SOUTH JERSEY

South Jersey firms praise return of tax pact

Carol Comegno
@CarolComegno
Subaru of America executive Dan Dalton thanks Gov. Chris Christie for reversing his decision to end the reciprocal income tax agreement with Pennsylvania at a press conference Wednesday at Campbell Soup headquarters in Camden with state legislators and other business leaders, such as South Jersey Chamber of Commerce President Debra DiLorenzo , right.

CAMDEN - Some South Jersey companies considered leaving the Garden State after Gov. Chris Christie nixed a reciprocal tax agreement with Pennsylvania.

At a news conference Thursday to thank the governor for recently reversing his decision, South Jersey state legislators and business executives said the initial decision would have had devastating impacts on the area economy.

The agreement, in place since the late 1970s, allows an employee to pay income taxes to the state where he or she lives. Business leaders worried losing that incentive would chase skilled employees out of their jobs or force them to abandon expansion plans here.

Vice presidents of Subaru of America, Inc., which is moving its headquarters and national training into Camden; and Destination Maternity Corp. of Florence said they looked at options that included possibly moving out of the state.

EDITORIAL: Bistate tax deal with Pennsylvania should be saved

Dan Dalton, vice president and chief human resources officer for Subaru, said progress on the pending construction of its training center building on Broadway in South Camden intentionally "slowed" because of the income-tax issue.

Subaru spokesman Michael McHale said company President Tom Doll was "clearly reviewing" not just the training center but the new headquarters already under construction and due to be occupied in early 2018.

Dalton expressed concern Subaru could lose members of its highly skilled workforce if employees were forced to pay New Jersey's higher income tax. The state has a graduated income tax that is as high as 8.97 percent, while Pennsylvania's tax is a flat 3.07 percent.

"About one-third of our employees currently are living in Pennsylvania and some were looking to go to other companies there," Dalton said.

"We also began getting contacts from other states (about moving) … but we're back concentrating (on Camden). We are very pleased the governor rescinded his action and we are interested in a strong and vibrant Camden and in hiring and training some of its residents."

Ronald J. Masciantonio, executive vice president and chief administrative officer for Destination Maternity Corp., said his firm was exploring a possible relocation from the new facility it rents in the Haines Industrial Park in Florence.

"Without reciprocity, this company would have been been hard-pressed to move from Philadelphia to New Jersey last year because it had told the 600 employees they would not have to pay higher income taxes," he said. "When the issue of reciprocity went sideways in September we were hugely disappointed and spent a good part of the last few months thinking of alternatives …

"Now we are committed to growing and staying in South Jersey," he added.

Kelly Johnston, Campbell Soup vice president of government affairs, said the company's 1,200 employees in Camden – more than one-third of whom live in Pennsylvania – were vocal about their opposition to Christie's plan.

"We're here to thank the governor because reciprocity agreements allow us to retain the best workforce possible," he said. "And for us in Camden, it is also about attracting and keeping investment and jobs in the city and region that's been our home since 1869."

Campbell's hosted the news conference at its Camden headquarters. Business leaders there also praised Senate President Stephen M. Sweeney, D-Gloucester, and Assembly majority leader Louis Greenwald, D-Cherry Hill, for finding the budget savings to convince the governor to reverse his decision.

Other area businesses also considered the elimination of reciprocity so important that they would be looking for satellite offices in Pennsylvania and even consider raising employee salaries despite the expense, according to South Jersey chamber Executive Vice President Kathleen A. Davis.

Sweeney led the fight against the governor's decision with other regional legislators, major businesses, the Chamber of Commerce of Southern New Jersey and other groups.

He found a source for $200 million in savings for the state by streamlining and modifying the pharmacy benefits system, persuading the governor to change his mind. Christie had cited a state budget shortfall as the reason for ending the pact.

"I want to thank the governor for keeping an open mind. I think we have corrected the problem employers had (in considering possible departure from South Jersey) and put a bad decision to bed for good this time, so let's move forward – not backward," he said.

Carol Comegno; (856) 486-2473; ccomegno@gannettnj.com