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Legislative Hearings into Tax Incentives Will Be Unlike ‘Slanted’ Task Force

Lawmakers to conduct their own probes of controversial programs but signal their efforts will be more sympathetic than recent investigations

Craig Coughlin, Phil Murphy & Steve Sweeney
L to R: Assembly Speaker Craig Coughlin, Gov. Phil Murphy, Senate President Steve Sweeney

As political tensions continue to rise over the future of New Jersey’s corporate tax-incentive programs, and the Murphy administration’s ongoing investigative task force, lawmakers say they will launch their own in-depth review of the state’s economic development policies and the Trenton-based agency that administers them.

The stated goal of a series of upcoming legislative hearings that were announced last week is to give lawmakers an opportunity to evaluate what’s been working and where improvements could be made to the tax-incentive programs that were established nearly six years ago.

But after a state comptroller’s audit and gubernatorial task force investigation have raised serious questions about the Economic Development Authority’s handling of the incentive programs — including uncovering possible criminal conduct — the hearings will also give legislative leaders who have adopted a more sympathetic view of the programs than the reform-minded Gov. Phil Murphy a chance to paint them in a more favorable light.

In fact, in announcing the hearings last week, Senate President Steve Sweeney (D-Gloucester) told reporters that Murphy’s task force has been “slanted” and that lawmakers need to get a more rounded story, including how the incentive programs have helped communities throughout the state in the wake of the Great Recession.

“We want to get to the bottom of everything,” Sweeney said. “See what’s right and what’s wrong.”

The Assembly will follow a similar course, according to Speaker Craig Coughlin (D-Middlesex), with its own set of hearings. They will “fairly examine” the current programs, which are up for renewal at the end of June, he said.

“It is obvious that the Legislature needs clarity in terms of how the New Jersey Economic Development Authority is doing business,” Coughlin said.

While the tax-incentive programs have long been a subject of debate in New Jersey, the discussions have intensified in recent months following the release of an audit by the Office of the State Comptroller that raised serious concerns about the EDA’s ability to oversee the incentives. In more recent weeks, a special investigative task force impaneled by Murphy has taken testimony from whistleblowers who’ve raised concerns that the incentives — designed to be awarded to companies for moving to, or not leaving, New Jersey — have been gamed.

Cutting close to home for Sweeney

Some of the task force’s work has also cut very close to home for Sweeney, who worked closely with then-Gov. Chris Christie in 2013 to craft the current tax-incentive programs in a way that benefited economic-development projects in Camden. Testimony taken earlier this month cast doubt on representations that were made by several companies with ties to Sweeney ally and South Jersey Democratic powerbroker George Norcross when they applied for and eventually were awarded lucrative tax incentives.

George Norcross
Credit: NJTV News
George Norcross

That has led to a circling of the wagons by Norcross and other Camden advocates who have credited the tax incentives for generating an ongoing economic revival in the city, which is one of the poorest in the country.

As a war of words between Sweeney, Norcross and Murphy has escalated — Norcross recently suggested that Murphy should expect a primary challenge in 2021 — the notion that the Legislature should hold its own hearings on the incentive programs was first suggested by top Republicans.

Sweeney credited GOP leaders for calling for hearings and said they would be bipartisan. In fact, the Senate will likely take testimony from former members like Ray Lesniak (D-Union) and Joe Kyrillos (R-Monmouth), who both specialized in economic-development policy during their long tenures, and other policy experts, Sweeney said.

The hearings, which will be led by a special committee, would also look beyond Camden to evaluate the use of the tax incentives in recent years, Sweeney said. They would include Newark, New Brunswick and Atlantic City, he said.

Looking for the plus side

“They still haven’t shown the plus side to the incentive programs,” he said of Murphy’s task force.

Meanwhile, Coughlin said the Assembly hearings will be led by the Commerce and Economic Development Committee. The goal will be to “study the efficacy and viability of the programs and ensure we are maximizing the return on our investments,” he said.

Coughlin also noted that the legislative hearings are coming at a critical time, with the current tax-incentive programs due to expire on June 30. If new policies aren’t crafted in time to replace them the state would no longer be able to offer businesses any enticements to come to New Jersey or at least keep from leaving.

“Tax incentives are an important tool to allow New Jersey to compete with other states in maintaining existing jobs and attracting new ones,” he said.

Murphy, a first-term Democrat, has already proposed major policy changes as he wants the tax-incentive programs to become more targeted toward specific policy goals, such as historic-site preservation and brownfield redevelopment. The governor is also insisting that lawmakers cap the size of the incentives to lessen their impact on the already-strained state budget. So far, lawmakers have yet to embrace his calls for major reform.

The governor spoke at length about the tax incentives on Friday while addressing a daylong conference organized by New Jersey Policy Perspective, a Trenton-based think tank that has been outspoken in its criticism of the existing programs. During his remarks, the governor said the tax-incentive discussions need to remain focused on policy in the run-up to the June 30 deadline.

“Some of the most pressing debates in our state could use a little less invective and a little more fact,” Murphy said.

“I ask you to be part of this effort, and to help us rise above the noise and the invective with a truthful and fact-based case to the people of New Jersey,” he went on to say.

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