The state’s Economic Development Authority released $52.7 million in tax breaks to 31 companies even as the agency ramps up its scrutiny of New Jersey’s now-expired corporate incentive programs to make sure businesses are following the rules.
Only 10 of the projects involved, amounting to $11.6 million, received awards under the Grow New Jersey program. The other 21 companies whose incentives were released were participants in the Economic Redevelopment and Growth gap financing program and represented $41.2 million of tax breaks. Both programs expired in July.
In total, the 31 companies were awarded $533.3 million of tax breaks which would be awarded in increments over ten years.
Records obtained by NJBIZ in July show that a total of 64 companies had their payments under the Grow NJ program put on hold while the EDA vetted the documentation they submitted to determine whether the recipients actually created the agreed-upon jobs and economic activity.
Altogether the 64 companies were awarded $175.5 million in 2018 for taxes they paid in 2017—$151 million under Grow NJ and $24.4 million under an earlier version of the program.
The EDA records indicate that the agency is “reviewing all 2018 annual tax credits” resulting in the delays in payments.
“We continue to be focused on ensuring that taxpayers get what they were promised when tax credits were awarded,” EDA Chief Executive Officer Tim Sullivan said in a Sept. 19 statement. “While our more rigorous process has taken some additional time this year, applicants can be confident that when they provide the data we need to verify their jobs, they will receive the awards they’ve earned.”
Sullivan maintained that the slowdown of payments came in response to the state comptroller’s January audit, which found that the EDA’s oversight of the program was insufficient.
According to the audit, the EDA over-awarded tax breaks, or awarded incentives to companies which never should have received them in the first place. Moreover, the EDA failed to make sure companies were compliant with the tax break agreement.
For example, nuclear energy parts manufacturer Holtec International, which received the state’s second-largest award at $260 million and where South Jersey political power broker George Norcross serves as a director, had a$26 million award put on hold.
According to a task force Murphy convened in January to examine Grow NJ, Holtec claimed in its application that it was not barred from any federal contracts even though it was ineligible for such work following a bribery scandal involving the Tennessee Valley Authority.
This information should have been discovered and would have been grounds to slow down the application, reduce the award amount or reject the application, the task force said.