LUMBERTON, N.J. – Assemblyman Ryan Peters announced a package of reforms to protect taxpayers from fraud and prevent backroom deals at the Economic Development Authority.
“Recently, we’ve witnessed the unearthing of hidden influence and rampant abuse within the Economic Development Authority and how it doles out billions of dollars in tax incentives,” said Peters (R-Burlington). “We need to turn a spotlight on the process and put greater controls in place to hold accountable the elected officials, lobbyists and businesses that benefit from our tax-incentive programs.”
The four-bill package provides oversight at EDA by creating inspector general and auditor positions in charge of monitoring the multi-billion dollar tax-incentive program. The inspector general would report the authority’s activities annually to the governor, while the auditor would verify claims made by applicants, such as the number of jobs created or threats to move out of state.
“New Jersey’s highest-in-the-nation tax and regulation structure has created an awful climate for businesses that has been well documented in the press. Without these immensely important tax incentive programs, this state will lose any level of competitiveness it has left,” Peters said.
“It’s absolutely critical we extend these programs, but if the system behind them is broken, it’s just as dangerous continuing with them as is. If the Democrat-controlled legislature is unwilling to lower tax rates on our businesses, then we need these changes to save our tax incentive programs while earning back the public trust.”
Peter’s proposal will also defend against undisclosed influence in the program by closing loopholes on lobbying. The threshold for reporting lobbying activity would be lowered to one hour in a calendar year from 20 hours and local-level lobbyists would have to comply with expanded disclosure requirements.
“The root cause of the tax incentive debacle was the lack of disclosure of lobbying activities and, as a result, the exploitation of state tax dollars,” Peters said. “Oversight, accountability and greater disclosure are needed to make our critical tax incentive programs work. I’m calling on the legislature to come back in session so this package can be introduced and we can move forward with fixing this broken system.”
Below is a summary of the proposals:
Appoint EDA Inspector General
Establishes the Office of Economic Development Inspector General within the EDA. The proposal provides the office broad powers to monitor, investigate and report on the agencies’ activities. The inspector general will be appointed by the Governor and affirmed by the Senate.
Appoint EDA Auditor
Establishes the position of Economic Development Auditor within the EDA to be appointed by the inspector general. The position will review and evaluate records of entities and individuals doing business with or receiving economic development incentives from the EDA. The auditor shall review applicant claims, such as job creation and retention, and the validity of the applicant’s decision to move out of state.
Lobbying Loophole Proposal 1
Under current law, a “government affairs agent” is a person who receives compensation to influence legislation or regulations by communicating with an elected state official for more than 20 hours in a calendar year. The proposal redefines the definition of “governmental affairs agent” to include those individuals performing activities for more than one hour in a calendar year.
Lobbying Loophole Proposal 2
Establishes the Local Government Process Activities Disclosure Act, requiring local activities that influence governmental processes beyond one hour are registered and disclosed with the Election Law Enforcement Commission.