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The incentive programs used to help attract companies to New Jersey and retain the ones already here lacked sufficient management and oversight, according to a report released today by the Office of the State Comptroller.
The audit looked at 1,000 projects that had received nearly $11 billion in tax incentives and cited a lack of monitoring and controls, noting that EDA’s economic benefit analyses relied too heavily on data provided from the incentive recipients.
At a news conference to discuss the report’s findings, Gov. Phil Murphy said that in a sample of 15,000 jobs reportedly created or retained by the tax incentive programs, nearly 3,000 —1 in 5 — could not be substantiated. The comptroller’s report did not identify the companies involved, but Murphy promised the state would “aggressively pursue violators.”
Murphy said that going forward he wanted tax incentive programs to be used in a more “sensible, fiscally responsible manner” and discussed allowing programs such as Grow NJ to expire in July and be replaced by one that imposes a lower annual cap on job-based incentive awards.
NJBIA President and CEO Michele Siekerka, Esq., later said that state tax incentive programs for businesses of all sizes are an important part of overall economic strategy.
“We do have concerns that imposing a cap for a jobs-based incentive program will strike at our regional competitiveness,” Siekerka said. “That said, NJBIA has always supported transparency and sufficient monitoring of these programs to ensure that the state is getting the most back for its investments.” (Go here to read the full NJBIA statement).
The report was ordered by Murphy a year ago. The audit reviewed awards going back to 2010. At the time, Murphy said the EDA had spent $8 billion in tax incentives between 2010 and 2017, compared to just $1.2 billion between 2000 and 2010.
The programs included in the comptroller’s analysis were the Business Retention and Relocation Assistance Grant Program (BRRAG), the Business Employment Incentive Program (BEIP), and the Urban Transit Hub Tax Credit Program (HUB), the Grow New Jersey Assistance Program (Grow NJ), and the Economic Redevelopment and Growth Grant Program (ERG). BRRAG, HUB and BEIP were phased out in 2013 and replaced by Grow NJ and ERG.