A billion dollars for business

By Deborah Howlett, President

Earlier this week, we calculated that the state, since the start of 2010, had given away $822 million in corporate tax subsidies to 69 businesses through four programs – an unprecedented spree by an administration that not so long ago said the state was so broke it had no choice but to cut funding for school lunches for poor kids. The spree was enabled by a Legislature that quietly beefed up these programs under the guise of job creation.

Even as the ink was drying on our report, we learned the state was again dipping into the well.

The New York Times, citing unnamed sources, said that the state hoped to revive the on-again, off-again Xanadu mega-mall by offering the third developer of the project a $200 million tax break to complete the project. The state, according to the Times’ account, would redirect state sales tax revenues into the bank accounts of the developers.

The project has struggled since construction began in 2007. Over the course of its troubled history, Xanadu has received more than $900 million in public subsidies and tax breaks and $300 million in property tax exemptions. Under this latest proposal, should the deal get signed with Triple Five, the project will fall far short of the original vision and morph into what is really little more than a big shopping center.

The underlying question about the subsidy is whether a taxpayer-financed mall is really the key to building New Jersey’s economy. And are retail sales jobs the best Governor Christie can offer the state’s unemployed workers?

Even more, the bail out of Xanadu pushes to $1 billion the total amount the state has given corporations in tax subsidies over the past 16 months. All of that spending to spur job creation has had almost no effect on the unemployment rate, reducing it by 6/10ths of one percent to 9.3 percent last month according to state Department of Labor reports.

To learn more about the extent of these tax paid subsidies, read our report: A Surge in Subsidies