Saturday, April 07, 2012

New Jersey's governor gets called out in the Times for offering tax breaks, but Bloomberg sounds like a white knight (nah)

In a front-page New York Times article two days ago, Christie Leaning on Tax Subsidies in Hunt for Jobs, New York Times development reporter Charles Bagli took a tough look at New Jersey  Gov. Chris Christie's approval of "a record $1.57 billion in state tax breaks for dozens of New Jersey’s largest companies after they pledged to add jobs."

But the nut graph gave way too much credit to New York:
The generous distribution of subsidies in New Jersey has come under fire from government-reform groups, Mayor Michael R. Bloomberg of New York City and some New Jersey landlords, who contend that the programs are an expensive and ineffective form of assistance to wealthy corporations.
However Christie deserves criticism, Bloomberg is hardly pure. After all, when New Jersey tried to lure Fresh Direct, which needs proximity to neighborhoods in Manhattan and Brooklyn, Bloomberg more than matched the subsidies.

Times columnist Michael Powell wisely called Fresh Direct's flirtation with New Jersey "more a feint than a threat" and pointed out that the city exacted no guarantees from the grocer.

Also, I'd add, Bloomberg offered developer Bruce Ratner $100 million--and then nearly $100 million more, later--for his Atlantic Yards arena-cum-skyscrapers project, leveraged by moving the basketball Nets from NJ to Brooklyn.

And Ratner saved well over $100 million thanks to the issuance of federally tax-exempt bonds. Should the feds subsidize the movement of one sports team across state lines? That's not good public policy, but Bloomberg was fine with that.

Help in NJ

The Bagli article details how New Jersey approved up to $250 million in tax credits for Prudential to build a new office tower even though the jobs were not “at risk” of leaving and that it would have been cheaper to renew its current leases in Newark.

And while Panasonic threatened to leave the state--and thus will get up to $102.4 million in tax credits to move from Secaucus to a new building in Newark--its chairman acknowledged that “probably 80 percent” of the company’s 900 employees wouldn’t have moved.

New York officials last year tried to lure Panasonic to the Atlantic Yards site, but were unsuccessful. Surely Bloomberg was offering some major subsidies.

On Brian Lehrer

Bagli was on the Brian Lehrer Show yesterday, saying that critics "suggest this is not the best way to go, that it's an expensive and ultimately ineffective way of creating jobs."

Bagli expressed some skepticism as to whether Fresh Direct was really going to move to Jersey City, and thus deserving the subsidies Bloomberg offered. So Bagli knows Bloomberg is not quite as noble as he came off in the article.

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