- Associated Press - Friday, May 8, 2015

A New Jersey law adopted in 2013 to streamline and beef up incentives for businesses to move to the state or stay here has become more controversial as it has played out. Here’s a look at the issues surrounding the Economic Opportunity Act.

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THE STATE ADMINISTRATION HAS USED THE NEW INCENTIVES AGGRESSIVELY

Since the redesigned and more generous programs under the Economic Opportunity Act were launched at the end of 2013, New Jersey has promised companies $2.4 billion in future tax breaks as incentives.

For comparison, the state pledged $4.2 billion total for business incentives from 1996 through November 2013.

Because incentives vary so much by state, it’s hard to compare them directly, but New Jersey’s program is now considered among the most generous.

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IT’S DRAWN BUSINESSES TO CAMDEN

Camden is one of the most impoverished cities in the country. A series of revitalization efforts for the city have fallen short of expectations.

The Economic Opportunity Act was championed by Democratic lawmakers from the Camden region and signed by Republican Gov. Chris Christie, and it includes special incentives to make Camden a more attractive place to do business. Companies can offer higher incentives there than elsewhere. And firms can qualify if they project generating less benefit to taxpayers over time if they choose Camden.

The incentives have attracted several companies to the city, including the U.S. headquarters for Subaru, the practice facility for the Philadelphia 76ers and a headquarters and factory for Holtec International, which makes components for the nuclear power industry.

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COMPLAINTS HAVE RAMPED UP

This week, state Sen. Raymond Lesniak, a Democrat from Elizabeth who was one of the 39 legislative sponsors of the original bill, introduced a measure to tighten up the incentives’ details.

It would require the administration to report to lawmakers on the progress of the programs. It would also change one key Camden-specific provision.

Currently, projects in the city have to have the potential to generate tax revenue equal to their benefits after 35 years. Under Lesniak’s proposal, it would shorten that time frame.

His proposal was made days after the liberal New Jersey Policy Perspective released a report showing that the incentives could cost taxpayers millions if the businesses lived up to their end of the deal but left after just 15 years - as they would be allowed to do.

Some of the key companies who have been approved for tax credits say they intend to stick around longer than that.

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BUSINESSES HAVE TO MEET CONDITIONS TO GET TAX CREDITS

To receive the tax credits they’re approved for, businesses have to meet conditions. Most of the credits are being awarded over 10 years.

To qualify for each year’s allocation, the companies must reach investment and/or employment goals for that year. And if the companies stop meeting their requirements for a time after they receive the breaks - generally five years - the state can try to make them repay.

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IT WILL TAKE TIME TO KNOW THE IMPACT

Few of the firms that have been approved for tax credits in the past 18 months have started receiving the credits yet.

And even when they do, it could take years to measure how much they help their communities and how much taxpayers get back because of their decisions.


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