In its third report, the Tax Incentive Task Force hammered the New Jersey Economic Development Authority’s culture for vetting applications for tax breaks.
“In administering the tax incentive programs, the EDA has fostered a permissive culture of getting to yes with applicant companies which resulted in a predisposition of EDA personnel to approval of tax incentives, and at higher amounts when possible,” said task force chair Ronald Chen.
The task force concluded that culture led to sloppiness and the Economic Development Authority (EDA) overlooking obvious red flags. For example, 15 companies applying for tax breaks all used a Blue Hill Plaza office complex in New York, just across New Jersey’s northern border. At one point, three applicant companies used the same office space at the same time.
“Although the EDA had these three applications pending at the same time, it appears that no one from the EDA even noticed that the three companies had offers for the same space. What did the EDA do? It approved all three applications,” said chief counsel Jim Walden.
NJ Spotlight budget and finance writer John Reitmeyer explained what the report found.
“This brings out clear examples of what looked like [companies’] efforts to stay here all along,” Reitmeyer said.
Giving law enforcement a clear picture
The task force has made 12 referrals to law enforcement for investigation, suggests $578 million in awards should be investigated and some of that should be terminated. A member of the task force said it did its work to help law enforcers see a clear picture of what happened.
One member faults the origin of the tax incentive program — the drafting of the Grow NJ bill in 2013.
“I’ve never seen anything quite like lawyers literally drafting the Senate version of the bill with the specific aim of benefiting their clients with none of that being disclosed to the public. I frankly think that that’s just shameful,” Walden said.
South Jersey powerbroker George Norcross has clashed with the Murphy administration over the program and recently lost a battle to reinstate a lawsuit over the work of the task force. Norcross-related companies have been awarded millions of dollars in tax breaks. He testified last year about it.
“Nothing would have occurred in Camden without these tax incentive programs. They did what they were precisely designed [to do] by the Legislature and the governor,” he said in November 2019.
A statement from the insurance company that Norcross chairs said, “We are not aware of any reason why Conner Strong & Buckelew’s incentive award would be denied or modified and today’s report offers none.”
An end to EDA program
The sun set on the EDA’s program last year, with lawmakers this year proposing how to move forward. The task force has recommended 27 changes in all. One in the latest report targets consultants.
Gov. Phil Murphy applauded the work of the task force at his daily coronavirus press briefing on Wednesday.
“They have shone a light on a really ugly reality,” he said.