The New Jersey Economic Development Authority plans to contract with Rutgers University to study the effectiveness of the state’s lucrative tax incentives for attracting and retaining businesses.
State Sen. Ray Lesniak, D-21st of Elizabeth, announced the agreement Wednesday, saying the Edward J. Bloustein School of Planning and Public Policy would produce reports on both the state’s two main incentive programs: Grow New Jersey and the Economic Redevelopment and Growth Program.
The deal is expected to be finalized Friday, Lesniak said.
The Grow New Jersey Program provides tax credits to businesses that make capital investments in the state, and the Economic Redevelopment and Growth Program provides grants and tax credits to developers that build in New Jersey.
Lesniak said the deal between Rutgers and the EDA calls for the Bloustein school to perform one-time evaluations of the current incentive awards and their economic impact, as well as develop metrics for evaluating future projects and perform ongoing evaluations of large-scale awards over $40 million.
The school also will produce an annual report for the next three fiscal years, beginning in February 2016 on the programs’ effectiveness.
Lesniak’s announcement comes in the midst of increasing debate in Trenton about the use of the tax incentives to lure businesses to New Jersey.
New Jersey has awarded more than $5 billion in incentives since Christie took office in 2010, and more than $2 billion since he signed a 2013 bill revamping the major tax incentive programs to make them more competitive with other states.
Supporters claim they are needed to attract private investment in a high-cost state like New Jersey. Critics question the incentives’ effectiveness in creating jobs, and contend that the lost tax revenue would be better invested in education and infrastructure improvements that would attract businesses.
Burlington County has seen a mix of benefits from the tax incentives so far. Earlier this month, the EDA announced a $9.7 million tax credit award to CareKinesis to assist the Moorestown company’s move to a new headquarters in the township.
County and state officials also have credited tax breaks with helping to entice Burlington Coat Factory to remain in Burlington County and for Destination Maternity to move its headquarters from Philadelphia to Moorestown and build a warehouse in Florence.
But a large incentive also helped entice Holtec International to break ground on a manufacturing plant and headquarters in Camden, which will replace the company’s headquarters in Evesham.
Lesniak, who earlier this year introduced legislation placing a moratorium on new incentive awards until they were studied, said the Rutgers reports would help make the programs “more effective and efficient.” He also said they would ensure that the tax breaks are creating more jobs and generating tax revenues.
“The intention of these programs is to create jobs and to generate economic growth that benefits working people and the entire state,” Lesniak said. “We want to make them work, and this evaluation process will help.”
Assemblyman Troy Singleton, D-7th of Palmyra, also penned legislation requiring the administration to annually review the state’s awarded tax incentives and report on their effectiveness. His bill, which also would set a 10-year limit on any new awards, was approved by the Legislature in March, but was conditionally vetoed by Gov. Chris Christie this month.
Singleton said the planned partnership between the EDA and Rutgers was welcome news, but that “our state would be better served by a permanent statutory requirement to conduct a more thorough analysis of these programs, which Gov. Christie unfortunately vetoed.”
New Jersey Policy Perspective, a liberal-leaning think tank that was one of the earliest critics of the tax incentives, said that the Rutgers studies represented a “first step,” and that the organization would continue to call for a full accounting of the outcomes of past tax breaks.
“New Jersey has a lot riding on this risky bet on tax breaks. We all deserve to find out if that bet is paying off,” said Jon Whiten, the organization’s deputy director.