As the state spent billions to spur job growth and attract new businesses, a new audit suggests New Jersey has yet to see a return on that investment. Worse yet, there’s been little monitoring to track if, or when, we will.
“The comptroller’s report confirms some of our worst suspicions — that billions of dollars worth of state tax incentives were awarded by the Christie administration with little regard to oversight or transparency,” Gov. Phil Murphy said.
At Murphy’s request, the state comptroller’s audit looked at more than 15 years’ worth of incentives doled out through five programs under the Economic Development Authority, or EDA. Think companies like Holtec, Subaru, and a whole host of others that were touted as job savers and creators.
But the report found “Inadequate monitoring, insufficient oversight, and non-existent policies and procedures … ”
“Company claims were taken at face value and never independently verified leading to sometimes overstated awards,” Murphy said.
Since 2005, New Jersey approved 1,000 tax incentive projects worth roughly $11 billion. The rub is, only 401 projects have been certified as hitting the goals to qualify for that benefit.
“As a result of this and other deficiencies the comptroller’s audit cannot substantiate that nearly 3,000 reported jobs out of a sample of just 15,000, or 1 in 5, were ever created,” Murphy said.
Labor unions, left-leaning groups, and even conservative think tanks have long bemoaned the program, Wednesday saying the report reinforces the need for reform. The state comptroller offered several ideas.
“We also recommended that through the course of the award process, the EDA streamline the system that they use to capture and record job retention and job creation data. And we also recommend the EDA look at how they asses fees related to the programs,” said Phil Degnan, New Jersey state comptroller.
“The best reform measure would be to let these programs expire in this July, and replace them with an entirely new set of programs that have accountability and responsibility written into them,” Murphy said.
That includes capping and closely monitoring the funds.
“We are surrounded by states that have robust tax incentive packages, and putting a purge up cap on our program is going to hinder our ability to be regionally competitive,” said New Jersey Business and Industry Association President and CEO Michele Siekerka. “That said, we believe in transparency and we believe in accountability.”
Senate President Steve Sweeney, who initially supported keeping the current programs intact, Wednesday said, “We will work with the administration to create replacement programs that address the same priorities of generating economic growth …”
Murphy called the incentives important to the state’s economy, but said they should be just one tool in a broader strategy. He said all options are on the table, including suspending or pausing the grants, adding that without someone watching promises made won’t be promises kept.
The governor says he plans to work with the Legislature to draft new reforms and vows to track this money down to the last penny.