N.J. Admin. Code § Executive Order No. 52 (2019)
Governor Philip D. Murphy
Executive Order No. 52 (2019)
Creation of a Task Force on the Economic Development Authority's Tax Incentive Programs.
Issued: January 24, 2019.
Effective: January 24, 2019.
WHEREAS, my administration has spent our first year in office focused on the central task of growing New Jersey's economy in a way that works for all New Jersey families; and
WHEREAS, during my first week in office, I issued Executive Order No. 3 (2018), which ordered the Office of the State Comptroller ("State Comptroller") to conduct a complete performance audit of the tax incentive programs administered by the Economic Development Authority ("EDA"); and
WHEREAS, the State Comptroller has completed this audit, which has revealed grossly inadequate compliance and enforcement efforts by the EDA that failed to ensure that the tax incentive programs operated to the benefit of the State's economy; and
WHEREAS, the State Comptroller's audit notably concluded that "[k]ey internal controls were lacking or nonexistent for the monitoring and oversight of recipient performance" and that "EDA relied only on recipient -reported data and recipient certifications" with respect to job creation and retention; and
WHEREAS, from a sample of approximately 10 percent of the EDA's certified projects that was projected to create or retain roughly 15,000 jobs, the State Comptroller's audit revealed that nearly 3,000 of those jobs could not be substantiated as being created or retained; and
WHEREAS, the State Comptroller's audit concluded that incentive awards were "improperly awarded, overstated, and overpaid" and specifically noted five commercial projects where the EDA failed to comply with the applicable statute and regulations and improperly awarded $ 179 million in incentives; and
WHEREAS, the State Comptroller's audit further found that numerous recipients hired employees at the end of the annual reporting period, indicating that their job creation or retention numbers were artificially inflated; and
WHEREAS, it is plainly unacceptable that billions of dollars in taxpayer money were awarded to companies based on promises of job creation and retention that often did not materialize; and
WHEREAS, legislators, advocacy groups, and numerous observers have all voiced their outrage that the EDA did not have proper enforcement mechanisms in place; and
WHEREAS, while the State Comptroller's audit has demonstrated the deficiencies in the EDA's tax incentive programs, the taxpayers of New Jersey deserve a thorough explanation of how and why these tax incentive programs operated with minimal oversight and accountability; and
WHEREAS, with the Grow NJ and Economic Redevelopment and Growth ("ERG") programs scheduled to expire on July 1, 2019, a public accounting of the decisions regarding the operation of these tax incentive programs will help inform lawmakers in their deliberations about whether and in what form these programs should be renewed, and what types of controls are needed both in the law and in practice;
NOW, THEREFORE, I, PHILIP D. MURPHY, Governor of the State of New Jersey, by virtue of the authority vested in me by the Constitution and by the Statutes of this State, do hereby ORDER and DIRECT:
N.J. Admin. Code Executive Order No. 52 (2019)