NJEDA – Enhanced Oversight and Improved Processes Ensure Tax Credits Deliver Benefits to Taxpayers
The New Jersey Economic Development Authority (NJEDA) announced today that it has cut awards approved under the Grow New Jersey (Grow NJ) Program by $350 million under Governor Phil Murphy’s leadership. Through increased oversight and more stringent review processes, the NJEDA has reduced the amounts of Grow NJ awards for 82 companies to date after they did not create or retain the number of jobs they committed to at the time of project approval.
A report issued in January 2019 by the Office of the State Comptroller (OSC) identified significant issues at the NJEDA related to incentive project approvals and oversight. Since then, the NJEDA has taken several significant steps to address specific concerns articulated by the OSC and the Governor’s Task Force on NJEDA Tax Incentives. These steps include more formal data-sharing practices with the New Jersey Department of Labor and Workforce Development and the Department of the Treasury/Division of Taxation to ensure that tax credits are only disbursed to companies to the extent they meet their commitments for job creation and retention.
A follow-up report released by the OSC today acknowledged NJEDA’s considerable progress toward improving its processes and internal controls for administering the State’s various tax incentive programs. As a result of the recommendations made by the OSC and the Task Force, the NJEDA now conducts a rigorous, annual review of more than 400,000 jobs associated with various programs.
The NJEDA has also made a number of critical organizational changes, including appointing a Chief Compliance Officer, creating the Division of Compliance and Program Management, reorganizing its front-end program teams to ensure a more transparent staff recommendation and decision-making process, and procuring an additional independent, external compliance auditor, among other changes. To reinforce a culture of compliance, transparency, and continuous improvement, the NJEDA has provided staff with tools and training to encourage them to ask provocative questions, dig deeper, and employ commercially reasonable skepticism.
“Since the OSC’s initial report, the NJEDA has worked hard to resolve the issues raised in the report and has reinforced its commitment to being a best-in-class steward of taxpayers resources to ensure the programs we administer benefit New Jerseyans and our communities” said NJEDA Chief Executive Officer Tim Sullivan. “While we continue to make improvements and adapt to the changing economic environment, we are proud of what we have accomplished during Governor Murphy’s administration. We also appreciate the OSC’s recognition that the NJEDA has addressed the most significant issues raised in its prior report.”
Sullivan noted that the NJEDA’s commitment to transparency and responsible stewardship of taxpayer resources is clearly reflected in all programs recently launched and under development by the NJEDA, including those created by the Economic Recovery Act of 2020.
The list of companies for which Grow NJ awards have been reduced to date is available here.
Article Courtesy of the NJEDA