AG Has ‘Tough Questions’ About NJ’s $11B Corporate Tax Breaks

New Jersey’s attorney general has pledged to “figure out what exactly happened and whether any laws were broken” after a recent report revealed a state agency has doled out $11 billion in corporate tax breaks over the past 14 years.

On Monday, Attorney General Gurbir Grewal said that he’s “very concerned” about last week’s report from the New Jersey Office of the State Comptroller, which claimed that gargantuan tax incentives are being offered to private corporations by the New Jersey Economic Development Authority (NJEDA).

Many of the tax breaks were aimed at creating or retaining jobs, which auditors said is nearly impossible to confirm due to the NJEDA's byzantine reporting requirements.

• See related article: New Jersey ‘Squandered’ $11B On Corporate Tax Breaks

“I found the report’s conclusions deeply troubling – both as a public official and as a taxpayer,” said Grewal, who went to school at West Essex High in North Caldwell.

“New Jersey residents have a right to expect that their government will carefully tailor economic development programs to maximize the general welfare and minimize the use of public funds,” Grewal charged. “The comptroller’s audit raises serious concerns about whether EDA’s incentive programs fell short of those expectations over the past decade.”

Grewal said that the audit also “highlighted the lack of robust internal controls at EDA,” raising the troubling possibility that EDA may have failed to sniff out “misrepresentations” made by the companies that profited from the huge tax breaks.

“I spent a significant portion of my career rooting out financial misconduct as a federal prosecutor in Newark and Brooklyn, and I get very concerned whenever I see a state agency distributing so much money, with so little oversight, over such a long period of time,” Grewal said.

“There are many things we still do not know about the historical details of EDA’s incentive programs, but it’s time to start asking some tough questions,” he continued. “As attorney general, I intend to figure out what exactly happened and whether any laws were broken. If it turns out that taxpayer dollars were distributed in violation of civil or criminal law, I will use the full powers of my office to seek recovery of those funds and ensure that the proper parties are held accountable. The residents of New Jersey deserve nothing less.”

Grewal will likely find support for the probe from Governor Phil Murphy, who kicked off the EDA audit with a Jan. 19 executive order.

Murphy pointed out that the NJEDA's corporate tax incentive programs saw $8 billion doled out during the administration of his predecessor, Chris Christie.

"The ineffectiveness of how the state's tax incentive programs were structured and managed has now been laid bare for the eyes of New Jersey taxpayers, and a full accounting of how as much as $11 billion was squandered is now required," Murphy declared on Wednesday.

Murphy – a former banking executive with Goldman Sachs – said that there is a role for tax incentives in economic development, but they must be "targeted and closely monitored" as part of a broader investment strategy.

Those investments could include mass transit, public education, infrastructure, and workforce development, Murphy suggested.

During his tenure as governor, Murphy has advocated in favor of Teva Pharmaceuticals USA, which the NJEDA gave a $40 million, performance-based tax break to move its U.S. headquarters from Pennsylvania to New Jersey, despite multiple lawsuits accusing it of contributing to the national opioid crisis.

Murphy also supported the idea of giving Amazon $5 billion in state tax breaks to locate its headquarters in Newark, a bid that the city ultimately lost.

• See related article: Amazon Officially Passes Up Newark, NJ For New Headquarters
• See related article: NJ Gives $40M Tax Break To Pharma Co. Accused Of Pushing Opioids

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