Chris Christie is a hero to the right and something of a media darling for his willingness to slash government spending and be brash about it.
So this report in The Wall Street Journal is fascinating for what it says about the governor’s priorities, even if the story itself is somewhat skimpy. Supposedly flat-broke New Jersey is handing Japanese giant Panasonic more than 100 million bucks worth of corporate welfare to move ten miles down the turnpike from Secaucus to Newark.
The cash isn’t upfront in a bag or anything, but over the course of ten years it will drain New Jersey’s government of taxes it would normally get.
That’s because Panasonic played the game like any company starting a smokestack chase whould: It threatened to pick up and move to another state. So New Jersey gave it $102 million in tax incentives to move to downtown Newark.
In exchange, Panasonic agreed not to move 800 jobs out of state, though it will have to end up with 950 jobs to max out the credit, according to the Bergen County Record. In other words, strapped New Jersey taxpayers are going to pay Panasonic $108,000 for each of those 950 jobs. That’s $10,800 per job per year for ten years. Come 2021, presumably, Panasonic will threaten to leave again.
I’ve noticed the Journal’s New York section playing stenographer to the governor more than once), so it’s good to see that the paper points out Christie’s hypocrisy here:
Given Gov. Chris Christie’s frequent claims that New Jersey is broke, the state’s use of incentives has frustrated New York City real estate executives and officials in the Bloomberg administration, which generally has been restrained in its use of subsidies for office leases.
Actually, there’s no stenography to take down this time. The normally loquacious Christie declined comment.
Here’s how the the Bergen County Record reports on Christie’s corporate welfare policies:
It has grown rapidly as Governor Christie has ramped up corporate incentive awards, hoping to retain and create jobs as the state struggles with a 9.1 percent unemployment rate.
Just in the past year, The Record reports that the Christie administration has handed out $380 million in corporate welfare to companies under the Urban Transit Hub Tax Credit Act, plus another $82 million through the Business Employment Incentive Program. Billionaire real estate tycoon Mort Zuckerman’s New York Daily News is getting $42 million from New Jersey to put a new printing press there.
Meantime, Christie is coughing up $261 million in financing to build a new casino in Atlantic City.
No doubt about it: Corporate welfare and tax expenditures like this is as much government spending as is, say, building a tunnel to Manhattan.
Not that its surprising to see you jump onto the “I hate Christy” bandwagon and all, but you are right to point out the general hypocrisy on this subject and the overall futility and counterproductive nature of providing direct subsidies and tax breaks as opposed to proving a good overall business environment like they seem to do in Texas.
But, on the whole, $108,000 for each of the 950 seems like a steal when compared to the $533,000 per job “saved or created” via the federal stimulus. Funny, don’t recall and headlines from CJR on that one, but then again, you’ve always been at war with East Asia.
#1 Posted by Mike H, CJR on Wed 20 Apr 2011 at 02:12 PM
How is this Panasonic thing Christie's fault?
The "Urban Transit Hub" credits came in 2008 (before Christie took office).
Furthermore, in order to qualify for these credits, Panasonic had to invest at least $50 million in a depressed area employ a bunch of people.
It seems we aren't getting the whole story, here...
The credits weren't Christie's idea or doing, and it doesn't appear that he has the ability to keep Panasonic from using them if ut choses to do so.
We're getting the parts of this deal that make Christie look bad... And not the parts that make him look good...
Another typical CJR hit piece.
#2 Posted by padikiller, CJR on Wed 20 Apr 2011 at 07:18 PM
The deal stinks. NJ's public employee pension plan is grossly underfunded by maybe a mere $55 billion dollars and it's handing out tax credits to big corporations? And not for attracting new business (jobs) to the state but to help a company move 10 miles down the road? Panasonic took advantage of a program which was meant to attract new business to the state but since it is moving its own operation down the road, where will the new jobs for Newark be? If it wanted to move it should have been on its own dime -- not on the taxpayers. Christie should be shoring up the pension fund before it starts giving corporations tax credits.
#3 Posted by Liam Planter, CJR on Wed 20 Apr 2011 at 07:33 PM
I agree that the deal stinks.. But why is this Christie's fault?
I'm generally against tax credits for pragmatic reasons... They generally don't work..
