The state Legislature sent Gov. Phil Murphy a bill extending the controversial multibillion-dollar corporate tax break program. Shortly after, the governor issued a statement that he will veto the proposed extension.
Murphy convened a task force in January to scrutinize the tax breaks – and its 75-page report from Monday presented evidence on how businesses with close ties to South Jersey political powerbroker George Norcross crafted the Grow New Jersey tax breaks to unfairly win at least $500 million of awards, and by questionable means.
Even more, the Economic Development Authority – tasked with overseeing Grow NJ and the Economic Redevelopment and Growth gap financing program – failed to conduct even the most basic background checks and research to make sure businesses should receive tax breaks for which they were applying, the report states.
“We’re not just dealing with a broken system, we’re dealing with a rigged system… I’m horrified by what I read. This is worse than what we thought,” Murphy said of the report on Tuesday, contending that the tax breaks were “riddled with unfairness and bad behavior.”
The extension passed by the Senate and Assembly 28-2 and 66-5 respectively on June 20. It extends Grow NJ and ERG seven months past their July 1 expiration.
Murphy promised that without reforms such as a cap on how many tax breaks are awarded annually, he would veto the measure, even if it meant the state was without any tax incentives.
Indeed, Murphy put forward a set of five new incentives capped at $400 million annually. New Jersey Forward would mirror Grow NJ and be capped at $200 million.
But Senate President Stephen Sweeney, D-3rd District – a supporter of Grow NJ, an ally of Norcross and often-times political opponent of Murphy, has dangled the prospect of overriding Murphy’s veto.
Sweeney has contended that with less than two weeks left before the program expires, the window has closed to find a replacement set of programs, a point with which Murphy has disagreed.
“We got 11 days, I still think we can work it out, I still hope we can work it out,” Murphy said Wednesday night on WBGO’s and WNYC’s “Ask Governor Murphy” radio segment. “We presented our proposed next generation of incentives last October, so it isn’t like we didn’t give folks advanced notice.”
Assembly lawmakers, when approving the measure in committee last week, admitted that they dragged their feet on hashing out a Grow NJ and ERG replacement.
“We put ourselves in this situation… We have put our backs against the wall. We should have vetted through the governor’s proposals,” Assemblyman Roy Freeman, D-16th District and a sponsor of the bill, said before casting his vote last week.
According to the report, companies such as Conner Strong & Buckelew where George is a partner, NFI, Cooper University Health Care where George sits on the board, and The Michaels Organization – all at the advice of law firm Parker McCay where George’s brother Philip – provided questionable information about where in Philadelphia they would move without the tax breaks.
The tax breaks for the three companies could have been reduced by $70 million if the EDA properly considered the applications, while the award for Cooper would have been just $7 million, according to the report.
Sheehan also wrote a provision in the Grow NJ legislation that said companies eyeing a move to Camden would not have to show they would leave the state if they did not win the tax breaks, and instead only demonstrate that the incentives were a “material factor” in their decision to set up shop in the South Jersey city.
Norcross wants the opportunity to directly appear before lawmakers Monday the Senate Select Committee on Economic Growth Strategies – similar in its goals to the task force – to provide his own side of the story.
“I hope that testifying before your committee(s) will allow me to correct the factual inaccuracies, gross misstatements and misleading information released by the Governor’s Task Force about applications submitted by my firm, Conner Strong & Buckelew, and a handful of other Camden firms during its May meeting – a meeting at which we were denied the opportunity to participate,” Norcross said in his June 18 letter to the committee members.