Daniel J. Munoz//January 14, 2019//
The state attorney’s office plans to scrutinize $11 billion awarded in corporate tax breaks to see if any were improperly granted to businesses.
Lawmakers were calling for a full investigation following a scathing audit Jan. 9, into the Economic Development Authority’s oversight of its incentive programs, however, Attorney General Gurbir Grewal, in a Monday statement, said his office would see if any civil or criminal laws were violated by companies receiving tax breaks and if so, “seek the recovery of those funds.”
Last week’s audit by the Office of the State Comptroller found that the EDA had little oversight and accountability over $11 billion of tax credits it awarded between 2005 and 2017, making it difficult for the agency to determine if companies actually delivered on their promised jobs and activity.
Grewal said the audit “highlighted the lack of robust internal controls at the EDA, raising the troubling possibility that EDA may have failed to identify material misrepresentations made by one or more entities at the time the agency approved their tax credits.”
“New Jersey residents have a right to expect that their government will carefully tailor economic development programs to maximize the general welfare and minimize the use of public funds,” he said. “The comptroller’s audit raises serious concerns about whether EDA’s incentive programs fell short of those expectations over the past decade.”
Gov. Phil Murphy, a critic of several of the tax breaks vastly expanded under former-Gov. Chris Christie, ordered the audit soon after taking office in January 2018. The governor’s office deferred inquiries to the attorney general’s office, which could not be reached for additional comment.
Wednesday’s report found the EDA lacks adequate ability to monitor the effectiveness of the awards under these five programs, which hampered the agency’s ability to “ensure the transparency, integrity, and accountability of the incentive awards.”
A day after the audit, Sen. Richard Codey, D-27th District, said he wrote a letter to Grewal calling for a full investigation.
In a written response to the audit, EDA CEO Tim Sullivan said a much lower number of tax credits was actually awarded – $696 million out of $8 billion awarded under three of the largest incentive programs: the Grow New Jersey, Economic Redevelopment and Growth Grant and Urban Transit Hub Tax Credit programs.
Murphy has repeatedly expressed desires to let Grow NJ and ERG expire when they sunset on July 1.
“If the company doesn’t meet the criteria, then they don’t get the tax break,” Murphy added.
Sullivan, in his written response, said the EDA could not adopt the recommendations on more intense scrutiny of company compliance, since the legislature has to adopt those policies.
“The NJEDA does not agree with the conclusory nature of the OSC audit deeming certain activities to be “deficient,” despite the NJEDA adhering to statutory requirements,” Sullivan added.
The EDA could not be reached for comment Monday on Grewal’s announcement.