Public gets to weigh in on state’s embattled tax-break programs

John Reitmeyer | July 10, 2019 | Budget
Task force also hears more about controversial Camden award made to nuclear-parts manufacturer Holtec International

Credit: NJTV News
The task force investigating the state's tax-incentive programs held a hearing in Trenton yesterday.
Members of the public got to testify for the first time yesterday before a task force convened by Gov. Phil Murphy to investigate the state’s economic-development tax-incentive programs, and witness after witness lined up to air concerns about mismanagement and alleged insider dealing.

“We would challenge defenders of these programs to provide statistically significant numbers of working-class or poor people who have benefited from these programs,” said Brandon Castro of the New Jersey Work Environment Council.

But others urged the panel to take a more nuanced view as the probe continues, saying the state has to ensure economically distressed communities like Camden continue to make progress even as new reforms may be enacted.

“Let’s not throw the baby out with the bathwater,” said Camden County Freeholder Jeff Nash, one of several officials from the Camden area to testify during the nearly five-hour hearing in Trenton.

Yesterday’s public hearing was the third held by the task force, which Murphy impaneled earlier this year in response to an audit that raised troubling questions about the state’s ability to administer tax-incentive programs, which can siphon billions of dollars from the state budget. The task force’s work comes at an important time as the state’s primary incentive programs have expired and Murphy and fellow Democrats who control the Legislature have yet to agree on what should be put in place next.

Earlier task-force hearings featured testimony from whistleblowers and expert witnesses who identified gaps in oversight of the now-expired programs. That continued some yesterday as the task force opened the hearing by revealing new questions about the qualifications of a company that received one of the largest incentive packages ever awarded by the state Economic Development Authority.

“Certainly, the EDA should have conducted greater diligence,” said Jim Walden, the task force’s special counsel, as he outlined the new information related to the company, Camden-based Holtec International.

Camden in the spotlight

The state has been offering some form of economic-development incentives for over two decades, but the latest versions of the tax breaks, which were signed into law in 2013 when former Gov. Chris Christie was in office, have generated the most controversy. They include tax-incentive regulations that were written to entice companies in the wake of the Great Recession to move to Camden, one of the nation’s most-impoverished cities, resulting in a groundswell of new development there in recent years.

But the task force has uncovered concerns that the writing of the tax-incentive law itself was influenced by attorneys with close ties to companies that went on to win lucrative tax breaks, and that many of the winning firms have links to Democratic South Jersey powerbroker George Norcross.

One such company is Holtec, where Norcross serves on the board of directors. The nuclear-parts manufacturer received a tax break worth up to $260 million in 2014, but recent reporting by WNYC and ProPublica revealed it failed to disclose an alleged incident involving payments to a Tennessee-based government agency that resulted in the company being temporarily barred from doing work for the federal government.

Such debarment could disqualify a company from getting a tax break in New Jersey, and as a result of that incident — which Walden outlined in even more detail during yesterday’s hearing using documents recently obtained by the task force — the EDA has placed a hold on Holtec’s tax break.

Company officials could not be reached for comment yesterday, but they have previously called the omission an “oversight.”

‘Things we need to know’

During testimony yesterday, Camden City Council President Curtis Jenkins told the panel it is uncovering “things we need to know.”

“This task force has a job to do … whatever you find, if it needs to be addressed, address it,” he went on to say.

But he also told the task force “there have been some successes, no doubt about it, because of the tax incentives” and called for more emphasis on job-training initiatives that would benefit more Camden residents.

“The people of Camden is my main concern,” Jenkins said.

Kevin Barfield, president of the Camden chapter of the NAACP, also praised the task force for its efforts while calling for a bigger focus on city residents.

“I hope that moving forward that the tax-incentive programs invest in the people of Camden and the communities,” he said.

Credit: NJTV News
Sue Altman, state director of NJ Working Families
But Sue Altman, director of New Jersey Working Families, returned to the concerns about the potential gaming of the incentive programs by those with political connections, calling it “an elegant study in New Jersey politics.”

“We are not saying zero tax incentives ever, but rather we must conceive of a community development program that puts people first, that puts the community first,” Altman said. “We can raise a city from the bottom up, not from the top down.”

So, now what?

It’s unclear what exactly will happen next. The Legislature has already passed a bill that would extend the existing programs until early next year. But Murphy is promising a veto and there may not be enough votes for an override. The governor also has his own reform proposals, but they have yet to get anywhere in the Legislature, creating a stalemate.

And also lingering in the background is a bitter disagreement over the state budget that just played out between lawmakers and the governor, including Murphy’s decision to freeze millions in spending approved by lawmakers after they refused to enact a millionaires tax to help pay for those items.

Camden County Freeholder Lou Cappelli referred to the political “turmoil” in Trenton during his testimony as he urged task-force members to keep their focus on the residents in places like Camden.

“Poverty is on the decline in Camden city. We are on the move,” Cappelli said. “Let’s put politics aside (and) put the residents first.”

The leader of the task force, Ronald Chen, a former state public advocate, said the panel is planning to hold additional hearings, with the dates for those events to be announced in the future.