A bipartisan senate committee released their recommendations on reforming New Jersey’s Economic Development Authority (EDA).
The special committee, chaired by Democratic Senator Bob Smith with Sen. Joe Pennacchio as vice chairman, mission to provide greater transparency and oversight to the EDA, improve it effectiveness of the policies used to create jobs, attract investments to distressed communities and generate long-term economic growth in New Jersey.
The 25 proposals the committee suggested include the creation of an independent inspector general to oversee the EDA, a chief compliance officer within the authority, the annual recertification of awards with additional penalties for violations, and the Senate’s advice and consent on the appointment of top EDA officials.
“We took a hard look at the programs in place to determine the reforms needed to make them work with more transparency and accountability,” said Sen. Smith in a statement released with the report. “We reviewed past practices with a critical eye so that we can develop constructive strategies for economic growth.”
According to Smith, the report provides a blueprint for reform and improvement to maximize the state’s ability to compete for jobs and economic growth, especially those in distressed communities.
The recommendations include a strict cap on individual awards, but no annual limit on the total program; an increase in the “net benefit” standard to require a greater return on investment, and a revision to the “but for” test that invites companies to pursue plans to relocate to other states.
Additional, the report found more support was needed for job training, affordable housing, residential tax credits, a program targeted for small and mid-sized businesses, and community benefit agreements.
Sen. Pennacchio commended Smith for producing a review of the tax incentive programs in a fair and bipartisan manner.
“Given New Jersey’s challenging business environment, we believe the final report represents a thoughtful strategy to make the Garden State more competitive, create new opportunities for residents, and better protect taxpayer dollars,” stated Pennacchio. “The report includes significant input from Senate Republicans that reflect many of the priorities we laid out at the beginning of the process.
The panel’s other members included Sens. Nilsa Cruz-Perez, Dawn Addiego, Joseph Lagana, and Declan J. O’Scanlon.
The incentive program under the EDA has been heavily scrutinized since a task force appointed by Gov. Phil Murphy found the agency did not have adequate procedures in place to vet applications for billions in lucrative awards and a lax culture when it came to evaluating applications by companies vying for the state’s tax incentives.
The governor’s office cited the report following Murphy’s own proposals for change, but holding firm on its position for the need for annual caps on incentive awards, according to NJ.com.
Senate President Steve Sweeney, who appointed the members, said the proposed reforms will bring greater transparency, accountability and oversight as it provides positive ideas to reestablish the tax incentive program for legislators.