TRENTON — Gov. Phil Murphy used his first State of the State address to focus on reform of the state’s tax incentive programs for businesses, saying much of the $11 billion spent on them so far could have been better used to solve the state’s fiscal crisis.
“After reading the audit of New Jersey’s corporate tax incentives released last week, this is not a time for business as usual,” he said as he opened his speech.
Democrat Murphy, 61, is a former Wall Street executive and Obama administration ambassador to Germany who campaigned as a progressive liberal but has run into some opposition within the leadership of his own party — particularly from state Senate President Steve Sweeney, whose own gubernatorial aspirations were squashed by Murphy.
Murphy ordered an audit of the tax incentive programs days after being sworn in, he said, and the report confirmed his fears — the state had rewarded the well-connected rather than create jobs and nurture innovative businesses.
He said $8 billion in corporate tax breaks were given away under Gov. Chris Christie between 2010 and 2017, and more than $11 billion has been awarded over the past 13 years “to lure companies to come to, or stay in, New Jersey. By the close of 2017, we were handing out tax breaks at a cost of more than $160,000 per job.”
But the state comptroller, based on a sample, could not prove that 20 percent of the jobs promised to be created or retained actually ever were created or retained, he said.
“In the upcoming fiscal year, these tax breaks from the past will cost us more than $1 billion,” said Murphy. “To those who bemoan our inability to pay for even the most basic items in our budget, let me say that this, simply put, is nuts.”
He said the same amount of money could have funded public schools, NJ Transit, met the state’s pension obligations or provided property-tax relief.
He said it’s time to fix it, “and, together, we can.”
Much of the rest of his speech focused on his administration’s achievements in 2018 and hopes for 2019.
“The state of our state is stronger and fairer than it was one year ago,” Murphy said, with an unemployment rate at its lowest level since 2001 and 50,000 new jobs created since he took office.
He called for the Legislature to pass bills to raise the minimum wage to $15 per hour and legalize recreational marijuana — two goals he had in 2018.
He also called for the state to replace its aging water infrastructure, especially for those whose drinking water has high levels of lead.
And he asked legislators to “allow residents to register to vote online and at the polls on Election Day ... (and) enact true early, in-person voting for our residents.”
He called for restoring voting rights for those on probation or parole, and for allowing undocumented people to get special driver’s licenses.
Republicans, who are in the minority in the Legislature, faulted Murphy for failing to address the state’s high taxes and what they say is its poor affordability.
“Gov. Murphy has a really big heart. We just don’t have the wallet to match his heart,” Assembly Minority Leader Jon Bramnick said after the speech. “New Jersey residents have seen 169 new laws, not one law related to making the state more affordable.”
Sen. Christopher J. Connors, Assemblyman Brian E. Rumpf and Assemblywoman DiAnne C. Gove, all R-Ocean, Burlington, Atlantic, said Murphy is confusing government spending and expansion with reform, forcing taxpayers to shoulder a greater burden.
State Sen. Chris Brown struck a more diplomatic tone. “I look forward to working in a bipartisan manner with the governor and my colleagues in the Legislature to provide property-tax relief for our middle-class families and retirees, bringing good paying, high-tech aviation jobs to Atlantic County, and getting the A.C. Rail Line back in service,” said Brown, R-Atlantic.
Business leaders were cautious.
“NJBIA has called for no new taxes in 2019, as have Senate President Sweeney and Assembly Speaker Coughlin,” said New Jersey Business & Industry Association President CEO Michele N. Siekerka. “We are hopeful that fiscal responsibility will lead to a more affordable New Jersey.”
She said the state is in a fiscal crisis and needs structural reform, especially through control of state spending.
Murphy talked briefly about his environmental record, having New Jersey rejoin the Regional Greenhouse Gas Initiative and jump-starting the state’s offshore wind energy industry.
“We need progress, not just words. Most of Christie’s rules are still in place,” said Jeff Tittel, director of the New Jersey Sierra Club. He said Murphy needs to reopen the Office of Climate Change and update climate change rules.
Food & Water Watch Senior Organizer Matt Smith called for a moratorium on “any and all dirty-energy projects before state regulators,” such as natural gas pipelines.
But League of Conservation Voters Executive Director Ed Potosnak defended Murphy’s first-year record.
“Our state has made huge strides to turn back the hands of time on the toxic legacy of the Christie administration,” Potosnak said, by advancing clean energy and environmental justice.
The Associated Press contributed to this report.