Companies bristle as New Jersey issues tax breaks more slowly

Jul 30, 2019

New Jersey is clamping down on tax break recipients, making sure companies are creating the promised number of jobs before it sends out their yearly credits.

It comes as the administration of Gov. Phil Murphy continues to investigate a program rife with allegations of abuse and self-dealing.

An activist in a chicken suit sits in the first meeting of the Senate Select Committee on Economic Growth Strategies. (Joe Hernandez)

But the added scrutiny has meant the state is slower to send out the annual awards, and industry groups say that is frustrating businesses that have come to rely on the promised incentives.

Christina Renna, senior vice president of the Chamber of Commerce Southern New Jersey, said she received an email from a consultant who represents tax break recipients who claimed the sluggish pace is hurting his clients.

“My clients hound me every week as they need this incentive to cover the significant capital investments in their projects,” the email said. “These companies made commitments to the state and paid significant fees to the [Economic Development Authority], so it is highly unfair the state treats them in this manner.”

But the head of the EDA, Tim Sullivan, said the authority has not sent out any 2018 awards so far because it is vetting data submitted by companies more closely than it was before.

“It shouldn’t surprise anyone that we’re taking our time and making sure that we’re getting it right,” Sullivan said.

The two spoke during the first hearing of the Senate Select Committee on Economic Growth Strategies, which met Monday.

The committee was formed amid questions about whether the EDA was sufficiently vetting applications and holding tax break awardees to the requirements of their agreements.

A state task force convened by Gov. Phil Murphy found evidence that some companies may have lied on their applications for awards. It also learned that politically-connected attorneys helped craft the 2013 law to benefit insiders.

Murphy’s investigation has received significant pushback from South Jersey Democratic power broker and businessman George Norcross, whose insurance firm was among the companies to receive a tax break. Norcross and companies with ties to him have been central to the state’s inquiry.

The Senate Select Committee was created by Senate President Steve Sweeney, a Norcross ally, and Senate Republican Leader Tom Kean in May.

It mostly heard from state officials and industry leaders Monday, but several critics said it should not have met at all.

New Jersey Working Families, a vocal opponent of the tax incentive system, filed a state ethics complaint against five legislators on the committee in June, claiming they had ties to Norcross and could not be impartial.

“Various senators who sit on that committee, who were handpicked by Steve Sweeney himself, … have conflicts of interest and therefore cannot be unbiased participants in this committee that’s supposed to be looking at various tax incentives and a controversy that swirls around George Norcross,” said state director Sue Altman.

Norcross had initially expressed interest in testifying before the committee, but that has not happened yet.

The two main New Jersey tax incentive programs expired in June, and Murphy says he will veto legislation to extend them seven months because it does not include significant changes. Murphy has proposed a new set of tax incentives but it has not gotten a legislative hearing.