Most of the recipients fail to make their targets or fail. Most of the jobs never pan out. There have been success stories, but I can think of four failures here locally.
I believe that the government should foster, but not finance, private industry.
It's one thing to create a favorable business environment through broad tax and regulatory policies - it's another thing to invest capital in specific businesses under the guise of public policy.
But how on Earth is this Christie's fault?
#4 Posted by padikiller, CJR on Wed 20 Apr 2011 at 09:05 PM
Christie has been pushing this beggar thy states approach to doing business
http://www.nbc40.net/news/16203/
which works great for political party contributions (which is why I believe the "Panasonic made me do it" lines are spin, and we'll see the proof in that pudding when we check the pattern political donations here on in) but craters tax revenue.
And it should also be remembered that this approach to holding on to business and wealthy tax bases by reducing their tax burdens so they become more parasite than participants (at the cost of pension contributions) began under Christine Todd Whitman's leadership
http://chronicle.com/blogs/brainstorm/but-the-pension-fund-was-just-sitting-there/32735
And that Christie is just continuing in bad conservative tradition to undermine the government's abilities to function and fulfill its obligations and then use their incompetent leadership to strengthen the platform of their anti-government party.
Lesson to learn? Don't elect idiot anti-government people to positions of political power. They break government and then blame government for being broke like it's someone else's fault.
#5 Posted by Thimbles, CJR on Wed 20 Apr 2011 at 10:57 PM
Yeah...
But what did Christie have to do with the Panasonic thing?
Christie recently vetoed expanding these "Urban Transit Hub" credits, and I know for sure that he wasn't in office when these credits became law in 2008.
Christie can't stop Panasonic from getting these credits if the law authorizes them. These things were created by Democrats and signed into law by a Democrat.
I'm just trying to figure out why (scratch that, I know "why", I mean "how") Chittum's trying to pin this (admittedly bad, in my estimation) deal on Christie... It seems dishonest to do so...
#6 Posted by padikiller, CJR on Wed 20 Apr 2011 at 11:16 PM
uh, Padi--
Christie has expanded these tax credits, pushed for the Panasonic thing, and his administration is out there touting it:
"Lt. Governor Kim Guadagno told the audience of about 100 company, elected and government officials that the state’s ability to close the deal with Panasonic shows Governor Christie’s determination to stop corporations from moving to other states.
“You have a choice,” she said. “These companies are being courted by everyone around the world … We are committed to stopping the flow of jobs out of New Jersey.”"
#7 Posted by Ryan Chittum, CJR on Thu 21 Apr 2011 at 12:24 AM
"But what did Christie have to do with the Panasonic thing?"
Well, if you read the law:
ftp://www.njleg.state.nj.us/20062007/S3500/3043_R1.HTM
"A business, upon application to and approval from the New Jersey Commerce Commission, shall be allowed a credit of 100 percent of its capital investment..."
So he could put pressure on a business trying to "extort" him if he really wanted to by having a few words with that commission.
Which was abolished in 2009... and merged with the "quasi governmental" New Jersey Economic Development Authority (EDA)... which spent $670 million to create 9578 permanent jobs and 14,343 construction jobs in 2009.
http://www.njeda.com/web/pdf/ar2009.pdf
Was Christie in charge then? Because that all smells a bit like socialism.
PS. why hasn't the EDA's site been kind of slow in updating since 2009? Their public sections are in some cases 2 years behind (the meeting minutes) and in their annual reports are at least a year behind. The EDA might be worth looking into, corruption off book wise.
#8 Posted by Thimbles, CJR on Thu 21 Apr 2011 at 12:47 AM
"“Under EDA’s policy — which is not supported by the law — Panasonic did not even certify they will leave the state, but for the grant,” said Allen Magrini, senior vice president at Hartz, in a statement. “It is entirely possible that the state of New Jersey will pay $102 million to keep a company here that never intended to leave, which deprives the state’s taxpayers of $102 million to attract or create new business activity to New Jersey.”
