BUSINESS & ECONOMY

Lawmakers probe state comptroller’s audit of EDA tax breaks

BY Brenda Flanagan, Senior Correspondent |

Protesters gathered outside the State House Annex because they weren’t invited to testify inside against New Jersey’s corporate tax incentives programs. They pointed to a recent comptroller’s audit that criticized the state Economic Development Authority for exercising poor oversight over $11 billion worth of tax breaks awarded to businesses between 2005 and 2017.

“And dare I say, it is quite Trumpian. We have corporations benefiting from political connections, from personal relationships with power brokers, with politicians, in order to fatten their own paycheck, in order to line their own pockets,” said Sue Altman, a board member with South Jersey Women For Progressive Change.

Many EDA tax breaks went to companies that agreed to locate in Camden during the Christie administration’s efforts to boost that region’s economy. But locals and union leaders claim the benefits — the jobs — did not trickle down.

“They’ve taken care of their cronies, their friends, the politically-connected, the chosen few, and we’ve seen it down in Camden County and it’s disgraceful,” said Ray Greaves, chair of the New Jersey State Council of the Amalgamated Transit Union.

The audit, ordered last year by Gov. Phil Murphy and highlighted in his State of the State speech, stated the EDA couldn’t verify whether 48 companies had actually created the jobs they promised in order to qualify for tax breaks. Monday, two committees of lawmakers met jointly to probe for more information. First, they wanted the names of those 48 companies. They didn’t get them.

“You do not want to reveal the names of those corporations that you audited?” asked Sen. Shirley Turner.

“Well, we did not audit the awardees. The audit was focused on EDA,” said State Comptroller Philip Degnan. “If I were to disclosed that list publicly today, it could be the first time that they’re aware this was going in with respect to their business, and that’s why I think there’s a fairness component here.”

The comptroller noted absence of proof in EDA records doesn’t mean the jobs weren’t created, or that the companies were, by law, at fault. They may have submitted what the law required.

“EDA did not do enough to confirm the data. Those jobs may exist, they may not exist. What I’m explaining is that determination was beyond the scope of the work we did,” Degnan said.

“I feel EDA stopped short of acting as a program partner and approached the program as an information processor doing only what they thought was necessary under the statute,” said State Auditor Stephen Eells.

The EDA has paid out only about $700 million of the $11 billion in tax break obligations and claims it’s already enacting reforms to ensure data is properly policed, including a partnership with the Department of Labor to track and verify job creation.

“Certainly make clear, we have room to improve our processes. We’ve already begun a number of those important steps,” said New Jersey’s Economic Development Authority’s CEO Tim Sullivan, “with regard to our internal processes to make sure we’re collecting the right data.”

The governor and the attorney general also authorized separate inquiries into the EDA, which has hired outside attorneys. But on Monday, CEOs of companies that received EDA tax breaks told lawmakers the incentives were crucial to their development and decision to stay in New Jersey.

“With the infusion of money, the tax credits, we have been able to purchase new equipment that has enabled us to go into some new markets and compete with these large corporations,” said Michael Amato, CEO of Camden Yards Steel Company.

The state comptroller will be expecting an action plan from the EDA within the next two to three months showing how it will improve oversight. Meanwhile, lawmakers will sit down to hammer out a new state budget and will pay particular attention to any new programs offering corporate tax credits.