Insider NJ

New Jersey Groups Across the Political Spectrum Join Together to Demand Accountability & Reform at the NJ EDA

Insider NJ — March 28, 2019

Trenton — Before Gov. Murphy's special task force convened a hearing on $11 billion in corporate subsidies awarded by the state's Economic Development Authority, grassroots and public policy organizations from across the political spectrum held a press conference praising the investigation and calling for major reforms of New Jersey's tax incentive programs.

A recent audit by the New Jersey Comptroller showed that the EDA awarded $11 billion in corporate subsidies without verifying that the companies had created the promised jobs. Last week, WNYC reported on allegations that the Christie-era EDA put pressure on staff to approve billions in tax credits, manipulated the cost-benefit analysis mandated by tax incentive programs, and turned a blind eye to fraudulent applications.

"Public policy organizations and watchdog groups had warned for years that Chris Christie's EDA was a runaway train," said Rob Duffey, Interim Director of New Jersey Working Families. "We support the task force's effort to identify wrongly awarded corporate tax breaks and hold the right people accountable. Until that investigation is complete, we need a complete freeze on Christie-era EDA awards. Taxpayers shouldn't lose one penny more to this graft."

New Jersey's already generous tax incentive programs began to spiral out of control after Democratic legislators joined with Christie to pass the Economic Opportunity Act of 2013. Under the programs established by the EOA, the NJ EDA pledged billions to profitable and politically connected corporations like Prudential, Holtec, Honeywell, and Campbell's Soup. The bill is now coming due for those individual awards, with New Jersey set to lose $3.5 billion in revenue over the next three years.

"AFP is committed to uniting with anyone to do good by removing barriers to opportunity for all," said Erica Jedynak, New Jersey State Director of Americans for Prosperity. "Recent headlines about the EDA whistleblower lawsuit exemplify why New Jersey is one of the worst states in the nation when it comes to the practice of picking winners and losers—giving special handouts to a favored few and leaving everyone else to pay the price."

The programs established by the Economic Opportunity Act are set to expire this year, and Gov. Murphy has called for significant reforms, including a hard cap on per-job and annual awards, tighter reporting requirements, and targeting awards to emerging industries and homegrown businesses.

"New Jersey must stop the madness and put a hold on all corporate subsidies approved by the Christie administration until an independent investigation is completed," said Brandon McKoy, President of New Jersey Policy Perspective (NJPP). "We already knew Christie-era subsidies were given out with little to no oversight, but now there are credible allegations by former high-level employees that detail a culture of corruption and fraud at the EDA. The need for reform has never been more apparent. Hard caps on per-job and annual awards is the best protection against further abuse. Anyone who stands in the way of meaningful reforms is turning a blind eye to corruption and corporate cronyism."

In many cases, corporations that received EDA subsidies were already paying so little in state taxes that they were able to sell the tax credits to other companies for a profit. According to a recent report by Politico a staggering 126 companies have sold EDA tax credits worth $204 million in 2017 alone.

"Christie's administration rigged the state economy to benefit corporations," said Brandon Castro, Campaign Organizer at the New Jersey Work Environment Council. "Billions of dollars were given away to line the pockets of wealthy executives and there is zero proof that this benefited our economy as a whole. What was produced was the destruction of jobs, deterioration of public infrastructure, and the pollution of our environment."

Public policy, advocacy, and grassroots organizations from across the ideological spectrum had sounded the alarm about the EDA and the Economic Opportunity Act for years before the audit. Nonpartisan research organization New Jersey Policy Perspective meticulously documented the growing cost of these programs, while progressive organizations like New Jersey Working Families and New Jersey Citizen Action and conservative grassroots groups like Americans for Prosperity highlighted the cronyism and corruption baked into the state's tax incentive system.

"Every dollar promised to corporations is a dollar that has to be made up elsewhere, whether through tax hikes or spending cuts," said Dena Mottola Jaborska, Associate Director of New Jersey Citizen Action. "We need sensible limits on these programs so that they don't spiral out of control again, and New Jersey taxpayers must be assured that the companies receiving these tax breaks are holding up their end of the deal."

The press conference was organized by New Jersey Working Families, New Jersey Policy Perspective, Americans for Prosperity, New Jersey Citizen Action, and New Jersey Work Environment Council, and Make the Road New Jersey in a call for greater accountability and transparency at the Economic Development Authority.

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