In an effort to revive Camden’s sagging economy, New Jersey has been offering tax credits to businesses that promise to relocate to or remain in the city. A recent analysis of the numbers proves just how much money the state is willing to forego to help the ailing city.
Since the beginning of 2014, the Economic Development Authority has offered more than $800 million in tax credits to 11 companies to remain in or move to Camden. That means the state is paying about $275,000 per job (excluding temporary construction jobs) in tax credits to companies that set up shop in the distressed South Jersey city.
Lauren Gilchrist, vice president of research at the real estate firm Jones Lang LaSalle, says although the price tag seems steep, it’s difficult to compare tax credits for Camden to tax credits anywhere else.
“It is a bit of a high level just anecdotally based on my experience,” she said, “but … it’s very difficult to compare place to place on an incentives basis.”
In exchange for the tax breaks, companies promise to create jobs and invest in their businesses over a 10-year period.
Critics say the tax credit program wagers potential tax revenue on an economic gamble that may not pay out, but Gilchrist says the tax breaks will likely benefit Camden’s economy down the road.
“It would be difficult to assess the long-term impact without additional data to prove out the case,” she said, “but Camden will definitely see a net benefit from the relocation of these jobs to the city.”
Unlike Philadelphia, Camden does not have a city wage tax that would directly create revenue from the new jobs. Gilchrist says much of the benefit would come from putting land and buildings back to work and having more people commuting to Camden. Many of the companies relocating to Camden are coming from to close by that they’re not expecting to have to replace many existing employees. Governor Christie’s administration argues these incentives have helped keep companies in the state who might have moved to Pennsylvania or elsewhere.
Last month, amid growing criticism of the EDA program, state Sen. Raymond Lesniak (D-Union County) announced that New Jersey would hire Rutgers University to take a closer look at how the agency distributes tax credits.