Smith’s NJEDA Hearing: The Benefits of Connectivity; or the Connectivity of Benefits

Insider NJ's Fred Snowflack gives an analysis of the first public hearing of the special Senate committee established to review NJEDA tax incentive programs and make recommendations on the best strategies for utilizing incentives to promote economic growth.

TRENTON – Phil Murphy likes to say that up to $11 billion in business-incentive tax credits has been possibly misused.

The figure seems a bit high and on Monday, state Sen. Declan O’Scanlon had another word for it – “irresponsible.”

Speaking at a Senate committee hearing into state incentive grants, O’Scanlon, a Republican from Monmouth County, said such loose talk from the governor undermines public faith in the entire Economic Development Authority grant program.

Of course, some may argue that the credibility of the program has been hurt by the EDA itself.

And that is why the committee, witnesses and various onlookers assembled in the Statehouse Annex on a hot day in July.

This is the second panel to look at EDA grants, which are designed to lure – and to keep – businesses in New Jersey. The tax incentive program expired at the end of the last fiscal year June 30, but applications filed prior to that date are still being considered.

A task force named by Murphy has had a few hearings and already has issued a report, suggesting that the program gave favorable treatment to Camden businesses connected to South Jersey political boss George Norcross.

Democratic senators, some of whom are much more inclined than Murphy to seek Norcross’ favor, put together their own committee, which met Monday for the first time. Sen. Bob Smith, the committee chair, immediately set a low bar, saying the committee would not conduct an investigation. A cynic may have responded, “if that’s the case, what’s the point?”

The committee’s official goal was to see how state tax-incentive programs could be improved. Lawmakers passed legislation to extend the program into this fiscal year, but the governor has not signed it.

Testimony from former Sens. Ray Lesniak and Joseph Kyrillos, who were instrumental in putting together the most recent program, was predictable. Both said tax credits are essential to help businesses thrive in a high-cost locale like New Jersey.

That really isn’t in dispute. The ongoing issue is the possibility that the program was beholden to political considerations – those connected benefited; those not connected did not.

After testimony about the need for tax credits, the hearing veered off in another direction.

Smith said publicity about the controversy has business owners calling his office. Their lament is that they are yet to receive the tax credits they were promised.

The man who needed to answer that was Tim Sullivan, who is the EDA’s chief executive officer.

Sullivan, who came across as well-prepared, but perhaps a bit too smooth, said there could be a number of reasons for a delay.

He explained that applications often are modified. For example, sometimes a company says it will bring 300 jobs to New Jersey and brings only 200. Tax credits are generally proportionate to the number of jobs created.

Then there are times when a company doesn’t follow through at all. Awards also can be delayed for inadvertent application errors like putting a figure in the wrong place.

Republican Sen. Joe Pennacchio bluntly asked Sullivan if there was ever “outside pressure”  to delay or approve an application, such as a phone call from a person of influence. Republicans would love to document that type of Democratic hanky-panky.

“No pressure,” Sullivan said. “No one told us what to do.”

Smith eventually asked if the EDA was getting calls from businesses looking for their tax credits.

Sullivan responded, “It’s been a couple of calls, but it hasn’t been around the clock.”

It’s comforting, one supposes, that no one is calling the EDA at 3 a.m.

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One response to “Smith’s NJEDA Hearing: The Benefits of Connectivity; or the Connectivity of Benefits”

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