GOP lawmaker proposes four-bill package to curb tax break ‘abuse’

Updated: Oct 2, 2019

By: Daniel J. Munoz/ NJ Biz

A new series of bills would increase scrutiny of the state’s Economic Development Authority, tasked with overseeing New Jersey’s controversial and now-expired corporate tax breaks, following both media and government reports that the agency lacked oversight and that the incentive program was crafted in a way to benefit politically connected figures.

Assemblyman Ryan Peters, R-8th District, unveiled a four-bill package on Tuesday to ramp up oversight of the agency.

His legislation does not address the central matter of extending the multibillion-dollar Grow New Jersey corporate tax breaks, or hashing out their potential replacement.

“It’s absolutely critical we extend these programs, but if the system behind them is broken, it’s just as dangerous continuing with them as is,” Peters said in a statement.

The legislation calls for the creation of the Office of Economic Development Inspector General within the EDA. Appointed by the governor, they would wield the power to monitor and investigate the workings of the organizations and report on its activities in an effort to root out “fraud, waste and abuse” of the state’s tax incentive programs.

It’s absolutely critical we extend these programs, but if the system behind them is broken, it’s just as dangerous continuing with them as is. – Assemblyman Ryan Peters

Another proposal is the creation of an EDA Economic Development Auditor, who would work under the inspector general and scrutinize any businesses that have won or already possess economic incentives from the EDA. The auditor would monitor compliance with the tax incentive program, such as whether the company created or retained the agreed-upon amount of jobs for the state.

In addition, the auditor would report any company that did not comply with the incentive agreements, while the inspector general would bring those findings to the agency’s board of directors to decide on actions such as clawing back tax breaks or withholding payments.

A task force Gov. Phil Murphy convened in January has presented allegations and evidence that businesses with close ties to South Jersey political powerbroker George Norcross presented bogus plans about where out of state they would move – despite no such actual plans – if they did not win the tax breaks, with the advice of law firm Parker McCay, where George’s brother Philip is a partner.

“We’ve witnessed the unearthing of hidden influence and rampant abuse within the [EDA] and how it doles out billions of dollars in tax incentives. We need to turn a spotlight on the process and put greater controls in place to hold accountable the elected officials, lobbyists and businesses that benefit from our tax-incentive programs,” Peters added.

Restoring public trust

The legislation would expand the state’s definitions around lobbyists who try to influence local and state-level laws, so that anyone who has done at least an hour of work would have to register as a lobbyist, down from the current 20-hour threshold.

The matter of alleged unregistered lobbying was frequently brought up by the task force, which alleged that Parker McCay attorney Kevin Sheehan wrote several provisions of the Grow NJ legislation that benefited businesses in which George Norcross had a financial interest.

Peters contended the threshold was a glaring loophole in state law allowing figures such as Sheehan to go under the radar with his alleged work.

“Let’s just say Kevin is completely innocent, but if you’re going to look at it and go ‘huh, George Norcross’ brother Philip hired Kevin and Kevin wrote last-minute stuff into law,” Peters told NJBIZ. “The public’s trust in the Legislature, how do you recover that, and my package, this is how you restore that.”

Democrats have dismissed Peters’ proposals as mere electioneering, given that the Burlington County Republican is up for reelection this year.

“Election years really bring out the hypocrites,” said Mickey Quinn, a spokesperson for the 8th Legislative District and senior adviser at the New Jersey Democratic Assembly Campaign Committee. “Just two months ago, Trenton politician Ryan Peters voted to extend the tax credit programs that he is current vilifying.”

Former State Sen. Ray Lesniak put out a series of proposals last week for a scaled back version of Grow NJ which he called “Grow New Jersey 3.0,” but Murphy wants to completely do away with Grow NJ.

The Assembly Democrats Office had no comment while the Senate Democrats Office could not be reached for comment.

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