N.J. firms are seeing delays for tax credits and EDA chief says it’s to ensure accuracy
The EDA has “significantly enhanced” its processes for verifying that companies created promised jobs, in exchange for the credits, and that is “taking some time,” the agency's chief said at a legislative hearing Monday.
A New Jersey legislative committee examining state tax credit programs pressed the head of the Economic Development Authority on Monday about complaints from businesses that the agency is holding up their tax credit awards.
Yes, agency CEO Tim Sullivan acknowledged, the agency is taking longer to review those tax credits so the data can be reviewed and verified.
Sullivan was one of 10 witnesses who appeared before the special state Senate committee, as legislators launched their own review of tax credit programs that are the subject of multiple investigations and a heated political battle among Democrats in Trenton. The programs expired June 30, and Democratic Gov. Phil Murphy has not signed legislation that would temporarily extend them until early next year.
Murphy appointed an investigative task force in January, after a scathing comptroller’s report found “significant” problems with EDA’s oversight of the multi-billion-dollar tax incentives. In a report last month, the task force said it identified $500 million worth of tax credit awards that it has either referred for suspension or termination, or that recipients have agreed to voluntarily terminate.
Democratic Sen. Bob Smith (D., Piscataway), the committee’s chair, struck a different tone at the outset of Monday’s hearing, saying the panel would not be looking into the actions of individual businesses. “This committee is not planning to conduct an investigation of any companies, or of the governor’s task force,” Smith said. "This is a deliberative procedure.”
Legislators heard from former state Sen. Raymond Lesniak, one of the authors of the 2013 tax incentives legislation, as well as New Jersey Chamber of Commerce president and CEO Thomas Bracken, and former EDA board chair Larry Downes.
During Sullivan’s testimony, Smith and other members of the panel repeatedly asked whether companies were now experiencing holdups on their awards. Smith said he was concerned about businesses being caught in a “catch-22," for example, if they have bank financing tied to the tax credits.
“My office has been getting calls … from existing awardees who are suggesting that EDA is not providing the tax credits that they were promised,” Smith said. He asked Sullivan whether that was true, and how many companies were affected.
Sullivan said that since the comptroller’s report, the EDA has “significantly enhanced” its processes for verifying that companies created promised jobs, in exchange for the credits, and that is “taking some time.”
“There hasn’t been a revocation or a declination of those tax credits," Sullivan said. “They just haven’t been issued yet this year, as we go through the process, and make sure we’re doing our homework, and we’re in a position to say with certainty that the companies did what they said they’re going to do.”
Sullivan said he would provide the committee with a list of companies that are due to receive credits this year, and have not received them yet.
South Jersey political power broker George E. Norcross III — whose insurance brokerage won approval for $86 million worth of tax credits — has said he is willing to testify before a legislative committee, but he was not slated to speak Monday.
Norcross is suing Murphy over the creation of the task force, which has questioned aspects of his company’s tax credit application. Norcross’ insurance brokerage, along with several other firms in the case, have denied any wrongdoing. A hearing in the lawsuit is scheduled for Wednesday in state Superior Court.