” reads the report.
The analyses looked into the effectiveness of the New Jersey Economic Development Authority’s two credit programs: Grow NJ and Economic Redevelopment and Growth programs, which dole out state tax incentives.
Tax credits might have been given out too generously, the report suggests, due to the formulas which the EDA utilized, and redundancies in the Grow NJ base and bonus structure awards.
The EDA outlined its findings and recommendations for the tax credit program in a more than 100 page study and letter Wednesday addressed to Gov. Phil Murphy. Lawmakers, Rutgers and the EDA rolled out the study in March 2016.
Tax incentives are utilized to attract businesses, jobs and investment into the state, or keep them from leaving New Jersey. The recipients have to achieve certain goals and standards to continue receiving the incentives.
In 2013, under the Gov. Chris Christie administration, the state expanded the tax break program with the goal of helping the state rebound from the Great Recession.
Between Dec. 2013 and Aug. 2017, Grow NJ handed out over $4.4 billion in tax credits, across 227 awards for 224 companies, in order to create or retain 59,200 jobs over a 10-year period.
Hudson County, namely Jersey City, received the bulk of the rewards, while Camden County followed in second place.
New Jersey gave a particularly generous amount of tax credits to Camden, because the 2013 expansion of the program also made the city a high-priority municipality in need of economic investment. In Camden the annual cost-per-job to taxpayers is $34,000 a year for every job created.
The report also indicated that the ERG program doled out $1 billion in credits over 50 awards, between Jan. 2014 and Aug. 2018. A Sayreville project, which will turn a large portion of the riverbank into a waterfront area with residential, office and retail space, received $139 million of the total amount.
On average, the Grow NJ tax credits cost taxpayers $7,650 a year for every job created, and $3,670 a year for every job retained.
But the report makes it clear that many of the projects haven’t progressed enough to fully ascertain the tax breaks’ effectiveness, and that a future analyses might be necessary.