New Jersey corporate tax breaks surge, but economy lags: study
(Reuters) - New Jersey has provided more corporate tax breaks in the past three years than in the entire previous decade, yet the state's economy continues to lag, according to a report released on Monday.
Since the start of 2010, when Republican Governor Chris Christie took office, the state has awarded $2.1 billion in subsidies, compared to $1.25 billion for the previous 10 years, New Jersey Policy Perspective, the liberal think-tank, said in its report.
Even so, New Jersey's economy remains sluggish. Though its unemployment rate has fallen slightly, it is the sixth highest in the United States at 9.3 percent in February, well above the national jobless rate of 7.7 percent.
New Jersey had the second-highest foreclosure rate in January at 7.2 percent, behind only Florida, according to CoreLogic.
"So far, efforts to spur economic growth through aggressively awarding subsidies have not borne fruit," the think-tank said in its report.
A spokesman for Christie, Michael Drewniak, said the group was "not credible."
"This 'study' simply fails to consider the disadvantage we'd be in without effective job retention and business incentive programs," Drewniak said in a statement, noting that both Democrats and Republicans have supported such measures.
Ben Sparks, spokesman for the state Republican Party, said in a statement that New Jersey Policy Perspective was trying to take the state back to "the failed policies " of ex-Democratic Governor Jon Corzine.
Corporate give-aways aren't new. But they've taken on urgency as many U.S. states struggle to recover from the recession, which stripped jobs and revenues.
Tax breaks and subsidies have been popular with cities and states trying to lure businesses in the hopes of creating and retaining jobs.
New Jersey has at least five different corporate tax and incentive programs. In the last three years, the largest award overall was a $261.4 million grant to Revel Casino, which filed for bankruptcy in March.
The lavish new casino that opened in April 2012 will slash its $1.52 billion of debt to about $272 million under a prepackaged bankruptcy protection plan.
Overall, New Jersey officials have awarded tax credits and grants to 171 projects since February 2010.
Bayer Healthcare, Citibank, Pfizer, UBS Financial Services, Prudential Financial, Panasonic and Lockheed Martin are among companies receiving some of the largest taxpayer-funded incentives in the past three years, according to the report.
The report said that the state should focus more on economic development funding for education, infrastructure and job-training programs.
(Reporting by Hilary Russ; editing by Tiziana Barghini and Leslie Adler)