NEW YORK (Reuters) - New Jersey’s new governor, Phil Murphy, signed an executive order on Friday calling for an evaluation of the state’s corporate tax break programs by the comptroller’s office before year-end.
The Democratic governor’s order came just a day after Newark, New Jersey, made the final-20 list of cities that retail giant Amazon.com Inc (AMZN.O) was considering for a second U.S. headquarters.
Newark has offered the company a hefty incentives package, and the state recently enacted a law that would provide Amazon tax incentives to locate its “HQ2” there.
The comptroller’s office is charged with completing a performance audit of the New Jersey Economic Development Authority’s incentive programs before the end of 2018, according to a statement from the governor’s office.
“Tax incentives play a role in smart economic development,” Murphy, who was sworn into office on Tuesday, said in the statement. “But they have to be the icing on the cake, not the cake itself.”
Over the last 10 years, New Jersey’s corporate subsidies have skyrocketed. The Economic Development Authority has spent $8 billion in tax incentives since 2010, compared with $1.2 billion spent between 2000 and 2010, Murphy said.
Further, according to an analysis by the New Jersey Policy Perspective think tank, the state authorized $1.2 billion in 2017 alone for corporate subsidies, compared with $51 million in 2007. Over that period, the state authorized the highest amount of subsidies in 2014, at $1.8 billion.
Earlier this month, as part of an effort to lure Amazon’s “HQ2” to New Jersey, then-Governor Chris Christie, a Republican, signed into law a bill that would allow a business to receive a tax credit of $10,000 a year for each full-time job created at its second headquarters.
To be eligible for the credits, a business would have to create at least 30,000 new full-time, high-paying jobs and make a capital investment of at least $3 billion at a site in the state, according to the bill.
Amazon said on Thursday that 20 locations, including Newark, made the first cut in the competition to find a second headquarters, where it promised to invest $5 billion and create 50,000 jobs.
Reporting by Stephanie Kelly; Editing by Daniel Bases and Jonathan Oatis