“The real question is EDA created this whole new fallacy of at-risk jobs, which is not in the legislation,” Magrini said in an interview with NJBIZ. The statute that created the Urban Transit Hub tax credit program required an award to generate a net positive benefit to the state, but “that wasn’t going to work here, so they came up with the category of at-risk jobs,” said Magrini, who said a hearing on the lawsuit would not be scheduled for as least several months. “An agency doesn’t have that kind of authority, especially at this kind of cost and expense to taxpayers.”
The EDA on Thursday said it does not comment on ongoing litigation."
http://www.njbiz.com/daily-news/86687-hartz-panasuit&Itemid=14
#9 Posted by Thimbles, CJR on Thu 21 Apr 2011 at 12:57 AM
Ah heck, forgot to select the part where they talk about violations of the Open Public Records Act
"In separate news, the superior court has postponed for the third time a hearing on Hartz’s first lawsuit against the EDA, which alleged the agency violated the state’s Open Public Records Act by failing to release documents relating to its decision to award the tax credits to Panasonic. The hearing on the lawsuit, which was filed Jan. 28, originally was scheduled for March 4, and has now been pushed back to May."
#10 Posted by Thimbles, CJR on Thu 21 Apr 2011 at 01:01 AM
Uh... Ryan....
Christie just vetoed an expansion of these credits....
http://www.jerseycityindependent.com/2011/02/23/gov-christie-vetoes-transit-hub-tax-credit-bill-because-it-requires-too-much-affordable-housing/
But hey! Why let this inconvenient piece of reality rock the liberal boat, right?
Of course Christie is determined to keep jobs in his state, Ryan.. Any governor is. And of course anytime there's a $100 million transaction, every politician in the universe will spin it for what it's worth.
But why is it that your article failed to mention the little fact that "Christie's Corporate Welfare" credits were created by a Democratic legislature and signed into law by a Democratic governor? What could Christie have done, if anything, to block the deal?
Looks to me like there's nothing he could have done to stop it.
Don't you think your readers need this little bit of information to make a fair analysis?
#11 Posted by padikiller, CJR on Thu 21 Apr 2011 at 05:29 AM
And that Christie is just continuing in bad conservative tradition to undermine the government's abilities to function and fulfill its obligations and then use their incompetent leadership to strengthen the platform of their anti-government party
I think this says it all about you .... you seem to be under the impression that the purpose of state government is to provide health insurance, high wages, and generous defined benefit retirement packages for its workforce when its purpose should be to provide high quality infrastructure and emergency services to the taxpayers.
#12 Posted by Mike H, CJR on Thu 21 Apr 2011 at 11:51 AM
Quick notes.
"Christie just vetoed an expansion of these credits...."
Based not on an objection to the credits themselves or to the expansion proposed, "I commend the sponsors of this legislation for seeking to encourage mixed use developments, which can offer many benefits to the local community in urban areas" were his words I believe, but based on the legislation not being pro-business enough, "urban transit hub projects should not be required to set aside more than 10% of their housing stock as affordable housing" were his words I believe - with him adding that developers should be allowed to seek waivers of any affordable housing requirements from the Executive Director of the EDA - who just let Panasonic walk away with a 100 million bucks of tax credits for a move down the road.
Why are you trying to deceive these good readers paddy? I demand a correction, a retraction, an apology and a kiss on my rear end you hypocrite.
And though this is off topic:
"its purpose should be to provide high quality infrastructure and emergency services to the taxpayers."
Which will be adequately provided and maintained by low skill McJob personnel living on pensionless minimum wage.
You too can kiss my rear end. When are you people going to get that life's perks aren't solely the preserve of shareholders and executives (you know, the truly overpaid and undertaxed class)? Top heavy cultures are like top heavy buildings, they topple for lack of structural support. You will not have stable economic growth while you allow the parasite class to scam all the fruits of a productive economy, especially now that the consumer credit and consumer confidence is so damaged.
Government has good stable jobs that provide good stable services when conservatives aren't putting Arabian horse traders in charge of them. You want high quality? You pay for high quality.
Or you can do what conservatives in New Jersey did and cancel government contributions to worker pensions, hand the savings out to rich people as tax cuts, bet other pension contributions on risky investments to make up the shortfall, and lose that money too and cry about the budget that magically went sour.
All the while denying any responsibility. Heck of a job, conservatives.
#13 Posted by Thimbles, CJR on Fri 22 Apr 2011 at 01:30 AM