Companies tricked NJ into giving them tax breaks by claiming they’d leave
A special task force created by Gov. Phil Murphy a year and a half ago to examine the Economic Development Authority’s tax incentives program found widespread problems and abuses.
The report concludes hundreds of millions of dollars in tax incentives were improperly given to companies to help encourage them to stay in New Jersey rather than move to other states because they never really intended to go elsewhere.
It details how so-called consultants, who really acted as lobbyists, helped companies design applications for tax millions of dollars in incentive grants that sometimes stretched the truth, or abandoned it altogether.
Former state public advocate Ron Chen, the chairman of the New Jersey Task Force on the Economic Development Authority’s Tax Incentives, said the EDA did not have adequate or consistent review processes to review whether a company satisfied the requirements under the programs, “which could lead to approval of awards with insufficient or inadequate information, or should in some cases have led to rejection of some applications or a significant reduction in the amount of certain awards.”
He said in administering these tax incentive programs, the EDA “has fostered a permissive culture of getting to yes with applicant companies, which resulted in a pre-disposition of EDA personnel to approve awards for tax incentives.”
Chen said much of this culture “can be attributed to the inherent temptation to treat tax incentives as an apparently unlimited source of funding.”
Jim Walden, the task force’s special counsel, said the report identified $578 million in incentive grants that need additional investigation, and in some instances certain ones have been referred to law enforcement agencies.
Chen said if New Jersey moves forward with a new tax incentive system, “then EDA needs to have the resources to develop a robust review and enforcement mechanism that can effectively protect against abuse.”
After the report was released, Murphy said his administration “will not tolerate fraud or self-dealing and we will ensure that every dollar of taxpayer money is spent wisely and effectively. Moving forward any incentives offered must produce the number of promised jobs for our state.”
You can contact reporter David Matthau at David.Matthau@townsquaremedia.com