New Jersey Policy Perspective issued Taking Care of Business: Does it Cost Too Much? on December 17, 2003. The report analyzed the state's Business Employment Incentive Program. A year later, several recommendations made by NJPP have been, to some degree, adopted by the state of New Jersey.

• A company's employment situation in a BEIP location should not be viewed in isolation from its other activities in the state.

The Economic Development Authority changed BEIP along the lines of the NJPP recommendation. Instead of looking only at people hired by a company at a BEIP site in deciding whether to continue a grant, EDA now considers a company's statewide employment picture. On grants approved by the EDA Board after mid-October 2004, EDA now requires that a BEIP company maintain at least 80% of its statewide base employment as it stood when the BEIP grant was approved for a period equal to 1.5 times the grant term (15 years for a 10 year grant). If a company's statewide employment falls below 80%, it has two years to return to that level. If a business can't get back to 80% in two years, the BEIP grant will be stopped and the company will be required to give back a portion of the grant money.

• In order to determine whether a company gets a state grant, CEO pay should be required on the BEIP application, on grounds that companies that can afford to pay high salaries do not need money from taxpayers.

EDA took a positive step by changing the BEIP application process. Now, publicly traded companies are required to include in their BEIP application their Securities and Exchange Commission Form 10K which lists executive pay.

• To make public participation easier, information on upcoming meetings of the EDA should be more detailed and available, including prominent placement on the Authority's web page.

EDA now posts on its website detailed agendas for upcoming Board meetings, with dates, times and location.

• New Jersey should adopt a clear, consistent disclosure policy that makes it easier for interested people to find out all subsidies that companies are seeking from the state, what they are offering in return and what the state is giving them. This information should be in a searchable database posted on the EDA web site and in files maintained at EDA headquarters so the public can view the information without having to submit written requests.

EDA now posts on its website, and updates monthly, a table of BEIP grants to companies that have agreed to come to New Jersey. However, this table does not include BEIP grant offers that companies have not yet accepted and the table is not searchable.

• BEIP should be terminated on Jan. 1, 2005 if, before that date, the State of New Jersey has not produced a detailed study that includes evaluation of the program's effectiveness in creating jobs and its impact on state revenues.

EDA took a positive step in the direction of the NJPP recommendation by deciding that BEIP will be evaluated periodically with the assistance of Rutgers University.

There is more to be done to make sure business incentives in New Jersey are accountable and accessible. NJPP looks forward to participating in, and helping to promote, more debate on this important use of tax dollars.

TAX REFORM

WORK & WAGES

BUDGET & FISCAL POLICY

TRANSIT ISSUES

ECONOMIC DEVELOPMENT

VOTING & GOVT REFORM

© 2008 New Jersey Policy Perspective