Insider NJ

New Jersey Policy Perspective Issues New Report On EDA As Progressive Groups Announce Tax Incentive Reform Agenda

Insider NJ — September 18, 2019

New Jersey advocates, community organizations and workers collectively demanded today that the Legislature pass meaningful reforms to the state's economic incentives program following the release of a new report that found that New Jersey saw little return on its investments under the failed Economic Opportunity Act of 2013, which expired in June.

A broad-based coalition including New Jersey Working Families, New Jersey Citizen Action, New Jersey Policy Perspective, New Jersey Work Environment Council, Workers United and 32BJ SEIU called on Trenton to adopt a series of six evidence-based reforms to its tax incentive program to ensure that future corporate subsidies benefit underserved communities and working families.

"As negotiations begin over a new tax incentive program, New Jersey lawmakers have the opportunity to fix a broken system that cost over $11 billion and was rigged to allow companies to fudge numbers, conceal new hiring, lie about plans to relocate out of state, and reap enormous profits through the tax credit application process," said Working Families State Director Sue Altman. "Any new legislation must focus on creating opportunities for working families and underserved communities."

The coalition also sent a letter to Senator Robert Smith, who chairs the Senate committee holding hearings on state incentives,, calling on the Legislature to ensure local and minority hiring, cap incentive spending, shorten award timeframes, strengthen labor standards, improve reporting requirements, implement recurring evaluations and guarantee tough EDA screening of future applicants.

"We are waiting for meaningful action from our Legislature," said Kevin Brown, 32BJ SEIU Vice President and New Jersey State Director. "I urge that the legislators who are involved in these critical conversations ensure that prevailing wage for building service workers for subsidized development projects in New Jersey makes it through passage and signage of the bill, and to enact the reforms in the Governor's conditional veto. The Senate needs to do the right thing and prioritize New Jersey's working families."

The newly released report by New Jersey Policy Perspective found that New Jersey's economy failed to see meaningful benefits from the expired incentive programs — pointing out that the average cost per job in New Jersey far exceeded the national average, reaching more than $100,000 per job during the Christie administration.

"This over-reliance on corporate tax subsidies flies in the face of economic development best practices and ignores New Jersey's precarious fiscal reality," the report notes, citing research that three-quarters of all tax incentive awards have no impact on job creation.

The report calls for the implementation of key reforms, including increased labor protections and local hiring agreements to ensure local communities benefit, as well as key oversight measures including caps on future awards and better oversight by the EDA.

"Not a dime of tax incentives should be given to any business that cannot, at the very least, guarantee the bodily safety of its employees," said Brandon Castro of the New Jersey Work Environment Council. "Companies receiving incentives must provide affordable healthcare and assure safe and healthy working conditions. The EDA should also require onsite consultation with the NJ Department of Labor and Workforce Development for any company in their first year of receiving awards."

"New Jersey simply can't afford to continue to throw away billions of dollars on these flawed, mismanaged corporate subsidy programs," said Mottola Jaborska Associate Director, New Jersey Citizen Action. "We've had far too many credit downgrades, we're facing a public pension crisis, and our state's rainy day fund is not robust enough to carry us through the next economic downturn. Additionally, too many public programs and services have been starved of funding so politically connected corporations can get their tax breaks. Tax credits are a public asset and the public should have a say in how to reform the programs that grant these credits to corporations. The legislative hearing on these programs scheduled for this upcoming Monday, September 23rd, should be opened for public comment so everyone can have a say in this process."

That hearing is coming even as a new EDA analysis of job creation numbers connected to tax credit-financed construction projects in Camden found that only 27 construction jobs went to city residents.

"The absence of an affirmative action officer and the failure to impose community benefits agreements in Camden projects equals 27 construction jobs out of 1,098. A whopping 2 percent," said Camden community advocate Amir Khan. "Utterly ridiculous."

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