The Select Senate Committee on Economic Growth Strategies won’t be used to investigate Gov. Phil Murphy’s tax incentive task force, State Sen. Bob Smith, the committee’s chairman, said Monday.
“To be clear, this committee is not planning to conduct an investigation into companies or the governor’s task force,” Smith said. “This is a deliberative proceeding intended to help the legislature make economic development policy.”
During its first hearing Monday, the EGS committee heard testimony from a number of those who support the Economic Development Authority’s tax incentive programs, which have come under fire following revelations that some firms received awards after submitting deficient applications.
Former State Sens. Raymond Lesniak and Joe Kyrillos, who led the charge to implement the 2013 legislation that created the tax incentive programs called for Murphy to sign a bill on his desk extending the troubled programs for seven months.
“I ask governor Murphy to quickly sign the seven-month extension of our current tax incentives and that you work quickly with Gov. Murphy to establish a tax incentive program that overcomes New Jersey’s competitive disadvantages while recognizing the depth and magnitude of our stress,” Lesniak said.
Though, while both former senators supported the programs, they agreed that reforms — largely those related to oversight — were needed.
Murphy has said he would veto the extension bill absent reforms, which legislators say won’t come until after the EGS committee and the Assembly Commerce and Economic Development Committee conclude hearings meant to identify the problems plaguing the programs and the fixes to the same.
“These tax incentives are not handouts. If a business does not produce the jobs and enhance revenues that are promised, they don’t get the credit,” Kyrillos said. “It’s as simple as that. We don’t shell out cash. It’s a credit on new revenues that we would not have otherwise.”
While many of those testifying largely followed the line set by Senate President Steve Sweeney and others who back the troubled EDA programs, EDA CEO Tim Sullivan, a Murphy appointee, took aim at one of Sweeney’s favorite talking points.
Though he has the power to veto the EDA board’s minutes, Murphy, Sullivan said, does not have the authority to veto individual EDA awards made under the Grow NJ program, which expired on July 1.
Language in the program’s enabling legislation guarantees the awards to companies who qualify.
Smith said tax incentive and economic development experts will testify at the committee’s future hearings. He expects the EGS committee to hold between three and five more hearings.
Representatives from the Chamber of Commerce and other business advocacy groups also pushed for the incentives to be extended and made clear their opposition to caps on tax incentives sought by Murphy.
Even a former EDA board chairman pushed for the incentives to be reinstated, warning that failing to do so would imperil the state’s economy.
“We really need those incentives, and I would add to that just to reiterate, the way I think about them is we’re going to need to make additional investments right now into the form of tax credits to attract businesses here are going to hire people and invest capital,” former EDA chair Larry Downes said. “We believe that’s going to become a problem. I can’t tell you when it’s going to be a problem, but it’s going to be a problem.”