Gov. Phil Murphy said he will let two controversial New Jersey tax break programs expire without signing a bill to extend them while lawmakers and the front office work on a new law that will lay out the rules of future incentives.
It comes after a state task force convened by Murphy to investigate the tax break program found evidence that companies may have lied on their applications and that politically-connected insiders likely helped write the law to benefit their clients.
“It’s quite clear that there was some poor behavior in this. I don’t know how you can extend that. I literally don’t know how you can extend that,” Murphy said Sunday after signing the state budget while leaving the bills extending the tax breaks on his desk.
Targeting the state’s tax incentive programs has been a cornerstone of Murphy’s agenda. He said the system was set up to benefit “special interests” and that it should be reshaped to cap how much the state awards in tax breaks each year.
“I do not take lightly the prospect of New Jersey going for any period of time without an incentive program,” Murphy said, “but the expiring programs are so flawed that this actually is the better alternative than continuing a broken and rigged status quo.”
Yet lawmakers led by state Senate President Steve Sweeney, D-Gloucester, have pushed Murphy to extend the programs they say are key to attracting businesses to the high-tax state.
Sweeney said Sunday he does not know why Murphy refuses to extend the tax break program since the governor controls the agency that awards them. Murphy picked Tim Sullivan to lead the Economic Development Authority, appointed Kevin Quinn to chair the board of directors, and has the power to veto the authority’s minutes.
“What damage could possibly be done if you have full control of the incentive programs? Are you telling me that you don’t have confidence in your staff to ensure that the checks and balances are done?” Sweeney said of Murphy’s criticisms of the tax incentive system. “It’s a soundbite. It’s a nice, political soundbite.”
At the center of the task force investigation is Sweeney ally and South Jersey Democratic power broker George Norcross.
Norcross’s insurance firm and companies with ties to his family have received more than $1 billion in tax incentives, according to an investigation by ProPublica and WNYC. Norcross sued Murphy to stop the task force investigation claiming it was unconstitutional, but a state judge has allowed it to proceed for now.
In early June, Murphy laid out his alternative ideas for a tax incentive program. So far the legislature has not endorsed his plan.