TRENTON — It was Chris Christie’s last major act as governor of New Jersey and, for a change, nearly everyone supported it: billions of dollars in tax breaks for Amazon if the tech and retail giant chooses to locate its second headquarters in Newark.
The tax incentive package, signed into law by Christie on Thursday afternoon and worth as much as $5 billion, is the latest move — and one of the biggest — in a scramble by nearly every state in the union to lure Amazon with tax breaks and other promises. Different states and cities are taking different approaches, despite concerns in some quarters about triggering a race to the bottom with taxpayer-funded incentives for corporations.
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“The most important thing to me is that we’re not giving away ice cream in the winter time,” said state Sen. Ray Lesniak, a Democrat and the primary sponsor, of New Jersey’s efforts to beat rival states. The New Jersey package is “what we decided was necessary to close the deal. The biggest loss to New Jersey is if they went elsewhere.”
“Today’s bipartisan action proves that nobody in any other state wants Amazon’s HQ2 more than New Jersey and the City of Newark, and there is nowhere better for this tremendously innovative job creator to grow and thrive,” Christie said as he signed the bill Thursday.
Amazon wants the headquarters to be in North America, and received 238 bids in October from suitors across the United States, Canada and Mexico — all feverishly vying for the 50,000 jobs and $5 billion investment that the e-commerce giant says the facility will bring. Only seven U.S. states did not bid: Arkansas, Hawaii, Montana, North Dakota, South Dakota, Vermont and Wyoming.
“It speaks to the urgency in a lot of places to position themselves in the advanced economy,” said Mark Muro, a senior fellow in the Metropolitan Policy Program at the Brookings Institution. “This looks like a fast way to accelerate one’s entry into the industries of the future.”
Amazon expects to decide on the location this year. A company spokesman declined to comment on a more specific timeline.
An analysis Brookings conducted in September, based on Amazon’s proposal criteria, gives high marks to the New York metro region, which by extension could include neighboring New Jersey. The area benefits from an existing technical workforce and transit infrastructure, even if it suffers from congestion.
“It would be hard to hire 50,000 people in many metropolitan areas,” Muro said. “The pool of requisite talent is surely one of the most important factors. That makes the big urban centers more likely.”
In Christie’s case, an Amazon deal bringing tens of thousands of jobs to the Garden State might improve a political legacy badly in need of a boost. And the Amazon package barely drew any opposition. The state’s Democratic legislative leaders signed on quickly when Christie proposed the plan. When Senate President Steven Sweeney hesitated, arguing that he first wanted a commitment that Amazon would locate in New Jersey, Christie warned that he would “be damaging New Jersey’s opportunity to get Amazon here.” Sweeney got back on board.
Christie’s successor, Phil Murphy, who will take office Jan. 16 has criticized state incentives for corporations in the past. The state’s use of corporate incentives has ballooned under Christie, totaling $8.3 billion since Christie entered office eight years ago. Murphy, a Democrat, has indicated he will consider scaling back the tax break programs.
But, afforded the luxury of not having to take a stand before he took office, Murphy kept quiet on this one, as Christie pushed it through the process.
As Jersey neared the end of its lame duck session Monday, the state Senate cleared the bill, 30-0, hours after the Assembly approved it, 61-10.
The deal comes with conditions: Under the proposal, Amazon must create 30,000 jobs and make $3 billion in capital investments to qualify for the tax breaks. With the company receiving $10,000 per job, per year, the tax credits could be worth $5 billion over a decade, and potentially more if Amazon were to create additional jobs.
Not everyone supported the bill. Assemblyman Jay Webber was the only lawmaker to speak out against the proposal in the lower house.
“Nothing in this bill is aimed at helping property taxpayers. This is aimed at one company and one company only,” Webber said. “It’s a bad deal.”
New Jersey Policy Perspective, a left-leaning think tank, also condemned the proposal, saying that if the state wants a stronger future, it must reform the use of these tax breaks.
“Instead of coming up with a sensible plan to reverse billions of dollars of disinvestment in New Jersey’s top economic assets, like public transit or higher education or high-quality preschool, the state’s lawmakers have doubled down on trickle-down economics by clearing the way for a gigantic tax subsidy for Amazon,” said Jon Whiten, vice president for NJPP, in a statement.
Amid those kind of concerns, New York City officials have made clear that they have no intention to put forward the kind of tax incentives Christie proposed. But the city does have some nondiscretionary state-authorized incentive programs that Amazon could automatically qualify for if the company were to choose the city for its headquarters. The state has also put together a bid for the headquarters, and, sources said, a package of incentives.
“We think New York City is a very strong contender. We think this will ultimately come down to talent. This is a company that needs to hire 50,000 of the best and brightest people in the country. Other cities may claim they can attract those kinds of workers, but New York is the only city that already has them,” says Melissa Grace, the deputy press secretary for Mayor Bill de Blasio.
Unlike New Jersey, New York is keeping its cards close to the vest, on the theory that announcing how much it’s willing to spend to draw Amazon could trigger a race to the bottom.
Amazon is expected to announce a short list of cities that made it to a “second round” of consideration sometime soon. New York City officials are optimistic their bid will make the cut. In a list of 10 likely sites for the second headquarters compiled by Moody’s Analytics last fall, both New York City and Rochester, New York made the cut.
In New Jersey, most lawmakers seem comfortable with the risks of the huge tax incentive package.
“The message we are sending out,” said New Jersey Assembly Minority Leader Jon Bramnick, “is New Jersey is ready to do business.”