TRENTON — The CEOs of two companies awarded hundreds of millions of dollars in tax breaks to build new facilities in Camden told New Jersey lawmakers on Monday that they would have left the state had their firms not won the awards.
The testimony before a Senate panel represented a rebuttal to the findings of a task force appointed by Gov. Phil Murphy, a Democrat who has described the state’s corporate tax break programs as beholden to special interests.
Democratic leaders in the Legislature have defended the tax breaks, saying they helped spur more than $1 billion in private investment in the long-struggling city of Camden.
Monday’s hearing showed how the Legislature is pushing back against Murphy. Here’s a guide to the debate and intraparty fight in Trenton:
How we got here: The fight over N.J. tax breaks
Murphy’s task force, appointed in January, has been investigating the Economic Development Authority’s administration of the incentive programs, which were overhauled under a 2013 law signed by Gov. Chris Christie.
After holding hearings, the task force published a report in June that suggested companies with ties to South Jersey power broker George E. Norcross III had misled the state by asserting on their applications for tax credits that they would move jobs out of state if they didn’t get the incentives. The task force said the evidence did not support that assertion — an accusation the companies have denied.
Norcross sued Murphy in May, arguing the task force had been created unlawfully, and sought a preliminary injunction to temporarily halt the task force’s inquiry. A judge denied the request, leading to the publication of the June report, and later dismissed the lawsuit entirely.
Meantime, with the programs set to expire at the end of the fiscal year on June 30, the Legislature passed a measure that would renew them through January. Murphy later vetoed the legislation, saying it would have continued handouts to politically connected companies.
How N.J. Democratic lawmakers are pushing back
Though Murphy and legislative leaders share the same party, they have long been at odds, and the governor has a particularly fraught relationship with Senate President Steve Sweeney (D., Gloucester), a close Norcross ally.
As with many other issues in Trenton, they haven’t been on the same page. Amid the task force investigation, a new legislative committee started holding its own hearings on economic development.
Lawmakers have heard testimony that the EDA has delayed its disbursement of tax credits as the agency takes more time to review the awards. Perhaps in a surprise to critics who had anticipated the Legislature would whitewash the controversy, the committee heard testimony earlier this month from policy experts who made recommendations for how the existing programs could be improved.
What CEOs say
Subaru of America CEO Tom Doll said that when his company was seeking a new U.S. headquarters, its corporate parent recommended Indiana, where the carmaker had a factory. With officials in Harrisburg also dangling incentives, Subaru was also considering moving to the Navy Yard in Philadelphia and the Pennsylvania suburbs, Doll said.
Subaru, previously based in Cherry Hill, was awarded $118 million in 2015 to move jobs to Camden and build facilities there.
“Were it not for the New Jersey Economic Development Authority’s direct engagement of Subaru and the proposal they presented approximately five years ago, I would not be sitting here before you today as the CEO of a New Jersey-based company,” Doll told lawmakers, reading from prepared remarks. “In fact, Subaru would be located in a state other than New Jersey.”
Doll said the company had contributed more than $5 million to Camden-based charitable organizations since 2016.
American Water, a water and wastewater utility company, was awarded $164 million in corporate tax breaks to build an office building on the Camden waterfront.
Before moving there, CEO Susan Story said Monday, the company had been considering locations in Pennsylvania, New Jersey, and Missouri.
Both American Water and Subaru won 10-year property tax abatements under the 2013 law and a Camden ordinance. They have agreements to make payments to the city in lieu of taxes.
“Incentives are and should be smart investments for the future of underserved or economically distressed cities throughout our state,” she said. “They should be carefully designed, implemented, and tracked to ensure they are delivering as promised.”
Some critics of the incentive programs have questioned whether the city of Camden and its residents have benefited from the deals.
Story said American Water had contributed $200,000 to the Camden School District for science and technology studies, and donated computers and other equipment.
She said the company also has donated $900,000 to a local nonprofit that teaches Camden students how to use technology, with a goal of later hiring some of those people. Story said the company had also held workshops on resumé-writing and interview-preparedness.
Local officials in Camden said the incentives were part of the city’s strategy to improve education and public safety.
What comes next
Lawmakers have not said whether they will hold more hearings. Once they complete the hearings, the Senate panel says it will make recommendations on how to improve the incentive programs.
The task force’s investigation also continues.