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An expert witness at a state Senate hearing on New Jersey’s next set of corporate incentives said there was “no evidence” that tax breaks, or the state’s current lack of any incentive program, had any bearing on its ability to attract business and economic development.

“While undoubtedly useful, the discussion is often premised on the assumption that incentives are tools states must use,” Jackson Brainerd, policy specialist for fiscal affairs for the National Conference of State Legislatures, told lawmakers on Thursday at a meeting of the Senate tax break committee – tasked with hashing out a new set of economic incentives for New Jersey.

Gov. Phil Murphy allowed the Grow New Jersey corporate tax break program to expire on July 1, after he declined to sign a measure extending the program until January. Since then, the state has since been without a flagship tax incentive program, and proponents argue the lack has put New Jersey at a considerable disadvantage for attracting business.

There is no evidence the number of economic tax incentives bear any relation to the broader performance of a state’s economy.

– Jackson Brainerd, fiscal affairs policy specialist, National Conference of State Legislatures

But Brainerd argued that this simply was not the case – if  New Jersey continued it’s “unusual state” of not having any incentives, the state would not be worse off down the road.

“There is no evidence the number of economic tax incentives bear any relation to the broader performance of a state’s economy,” he added. “And there is quite a bit of evidence that tax incentives often fail to achieve their stated goals and can have a negative impact on a state’s fiscal health.”

The other academic heads who appeared before lawmakers Thursday also downplayed the role that tax incentives would have in boosting statewide economic development, suggesting that the state ought to throw its efforts behind job-training and labor and workforce development.

It marked a reversal from the first hearing by the Senate committee, where former state Sens. Ray Lesniak and Joe Kryillos, as well as business advocates, argued New Jersey would be left in the dust without an incentive program.

“Although incentives can make a difference, a lot of times they don’t,” W.E. Upjohn Institute for Employment Research Senior Economist T.J. Bartik told lawmakers. “The ‘but for’ of incentives – the percentage of incented jobs that would not have existed in the state ‘but for’ the state providing these incentives – is less than one-quarter of the incented jobs.”

The state had a relatively poor return on investment for the tax incentives it awarded, according to Bartik: $66,000 per job versus the national average of roughly $33,000 per job.

Bartik cited the case of Amazon scoping out sites nationwide for its second North American headquarters. The eCommerce giant chose New York City over Newark, despite New Jersey dangling a $5 billion tax break and New York City a $1.5 billion incentive.

“This is a good example of why tax incentives don’t drive location,” Bartik added. If they did, Amazon would have chosen to “locate its new facilities in Maryland and Newark, not New York and Virginia.”

The tax break program, especially how it was crafted to attract business to Camden, drew intense condemnation at the hearing from Michael Lahr, director of the Rutgers Economic Advisory Service.

Under Grow NJ, the state had a one to one ratio for return on investment, meaning that for every dollar spent on incentives, New Jersey had to get at least a dollar back through taxes, such as sales and income. Lahr said that should be bumped to a one to four or five ratio.

In a series of at-times tense back and forth with lawmakers, Lahr decried such provisions as so-called “phantom taxes,” where companies moving to Camden could count property taxes they would not have to pay as taxes calculated in the net benefits test, so that they could win much larger awards. “There’s bad math in that, it’s insanity to me,” Lahr said.

“Some of the lower ratios, most of those happen in distressed areas,” state Sen. Joe Pennachio, R-26th District, responded. “You may not have gotten as much out of that area that’s distressed unless you happen to be the one that’s getting that job.”

Lahr also decried the city’s use of payment in lieu of property taxes, which many companies took advantage of in order to move into Camden, saying the city gave up its one major source of income.

At the very least, the state needs to get involved with negotiating the PILOT agreements so that Camden and other cities win a much more favorable agreement. But Smith noted that the companies submit payments on those properties that the city would otherwise not have received.

Other proposals floated on Thursday included for businesses to partner with community colleges and other schools to train the local workforce. New Jersey could also take note of Oregon’s tax break clawback provisions to recover funds the state overpaid, or if the business did not follow through on the jobs it promised to create. Oregon offers the tax breaks as loans which are forgiven if the business fulfills what it promised under the tax incentive agreement.