Yesterday the Christie administration proposed to “slow the implementation schedule of the conversion of BEIP grants into tax credits” as part of its plan to close a looming 2017 budget gap. This is just more proof that New Jersey’s surge in business tax subsidies is simply unaffordable.
This proposal – combined with projections released last week by the EDA showing a growing budget hole from BEIP and other subsidy programs – clearly shows that policymakers need to rethink this flawed economic development strategy, which favors short-term thinking over long-term prosperity.
When the state couldn’t afford to keep its commitments to these businesses, it converted the annual payments from budget line items to future tax credits, which kicked the can down the road and made the dollars lost to these subsidies harder to see.
Now the state can’t even afford the anticipated first-year loss from the tax credits, and is looking at kicking the can even further down the road.
If policymakers want to offer such lucrative tax breaks to corporations, they should make the hard choices and find the money to pay for them – not merely push the costs off to future policymakers, who will be forced to contend with an ever-shrinking pool of revenues to pay for pressing state needs.