In a politically charged atmosphere, the chairman of the Select Committee for Economic Growth, Sen. Bob Smith, downplayed expectations.
“This committee is not planning to conduct any investigation of any companies or of the governor’s task force. This is a deliberative proceeding intended to help the Legislature make economic development policy,” Smith said.
The first witnesses were two former state senators who sponsored the major tax incentive laws. Former State Sen. Ray Lesniak said without incentives there would have been no Jersey Gardens Mall, no Revel Casino, no Panasonic in Newark, no groundbreaking like the one for Teachers Village in Newark.
“The four tax incentives, in addition to creating jobs and improving neighborhoods, generated hundreds of millions of dollars of tax revenues into our state and local treasuries,” said Lesniak.
“I fear the good work we’ve done in attracting and creating jobs over the past several decades is at risk. Unfortunately, a toxic political environment is already having a chilling effect on the business community and companies looking to relocate here or to stay here,” said former State Sen. Joe Kyrillos.
Gov. Phil Murphy has been arguing about tax incentives with Democratic power broker George Norcross and Senate President Steve Sweeney all year.
The governor created a task force to study Economic Development Authority awards. Norcross is trying to block that task force in court. The Senate hearing is Sweeney’s answer to the Murphy task force. Former EDA chairman Larry Downes alluded to all that.
“I just say, senator, the point that you made, with everything going on right now, let’s get to the bottom of it and let’s fix it. And if things can be done better, and I can tell you that my former colleagues in EDA feel like this, let’s fix it and fix it quickly,” said Downes.
Murphy wants a smaller program focused on startups and innovative mid-size companies. Tim Sullivan is Murphy’s man in charge at the EDA.
“We have not seen in our economy that kind of growth, of young companies going from one to two people in a garage or at a coffee shop into a Fortune 500 company. We need much more. That’s what the governor’s innovation evergreen fund and a whole suite of innovation economy initiatives are designed got focus on,” said Sullivan.
A panel of business leaders lamented what’s happened to the once widely respected agency.
“The absolute vilification and ongoing vitriol of the EDA, its programs, its employees, most based on misinformation, is totally uncalled for and is damaging the reputation of the state. It is basically a situation where guilty until proven innocent of all recipients of tax incentive programs,” said Tom Bracken, president of the New Jersey Chamber of Commerce.
Critics have argued Smith has a financial connection to Norcross, as Smith’s law firm represents an insurance fund with links to him.
“We do our due diligence, so the first thing we did when that suggestion was made was go to the ethics officer of the Senate. She’s reviewed all the documents, everybody’s contract, reviewed the structure and organization, she said there’s no conflict of interest,” said Smith.
The major tax incentive programs expired on June 30. The Legislature quickly passed a bill to extend them for seven months. Whether the governor will sign or veto that bill, or make a deal, remains one of Trenton’s big questions.