A Full-throated Defense of Tax Incentives — Especially in Camden
Monday’s hearing of the Senate’s special economic growth panel couldn’t have been more different from the previous one – a full-throated defense of tax incentives, rather than a sharp critique, with a particular emphasis on defending Camden.
A gubernatorial task force following up on a critical report by the state comptroller of New Jersey’s administration and oversight of $11 billion in promised tax breaks has honed in often on Camden, so the city's backers were invited by the Senate to offer their praises of the Economic Opportunity Act.
“For over 10 months, we have heard about how the EOA did not produce the desired effect in Camden,” said Dana Redd, former Camden mayor and former state senator. “I do find it ironic that for years when other cities in the state saw companies getting tax credits, it was called progress. But when Camden was given the opportunity to do the same, it was called a waste.”
The tax credits under the 2013 to locate jobs in Camden were far more generous than in other cities or under past economic development laws. Redd said it is “unmistakable and undeniable” that they chose Camden because of the outsized incentives.
“I know this is what has finally reversed Camden’s five-decade downward trajectory. I beseech you to strongly reconsider anything that may alter the formula that’s produced 50-year lows in crime, highs in education and unprecedented development," said Scott Thompson, a former Camden police chief.
Executives from two companies that received tax incentives to move their headquarters to Camden from other locations in New Jersey – Subaru of America, $118 million, and American Water Works, $164 million – told lawmakers that without the tax break, they’d almost certainly be located elsewhere.
Tom Doll, president and chief executive officer of Subaru of America, said his company’s parent was pushing it to move its 900 employees to Indiana, near one of its major manufacturing centers.
“Our loyalty to this state cannot by itself be reason enough to remain in any particular location,” Doll said. “… Companies such as Subaru, American Water and the other 23 businesses who have moved to Camden could have similarly located elsewhere outside of New Jersey but they chose Camden because the tax incentives made the overall cost of doing business as good as moving to another state.”
A number of the people who testified in Camden’s defense expressed their disapproval with the criticisms Gov. Phil Murphy and his administration have levied at Camden, most recently an Economic Development Authority analysis that just 2% of construction jobs on 25 tax-break supported projects, a total of 27 jobs, went to Camden residents.
Camden County Freeholder Jon Young said that data was incomplete and that its release should be looked into. Young said payroll data obtained by Camden Mayor Frank Moran shows six companies hired 198 Camden residents for construction jobs.
“A lot more needs to be done,” Young said. “It took decades for Camden to come out of this economic depression, and it will take some time for us to bring this city back. However, no amount of second guessing is going to change the fact that the Economic Opportunity Act fundamentally led to the transformation of this great city.”
“The EOA has really allowed Camden to undo decades of poor policy decisions in the state of New Jersey that saw other communities benefit from incentives,” said Brian Morton, executive director of Parents for Great Camden Schools.
“Caricatures and portrayals of Camden and the progress that we have made are misplaced at best and harmful at worst,” Redd said.
Not all of the day’s testimony was supportive of the Economic Opportunity Act, which expired nearly three months ago, leaving the state without a signature tax-incentive program it can use to try to recruit businesses.
Officials from the Somerset County Business Partnership said the programs should apply statewide without favoring select cities, as was done under the recently expired programs.
“There’s a severe suburban disadvantage that’s affecting 500 municipalities in this state,” said Mike Kerwin, the partnership’s president and chief executive officer.
John Maddocks, the group’s vice president for economic development, said business incentives in Jersey City are worth four times what can be provided in most municipalities. He said it also concerns him that job retention programs aren’t emphasized in Murphy’s tax incentive plan.
“Job retention was the only component of Grow NJ that had any significant impact on our communities,” Maddocks said. “If it were not for the 4,800 jobs retained under Grow NJ, we would be having an entirely different economic discussion on the future of Somerset County.”