Citizen Organizations Demand NJ EDA Board Preserve Documents in Advance of Potential Lawsuit Over Mismanagement & Abuse
Trenton- A lawyer representing community and citizen organizations sent a letter to the board members of the New Jersey Economic Development Authority demanding they preserve documents and correspondence in anticipation of a potential taxpayer lawsuit over years of alleged mismanagement and abuse around $11 billion in corporate subsidies to profitable and politically connected companies.
“There’s a long of taxpayers holding negligent or corrupt public officials accountable through the courts,” said Rob Duffey, interim director of New Jersey Working Families. “If the NJ EDA Board won’t do the right thing and resign over this $11 billion corporate gravy train, taxpayers may have to take matters into their own hands.”
The letter comes three weeks after fifty-six organizations demanded the non-ex-officio members of the NJ EDA Board resign over an $11 billion scandal at the agency. That demand was echoed by Gov. Phil Murphy, and the Star-Ledger editorial board. Former EDA Board Chairman Larry Downes resigned a week later, but other members of the board remain, including Vice Chairman Charles Sarlo, Phillip Alagia, Fred Dumont, Massiel Medina Ferrara, Louis Goetting, Bill Layton, and Thomas Scrivo.
“Grassroots groups are increasingly turning their focus to Trenton, and they won’t stand for the mismanagement of billions of dollars in economic development for some of our state’s most distressed communities,” said Sue Altman, board member of South Jersey Women for Progressive Change.
In January, New Jersey State Comptroller Phillip Degnan released a scathing audit which found the NJ EDA lacked basic internal controls and oversight necessary to determine whether companies that had received tax incentives from the state were creating the jobs they promised. In response to the audit, Gov. Murphy has convened a special task force headed by Ronald K. Chen to investigate.
“NJ 11th for Change applauds the efforts of the New Jersey Working Families Alliance to take judicial action on behalf of the people of New Jersey,” said Saily Avelenda, executive director of NJ 11th for Change. “We are tired of reading story after story about how New Jersey’s resources are being given away to a few select insiders, with little documented benefit to New Jersey. We are tired of the EDA Board continuing to ignore the concerns of activist groups. Litigation is always a last resort, but the EDA Board has left the people of New Jersey with no choice.”
Last month, WNYC reported on a whistleblower lawsuit alleging that Gov. Christie’s Business Action Center pressed EDA staff to approve tax incentives without due diligence and may have turned a blind eye to fraudulent applications. One week later, another whistleblower came forward to tell Gov. Murphy’s task force that her employer lied about its plans to leave the state in order to receive a tax incentive. Worse, the EDA awarded the company the tax incentive even knowing the company had failed to comply with the terms of a previous grant.
“Action Together New Jersey strongly supports legal measures to preserve all documents pertaining to the EDA’s tax incentives program. In the interest of full transparency, the people of New Jersey deserve full insight into the former administration’s corporate-lobby-driven activities, including the egregious hand-outs awarded to undeserving entities at the expense of taxpayers,” said John George, economic policy director of Action Together NJ.
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.
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.
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.
Signers of the letter include South Jersey Women for Progressive Change, NJ 11th for Change, Cooper River Indivisible, SOMA Action, Westfield 20/20, Our Revolution Essex County, Our Revolution Union County, Our Revolution Ocean County, Ridgewood JOLT, Camden Parents Union, NJ Communities United, Good Government Coalition of New Jersey, NJ Badass Teachers Association, NJ 21 United, NJ 7 Forward, Action Together New Jersey, Indivisible NJ 5th District, and Stand CNJ.