Lesniak, in scathing letter to Murphy, rips governor over EDA, incentives

By Tom Bergeron
Trenton | Apr 29, 2019 at 1:30 pm

Ray Lesniak, the author of the first tax incentive bill and a former Democratic power broker who served in the state Senate with great influence for more than three decades before retiring last year, sent Gov. Phil Murphy a scathing letter regarding how he feels Murphy is characterizing the state’s incentive programs and the work of the state’s Economic Development Authority.

“It is disconcerting to witness the misinformation and inquisition-style attacks being leveled against our tax incentive programs,” he said in the two-page letter obtained by ROI-NJ. “With few exceptions, businesses that have participated in the programs have done exactly what the state mandated them to do — invest, retain and create jobs.”

Read the letter in its entirety below.

The letter was emailed to Murphy, state Senate President Steve Sweeney (D-West Deptford), Assembly Speaker Craig Coughlin (D-Woodbridge) and members of Senate and Assembly economic development committees on Monday morning.

Lesniak was particularly upset at statements made by Murphy and state Treasurer Elizabeth Muoio regarding a recent audit of the EDA’s incentive program in which they seemed to indicate the EDA was lax in its oversight of its programs — and that the programs did not produce the jobs they were supposed to create.

Lesniak was particularly upset at the suggestion the state had wasted $11 billion — a claim he feels the governor and Muoio have made without providing facts to back it up.

“I want to be clear I fully endorse holding companies that have misused the incentive programs responsible … but to also be clear, in his testimony to the Joint Hearing of the Senate Economic Growth Committee and the Assembly Commerce and Economic Development Committee on Feb. 11, 2019, the New Jersey Comptroller, Philip J. Degnan, stated that his office ‘… did not make any public policy judgments regarding the merits of the programs themselves’ nor was his office ‘alleging that the job(s) (were) not, in fact, created.’

“In a press statement in reaction to an audit of the state’s tax incentive program, you said ‘… as much as $11 billion was squandered …’ away and Treasurer Elizabeth Muoio in a letter to the members of the Senate Economic Growth and Assembly Commerce and Economic Development committees stated that tax incentives will cost the state treasury billions, without giving any evidence to support those statements.

“Treasurer Muoio focused on one aspect of tax incentives without analyzing the loss of tax revenue from businesses leaving or not locating in New Jersey were it not for tax incentives.”

Lesniak served on the Economic Growth Committee (as chair), Commerce Committee (as vice chair), the Legislative Services Commission, the Judiciary Committee and the Legislative Oversight Committee during his time in the Senate.

He also was a candidate for governor in 2017, when he was among a group of people Murphy outmaneuvered to get the Democratic nomination on the way to an easy victory in the general election.

In the letter, Lesniak defended his actions while serving on various economic committees, argued others have argued the state has benefited — and noted that Murphy’s former employer, Goldman Sachs, also benefited.

In response to Murphy’s and Muoio’s statements, he said:

“Both statements ignore the Bloustein School of Planning and Public Policy report, which stated: ‘There has been a significant volume of project approvals under Grow NJ, which are associated with significant volumes of retained and created jobs.’

“Companies receiving tax incentives have invested billions in capital and created or retained permanent jobs and building trades jobs, including Goldman Sachs, which received close to $165 million in Business Employment Incentive Program (BEIP) grants in 2004 for its Jersey City project when you were part of the firm’s management committee.”

Lesniak said the EDA incentives have helped more than just Jersey City — including municipalities up and down the state, arguing they have kept jobs in the state, writing:

“As chair of the Senate Economic Growth Committee, my priority was job retention and creation. Tax incentives have attracted investments in Newark, Camden, Atlantic City, Elizabeth, Jersey City, New Brunswick and other municipalities throughout New Jersey that likely would have gone out of state and, not only lost the state treasury billions of dollars, but also lost jobs to more fertile pastures in the 35 other states that have been rated better for businesses.”

Lesniak specifically noted success of incentives in Camden, writing:

“A city like Camden, which was economically dormant for nearly 50 years, is making real progress in attracting businesses, complementing efforts by residents and local leaders to increase graduation rates in the K-12 system to 70%, and reduce total crime by nearly 57% since 2012. The progress being made in Camden was significant enough to catch the attention of President Barack Obama, who visited the city in 2015 and held it up as a ‘symbol of promise for the nation.’

“I know you share President Obama’s view and have often spoken in glowing terms about the progress being made in Camden and all our urban cities where tax incentives are playing a crucial revitalization role.”

Lesniak also defended the Grow New Jersey program, noting Murphy supported it during the state’s bid for Amazon’s second headquarters and that the EDA has awarded nearly $400 million in credits during his administration, writing:

“The Grow NJ program, which self-identified progressive organizations like New Jersey Policy Perspective often cite as a prime example of wasted taxpayer dollars, in fact has been a good tool to attract businesses and help our urban cities rebuild and stabilize, secure and grow their tax base.

“You know this to be true, as you publicly committed to Amazon $5 billion in Grow credits to move to Newark and your administration approved $397 million in Grow credits to companies in less than the 15 months you have been in office.”

Lesniak concluded by saying a healthy incentive program — one he welcomes being updated — is needed to help the state attract companies that would help Murphy achieve his goals, writing:

“No doubt our tax incentives should be reviewed and recalibrated, as any government program should be to evaluate their continued effectiveness. I believe your goal of a healthy environment, a strong middle class and spending on universal pre-K education will enhance the quality of life for all our residents, but advancing these objectives is reliant on our ability to attract and keep businesses in a state that is in the bottom half of business-friendly states in America. I urge you to work with the Legislature and develop a plan to improve our tax incentive programs.

“I stand ready to help as always.”