NJPP Monday Minute 9/6/10: Having your cake and financing it too State awards cake baker for Christie inauguration a BEIP grant

Earlier this year, Gov. Christie suspended New Jersey's film tax credit for the fiscal year 2011 - a reasonable move given the staggering budget situation that the state faced. The movie and TV industries protested. Actors, producers, lobbyists and small business owners testified against eliminating the credit.1 When lawmakers passed a budget without the credit, NBC's Law & Order: Special Victims Unit moved its production back to New York.2

But the governor's elimination of the film tax credit did not stop the state from favoring another television production with a $45,000 grant from New Jersey's flagship business subsidy, the Business Employment Incentive Program (BEIP). The recipient of the state's largesse: Carlo's City Hall Bake Shop in Hoboken, the subject of TLC's reality show "Cake Boss, " and the bakery that supplied the cake for Governor Christie's January inauguration. The Star-Ledger reported that the inauguration cake was donated and would retail for about $15,000. The cake was a twin-bed sized diorama of New Jersey sights including an edible version of the Goldman Sachs tower in Jersey City - ironic since the real version of this tower has benefitted from multiple BEIP grants.

In April, in a decision that received no press coverage, the state Economic Development Authority (EDA) approved the BEIP grant to Carlo's Bakery Inc., the owners of which operate Carlo's City Hall Bakery. The Cake Boss wanted the state's help in opening an additional cake and dessert manufacturing facility to accommodate increasing customer and restaurant demand. It plans to hire 30 new workers who would be paid an average annual salary of $35,000.

When the application was approved, no location had been selected. The bakery owners said the new facility does not need to be near its original Hoboken bakery. If the Cake Boss were to locate his additional facility in one of the state's municipalities where economic development is most encouraged, such as Jersey City, Newark, Paterson or New Brunswick, the grant could increase from the estimated $45,000 to $144,000.

The funding for the BEIP subsidy comes from the state income taxes paid by the new employees. Instead of the state using these tax collections entirely for property tax relief as the income tax was intended to be used, the state returns a portion to the employer. That amount is based on a number of factors, including location, and can be as much as 80 percent of income tax withheld. Since its inception in 1996, the BEIP subsidy has paid out $856.4 million in grants to businesses, according to the EDA.

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1. Siriwardane, Venuri. "TV industry joins fight to keep N.J. tax credit." Star-Ledger. June 15, 2010. www.nj.com.
2. Arrue, Karina. "Jersey loses when Law&Order: SVU leaves North Bergen, Hudson pols blame Gov. Christie's suspension of $10 million film tax credit." July 30, 2010. www.nj.com