New Jersey Democratic Gov. Phil Murphy said the state's tax incentive programs amounted in some cases to "crony capitalism" and called for the expiring credits to be overhauled during his first state of the state speech Tuesday.
Murphy, who is entering his second year in office after taking over from Republican Chris Christie, took aim at one of his predecessor's preferred economic incentives during the address before lawmakers in the General Assembly chamber.
His comments come after a recent state comptroller's audit showed the Economic Development Authority failed to check whether the jobs promised materialized in return for tax credits. Under Christie about $8 billion in credits were awarded. Attorney General Gurbir Grewal has also said he is digging into the incentive programs.
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"The comptroller verified one of our worst suspicions, that in the most egregious cases, past 'business incentives' got turned into 'crony capitalism'," Murphy said.
Murphy cast the incentives as too costly to the state budget and suggested they're a contributor to economic hardship for many.
Though $8 billion in awards were approved under Christie, only about $700 million has been paid out by the state, according to the development authority.
"In these challenging times, the people of New Jersey are not wrong to be concerned," he said. "But they are far more right to be hopeful that we will level the playing field and give them their shot at success."
Murphy called for a new incentive program that caps award amounts and tightens oversight of incentives, though he did not provide much detail.
He also renewed calls to bump minimum wage from $8.85 to $15 an hour and legalize recreational marijuana, both campaign promises that remain stalled in the Democrat-led Legislature.
An unabashed liberal, he took a victory lap of sorts by citing a number of campaign promises that he achieved by signing new bills into law, including increased funding for Planned Parenthood, paid sick leave requirements for employers and tighter gun control.
Where Christie clashed with public sector labor unions, Murphy agreed to a four-year $150 million contract for roughly 35,000 state workers. He's rejoined a regional greenhouse gas initiative that Christie pulled out of.
Some agenda items remain incomplete.
Murphy has pledged to rehabilitate New Jersey Transit, which has suffered from poor management, bad internal morale and lack of resources, according to reports. Despite the focus on the agency and reaching a December goal of equipping rail lines with an emergency braking system, riders continue to complain about service and delays.
In his first year, Murphy also paid more into the public pension — a trend that started under Christie despite his sour relationship with public sector unions. He also increased education spending and boosted the state subsidy to NJ Transit.
To pay for it, he and the Democrat-led Legislature hiked income taxes on those making $5 million a year or more. Those earners will go from paying an 8.97 percent top rate to 10.75 percent.
Taxes on businesses making more than $1 million will see an average hike of 2 percent over four years. The hike is set to expire after the fourth year when the rate would drop back to 9 percent.
Those increases were a far cry from what Murphy initially sought: a higher income tax on people making $1 million and above. The change comes after sometimes contentious negotiations with the Democrat-led Legislature, which after years of calling for higher taxes under Christie fought Murphy on the higher rates.