Friday Facts and Figures: May 24, 2019

Friday Facts and Figures is a brief digital newsletter focusing on data points from NJPP reports, research, and policy debates in New Jersey and beyond.
Sign up here.


$260 Million

In 2014, Holtec International was awarded the second largest corporate subsidy in New Jersey history — $260 million in total, or over $650,000 per job — to build a new headquarters in Camden. Now, the fate of the subsidy is in jeopardy as WNYC has uncovered Holtec’s CEO gave a false answer in its certified application to the Economic Development Authority (EDA). The CEO responded “no” to a question asking if the company had ever been barred from doing work with a state or federal agency, despite being temporarily banned from doing federal business in 2010. According to the EDA, inaccurate data in an application may result in a suspension of the subsidy and/or a recapture of the subsidy. [WNYC / Nancy Solomon and Jeff Pillets]


90 Percent

In the most comprehensive study of tax incentives ever, the W.E. Upjohn Institute for Employment Research concludes that tax credits starve states of critical revenue and negatively impact their overall fiscal health. The study looked at subsidies in 32 states — representing 90 percent of the nation’s tax incentive programs — and found that a reliance on tax credits correlated with higher state debt, a greater dependence on the federal government for revenue, and a higher ratio of total expenditures to revenues. The Upjohn Institute recommends states control costs by setting hard caps, employing strict oversight and benchmarks, and including subsidies as line items in the state budget. These reforms are in line with what NJPP has recommended for New Jersey’s tax subsidy programs. [Governing / Mike Maciag]


300,000+

The Trump administration is considering a proposal to redefine the formula for calculating poverty, endangering millions of Americans who use health and social safety net programs. More than 300,000 children would lose health coverage through Medicaid and CHIP, and more than 250,000 adults who gained Medicaid access under the Affordable Care Act would lose it. Further, more than 250,000 seniors and people with disabilities would lose their Medicare Part D subsidy for prescription drugs. This proposal has been characterized by many as a “War on Poverty,” and its impact would surely reverberate throughout the economy. [Center on Budget and Policy Priorities / Aviva Aron-Dine and Matt Broaddus]


$1,089

Amidst federal attacks on the poorest Americans, New Jersey is considering an increase to its Earned Income Tax Credit (EITC). This would boost the take home pay for more than half a million low-paid workers, with the average credit rising to $1,089. The cost of this increase, $57 million, pales in comparison to the increased cost of corporate subsidy programs, which will balloon from $466 million this year to over $1 billion next year as a result of projects approved under the Christie administration. When comparing the two tax credits, NJPP President Brandon McKoy noted the EITC is “definitely a more effective way to improve the economy. It’s growing the economy from the bottom up.” [NJ Spotlight / John Reitmeyer]


2

A new analysis by Moody’s Investors Service finds that two states —New Jersey and Illinois — are the least prepared to weather a future recession. If a moderate economic downturn occurs, New Jersey could lose up to 18 percent of its major tax revenues, and there isn’t nearly enough funding in surplus and rainy day accounts to mitigate that loss. This report highlights the need for longterm and sustainable sources of revenue, like the millionaires tax, as well as robust annual surpluses. Governor Murphy’s proposed FY 2020 budget assumes a $1.2 billion surplus, but even that’s not enough after years of running structural deficits and not putting money into the state’s rainy day fund. [NJ.com / Samantha Marcus]


Bonus: 3

It’s been a busy week in Trenton, so we’re including a bonus number! In response to ongoing attacks on access to reproductive health care, only three New Jersey lawmakers signed on to a letter denouncing efforts to ban abortion (shout outs to Senator Weinberg and Assemblymembers Huttle and Mukherji). The letter followed the passage of extreme abortion bans in Georgia and Alabama and included signatures from hundreds of state legislators from across the country. In December, NJPP released a report outlining ways lawmakers can promote reproductive health care at the state level. [NJ Globe / David Wildstein]


Have a fact or figure for us? Tweet it to @NJPolicy.