As A Matter Of Fact...We’ve got a situation: NJ taxpayers snookered

September 26th, 2011 | Published in NJPP Blog: As a Matter of Fact …
By Sarah Stecker

Do a quick Google search and you will find over 170 citations on New Jersey giving out what has been dubbed the “Snooki Subsidy.” That is a reference to the decision on September 14 by the state Economic Development Authority (EDA) to give a $420,000 film tax credit to the production company, 495 Productions Inc., which produced the first season of MTV’s reality show “Jersey Shore.” Following a public uproar, the governor said a few days ago he is considering blocking the film tax credit for that show.

Try a second Google search and you will find but 29 articles on the state’s decision to give a subsidy worth as much as $82 million to Pearson, Inc., so the publishing company will move its workers in Upper Saddle River to a new building in Hoboken. The subsidy comes from the state’s Urban Transit Hub Tax Credit, which is meant to create new jobs in the cities by encouraging companies to invest capital in urban areas near transit stations. To qualify, a company must bring in a minimum of 250 jobs. The credits are then deducted from the company’s state corporate tax obligation.

People in New Jersey are expressing more outrage over a relatively small, half-million dollar subsidy for a reality show than they are over tens of millions being given to a global corporation simply to shift existing jobs about 27 miles within the state.

New Jersey has decided to award Pearson the subsidy even though the company has decided to move about a third of the firm’s existing New Jersey workforce to New York City, where it stands to collect up to another $50 million in tax subsidies. In the end, by playing New Jersey off New York, Pearson could collect more than $130 million in subsidies from two states for just moving jobs around the region.

Not even Snooki is that brazen.

Several questions come to mind about the Pearson subsidies. First, and foremost: How important were the subsidies?

Perhaps the New York City location is attractive enough without the subsidies. EDA certainly seemed to think that on September 14 as reflected in its summary of the Pearson grant:

The alternative site option[to New Jersey] is 330 Hudson Street in Lower Manhattan, New York which is proximate to where Pearson has current operations and is desirous from both the talent pool with the skill sets the company seeks combined with the co-location of certain related business and editorial activities within facilities to enhance collaboration and productivity.

It turns out that assessment was accurate. Pearson will move more than 600 workers to 330 Hudson Street, according to an announcement by the company September 19. Clearly, the company wanted to take advantage of that local labor pool and the opportunity for current staff to be close to one another. Those seem like core business reasons to move operations.

A second question might be why officials and taxpayers in New Jersey are unhappy about giving $420,000 to subsidize Jersey Shore production, but seemingly glad to divert up to $82 million in taxpayers’ money to a successful publisher which didn’t even keep all of its employees in New Jersey?

While Jersey Shore certainly is a questionable place to invest taxpayer dollars, investing tens of millions to keep a few hundred jobs in Hoboken rather than lower Manhattan is an unwise investment on a far greater scale. And, it greatly undermines the state’s ability to provide important services to all residents.

MM Note: Earlier today Governor Christie stripped Snookie and the rest of her Jersey Shore pals of the $420K tax subsidy that they enjoyed during their first season of production.

Officials in Seaside Heights and those in the film industry testified at a committee hearing last week stating that tax incentive was well worth it because it brings millions of dollars and additional jobs to the state.

So was this just another example of the the Governor being penny foolish and acting tough without realizing the the potential consequences of his actions just make himself look better to his Republican friends that are courting him to run for President next year? Maybe