NJ Gov. Chris Christie Won't Beg NBA Nets to Stay But Happy to Shower Corporate Welfare on Others
Here's brassy New Jersey Gov. Chris Christie on the NBA Nets leaving the Garden State for greener pastures in Brooklyn:
"My message to the Nets is goodbye," Christie said. "You don't want to stay here, we don't want you. I'm not going to be in the business of begging people to stay here."
The Nets have played the last two of their 35 years in New Jersey at the Prudential Center Arena in Newark, built in 2007 by the city and the NHL's New Jersey Devils.
"That's one of the most beautiful arenas in America they have a chance to play in," Christie said. "It's in one of the country's most vibrant cities and they want to leave here and go to Brooklyn? Good riddance. See you later."
Tough talk, for sure, and welcome from any pol (though Newark is "one of the most vibrant cities" in America? Not quite; its population peaked in 1930).
But if Christie is too busy to beg the hapless Nets to stick around, it's only because he's on his knees before other corporate-welfare recipients such as Panasonic, Prudential, Campbell's, and Goya Foods:
Since taking office in 2010, Gov. Chris Christie has approved a record $1.57 billion in state tax breaks for dozens of New Jersey's largest companies after they pledged to add jobs. Mr. Christie has emphasized that these are prudent measures intended to help heal the state's economy, which lost more than 260,000 jobs in the recession. The companies often received the tax breaks after they threatened to move to New York or elsewhere….
The New York Times reports what economists everywhere can tell you: This sort of handout (part of the New Jersey plan offers up to 100 percent in tax credits for capital projects) rarely works as intended, especially when it comes to promises to create jobs.
Consider the case of Prudential, which is the big kahuna in Newark. Prior to the handouts, the company had "acknowledged" that it wasn't planning on leaving New Jersey and that its current location at Newark's Gateway office complex was "low-cost options by a wide margin when compared to the cost of new construction." The governor's sweet offer of $250 million in tax credits, however, cajoled Prudential into building a brand-new complex a couple of blocks away, while promising to "create 400 new jobs, including 100 coming from outside New Jersey." The landlords of the place Prudential is leaving are suing:
They contended that Prudential would have renewed its lease if not for the state's intervention in the form of tax credits. The state's decision, the landlords said, amounted to "corporate welfare at its worst."
Another agreement has also stirred criticism. In February 2011, the state approved a $42 million tax break for Campbell's Soup to renovate its longtime headquarters in Camden and add new jobs.
Campbell's then announced in June that it would eliminate 130 jobs in Camden. The administration responded by reducing the subsidy to $34.2 million and warning Campbell's that it could not use the tax credits until it restored the work force to the level before the job cuts and added five jobs a year for a decade.
For some background on this sort of corporate welfare and its failings, check out "The Folly of Southern Hospitality," which details why lavish subsidies don't work as promised. And here's a recent study in The Cincinnati Enquirer of Ohio firms given tax breaks to create jobs. The results? The companies collected 100 percent of offered breaks while hitting the jobs numbers only half the time.
If Chris Christie wants to turn Newark—and New Jersey—into something approaching vibrant, tax breaks for companies that aren't planning on leaving their current offices, much less the state, isn't the way to go about it.
And neither is proposing a budget that would spend 8 percent more in the next fiscal year (which starts in July) than the curent budget—and relies on an increase in revenues of 7 percent.