The head of the Economic Development Authority, the agency tasked with overseeing billions of dollars in state tax breaks, is expected to testify at a Feb. 11 legislative hearing on the effectiveness of those incentives, NJBIZ has learned.
Tim Sullivan, chief executive of the EDA, will appear before a joint Assembly-Senate panel examining five of the state’s largest tax incentive programs and the $11 billion approved for businesses under that scheme between 2005 and 2017, according to a legislative source who requested anonymity.
Monday’s hearing comes in response to an audit issued by the State Comptroller in early January finding that the state exercised little oversight on the tax breaks the state awarded to businesses during that 12-year period, making it difficult to determine whether the recipients actually delivered on the promised economic activity.
State Auditor Stephen Eells, New Jersey Policy Perspective Director of Government and Public Affairs Brandon McKoy and Pew Charitable Trusts Senior Officer Josh Goodman are also expected to testify on Monday, the source added.
As the inquiries into the EDA’s incentive programs are ramping up, the agency is expected to hire two high profile white-collar criminal defense attorneys, Eric Corngold and Ricardo Solano, lead attorneys at Friedman Kaplan Seiler and Adelman LLP.
“The EDA is represented by the Attorney General’s Office and does not have its own in-house counsel. Given the inquiries into the state’s incentive programs, including the task force and OAG’s review, outside counsel was retained based on expertise relating to the potential scope of the inquiries,” EDA Chief of Staff Erin Gold said in a statement.
The EDA could not share details of the arrangement, such as the cost, because the contract was not finalized, but Gold said the EDA would cover the expenses, not the state.
Gov. Phil Murphy cited the audit in making tax breaks the main topic of his first State of the State address and calling for dramatically scaled down incentives after the two largest programs – Grow New Jersey and the Economic Development and Growth Program – sunset on July 1.
Days after the release of the audit, Attorney General Gurbir Grewal said that his office would scrutinize all the tax breaks issued to see if any were improperly granted to businesses and whether and laws or rules were violated by companies receiving the breaks. If so, Grewal said he would “seek the recovery of those funds.”
Senate President Stephen Sweeney, D-3rd District and Assembly Speaker Craig Coughlin, D-19th District, established the joint panel in late January, just hours after Murphy unveiled a task force with similar goals.
Sullivan could not be reached for comment, but he previously criticized the methodology of the report and noted that of the $8 billion of tax breaks awarded under the Grow NJ, ERG and Urban Transit Hub Tax Credit programs between 2005 and 2017, only about $700 million was actually distributed.
Sweeney pinned the total amount distributed at $1 billion over those five programs.
The remaining tax breaks would be doled out over 10 to 20 years on the condition that recipients stay in the state and meet certain job-creation and economic activity goals.