In passing the budget, Democrats played into Christie's hand, helping his presidential aspirations by providing him with the opportunity to brag about vetoing more tax increases.
But the budget presents a different opportunity for both Democratic and Republican legislators to demonstrate that they are truly looking out for New Jersey's residents and corporations by acting in a fiscally responsible manner.
Last month, Christie conditionally vetoed a measure sponsored by state Assemblyman Troy Singleton, D-Burlington, that would have created a structure for thorough annual reviews of the effectiveness of corporate-tax incentives. The incentives are administered by the state Economic Development Authority and offer corporations tax breaks for meeting specified investment and employment mandates.
The bill would have provided taxpayers in the state with data indicating which companies received subsidies, how many jobs each company created, the salaries and wages paid for each job, and whether the company had laid off workers at other sites as a result of the tax break. In 2007, legislation required similar reports, but the state Department of the Treasury refused to produce them, arguing that it never produced them because such reports would violate Internal Revenue Service privacy requirements. Despite this contention, the National Conference of State Legislators reports that at least 10 other states require regular evaluation of incentives.
$5.4 billion in tax incentives
Since taking office in 2010, the Christie administration has granted more than $5.4 billion in corporate tax incentives to businesses in New Jersey. The incentives are designed to attract or retain jobs for New Jerseyans, but various investigative reports by media outlets question how the incentives have been awarded. These reports indicate that the incentives have been disproportionately awarded to politically connected corporations, corporations with connections to individuals who have contributed to the Republican Governors Association (which Christie headed), and to corporations that have exploited the incentives.
Some have claimed plans to relocate businesses out of state yet it appeared that the businesses had no such plans. Other corporations have moved within the state — sometimes mere miles down the road — in order to garner millions in tax incentives. In some documented cases, the tax incentives have exceeded the value of the company.
As Christie stumps in early GOP primary and caucus states, including Iowa and New Hampshire, he is calling for federal corporate tax incentives similar to New Jersey's.
The high cost of tax breaks
But state legislators are rightly questioning the effectiveness of the tax incentives as New Jersey continues to battle unemployment rates higher than both the national average and those of neighboring states. The nonpartisan economic research group New Jersey Policy Perspective reports that corporate tax breaks have tripled the costs of a job at the companies receiving the awards, meaning that the tax-incentive program has actually contributed to New Jersey's higher unemployment rate, rather than reducing it.
NJPP also calculated that the incentives have only helped 1 percent — or 252 — of New Jersey's 200,000 companies. The remaining 99 percent of New Jersey businesses have to make up the lost revenue provided to that handful of corporations.
In conditionally vetoing the legislation, Christie asserted the need for "a more holistic" approach to evaluating the tax incentives.
"I cannot support the annual evaluation of certain tax expenditures in a vacuum because these projects often have long durations that will not inure benefits until project completion," Christie wrote in his veto message.
But as Christie seeks to make the case as to why what's good for New Jersey's economy is good for the country, state legislators of both political parties should be making the case that accountability is good both for individual and corporate taxpayers. Republican leaders — including state Senate Minority Leader Tom Kean and Assembly Minority Leader Jon Bramnick — have a particular burden here. They are often not wont to defy Christie and incur his wrath by overriding a veto, but with corporate tax incentives, they have a good case for protecting not just the economic interests of their constituents, but also the economic health of 199,748 corporations that subsidize the 1 percenters of New Jersey's corporate world.
Brigid Callahan Harrison is professor of political science and law at Montclair State University, where she teaches courses in American government and state and local politics. A frequent commentator in print and electronic media, she is the author of five books on American politics.