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In exchange for tax credits, businesses face more ‘pointed questions,' N.J. agency says

As the EDA reviews more than 420,000 jobs this year, the agency is taking new steps to make sure companies only get tax credits in exchange for eligible jobs and investments.

Ronald Chen, chair of a special task force appointed by New Jersey Governor, Phil Murphy, in Trenton in July 2019. On Thursday, the task force heard testimony from officials at the agency that administers the state's tax credit programs for businesses.
Ronald Chen, chair of a special task force appointed by New Jersey Governor, Phil Murphy, in Trenton in July 2019. On Thursday, the task force heard testimony from officials at the agency that administers the state's tax credit programs for businesses.Read moreANTHONY PEZZOTTI / Staff Photographer

For much of this year, the multibillion-dollar tax incentive programs administered by New Jersey’s Economic Development Authority have been at the center of a heated political controversy, and one investigation after another.

In the meantime, the programs have expired. And negotiations on a bill to create the next generation of tax credits for businesses are inching along.

But inside the agency, procedures are changing for the good of taxpayers, a senior official testified at a public hearing Thursday. As the EDA reviews more than 420,000 jobs tied to incentives from the state in 2019, the agency is taking new steps to ensure tax credits are only being granted in exchange for eligible jobs and investments.

“This starts with a more robust review, which challenges the information provided by companies and asks pointed questions to understand the business decisions facing the entity,” said Bruce Ciallella, a senior vice president at the EDA.

Ciallella addressed a special task force during its fourth public meeting since it was created by Gov. Phil Murphy, a Democrat, after the state comptroller identified “significant” oversight problems in a January report.

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The task force has said the Economic Development Authority had failed to identify red flags in a number of businesses’ applications for the tax break. In a June preliminary report, task force investigators identified more than $500 million in tax credit awards that may be taken away because companies’ failed to follow rules.

Ciallella said the EDA has acted on a recommendation from the June report, and hired a firm to better scrutinize pending applications for grants. The agency has also broadened the list of information that a company’s CEO must certify to be true.

As for keeping track of how many jobs companies have created — a number that allows firms to collect their tax credits each year — Ciallella said that the EDA is now cross-checking those tallies against data from the state’s labor department.

“The EDA is building a culture of continuous improvement,” he said, “and while we have made significant strides to our process both on the front end and the back end, we will not stop improving as part of our obligations as stewards of taxpayer resources."