Op-Ed: Governor, Legislators Need to Fix Deeply Flawed Tax-Incentive Programs

Analilia Mejia | January 14, 2019 | Opinion
New audit shows that companies gamed the system, and no one stopped them. New Jersey taxpayers should be furious

Analilia Mejia
Last week, the New Jersey Comptroller published a damning audit of the state’s tax-incentive programs. It found that the state Economic Development Authority pledged nearly $11 billion to some of the most profitable and politically connected companies in the world with little oversight or accountability. Companies gamed the system, and no one stopped them.

The audit’s most eye-popping claim: We can’t say for sure whether New Jersey saw any economic benefit from all those tax breaks that were ostensibly supposed to create jobs.

New Jersey taxpayers should be furious, since they are the ones who will foot the bill. But while we have a right to be angry, we shouldn’t be surprised. For years, experts, community leaders, and concerned taxpayers have sounded the alarm on ballooning corporate subsidies. Gov Chris Christie and his enablers in the Democratic Legislature failed to heed those warnings and doubled down on a strategy that clearly wasn’t paying off. In 2013, Christie, Senate President Steve Sweeney and other legislative leaders dramatically expanded the scope of New Jersey’s corporate welfare programs, opening the door to even more fraud and abuse.

The audit is damning, but the problem with these subsidies is not just one of execution. These programs are deeply flawed in principle, especially because giveaways to the wealthy and corporations come at the expense of good schools, clean air and water, and strong infrastructure that has always been New Jersey’s selling point for employers.

Every budget season, legislators bemoan a lack of funds to fix our roads, bridges, and transit system or fully invest in our schools. They skip or shortchange pension funds and kick responsibilities down the road. This year alone, corporate subsidy programs will cost us $1 billion that could be used to fix New Jersey’s roads and bridges, increase access to preschool, or even deliver property-tax relief to working New Jerseyans.

Looking for transparency and accountability

Most serious research shows that targeted corporate subsidies aren’t a draw for major employers. We end up paying companies to do what they were already planning to do based on the needs of their businesses. But if we are going to have tax-incentive programs, they should be transparent and accountable and targeted to “mom and pop” shops instead of financial giants.

The good news is that Gov. Phil Murphy and legislators have an opportunity to do right by taxpayers and fix this terrible mistake. First, we must immediately freeze all existing grants to companies and issue no new grants until we have accounted for every single penny given to more than 400 corporations. The Murphy administration should carefully investigate fraud, and where they find it, they must take those subsidies back.

Most importantly, we can’t continue to throw good money after bad. The EDA programs in the audit report are set to expire this year. That opens the door for the radical reforms we need. For years, the experts and advocates in the Better Choices for New Jersey campaign have offered commonsense fixes and limitations on our corporate-welfare programs. It’s time to give them another look.

But let’s be clear: This cannot be business as usual in Trenton. The taxpayers of New Jersey must have a say in how these programs are designed and implemented, because they are the ones who ultimately will cover the cost. It’s time to stop the backroom deals and let in a little sunlight.