Murphy Re-Election Bid Faces New Jersey Democrats’ 44-Year Curse

(Bloomberg) -- Phil Murphy, with a multimillionaire’s wallet and high polling marks for his pandemic response, is taking a step toward a prize that’s eluded his party for more than four decades: a second term as New Jersey governor.

In a $5 million ad campaign, Murphy is hawking his administration’s moves to increase school spending, boost the minimum wage, defend abortion rights and lead an economic recovery in Covid-19’s wake. “There are some that want to take us back to the way things were before, when New Jersey only worked for the wealthy and well-connected,” Murphy, 63, said in a video posted on Tuesday, when he ran unopposed to win the Democratic primary nomination. “We cannot go back. We have to keep moving forward.”

Five months before the general election, though, Republican challenger Jack Ciattarelli, 59, says Murphy has worsened the state’s high-tax, high-regulation reputation and failed to tame sprawling local government’s cost. Those issues rocketed fellow Republican Chris Christie to office in 2009 and helped keep him there for eight years.

New Jersey and Virginia are the only two U.S. states electing governors this year, providing early indicators of the national political environment ahead of the important 2022 midterm elections.

Murphy leads Ciattarelli, a former state Assembly member, by 26 percentage points, according to a Rutgers-Eagleton poll released on Tuesday. That puts him well in position to break the Democrats’ one-term curse, but victory isn’t a given.

More than two-thirds of residents say Murphy has hurt the middle class, according to a Monmouth Poll released on May 5. Job approval, though a strong 57%, was 14 percentage points higher last year. And while he gets high marks on pandemic handling, he must persuade residents that New Jersey will bounce back from shutdowns he ordered, using constitutional power, to curb the virus’ spread.

“We’re still battling a pandemic -- the fact that we’re opening up and we’re in a much better place doesn’t mean that a light switch has been flipped,” Murphy, a retired Goldman Sachs Group Inc. senior director and former U.S. ambassador to Germany, said in an interview. “The economic recovery that we are, God willing, going to get on the back of it is the other big focus right now.”

‘Damn Unhappy’

When Christie was governor, his bombastic moments drew a social media fan base: He called one lawmaker “numb nuts,” told a critic to “sit down and shut up” and, ice-cream cone in hand, went back and forth with a heckler on a Jersey Shore boardwalk.

Murphy has no such public outbursts. A self-described “glass-is-half-full guy,” he’s better known for his Dad jokes and even temper. His testiest moment may have come during an April 2020 virus briefing, after Senator Mitch McConnell said he favored bankruptcy over federal aid for states hurt by Covid-19. Murphy warned of financial disaster and then zinged McConnell: “Watch your words, sir.” Another time he said that “knuckleheads” -- his term for people who didn’t comply with Covid-19 protocols -- made him “damn unhappy.”

For this campaign, Murphy is adding “resilient” and “forward” to his first run’s “stronger and fairer” message. Ciattarelli, who defeated three challengers in Tuesday’s primary, counters with New Jersey’s highest-in-the-nation property taxes, averaging $9,112 last year.

“Murphy never wants to talk about New Jersey’s property-tax crisis,” Ciattarelli, a retired medical publisher and certified public accountant, said in an interview. “The governor keeps making promises we can’t afford and then increases taxes and borrows billions to pay for them.”

New Jersey hasn’t had a two-term governor from Murphy’s party since 1977. Onetime Goldman colleague Jon Corzine lost for a second term in 2009 amid a recession. Christie, the Republican who defeated him, was re-elected in 2013 largely for his handling of Hurricane Sandy, the state’s costliest natural disaster.

Murphy spent more than $16 million of his personal fortune on the 2017 primary, according to state campaign-finance records. This time, he and his family have contributed less than $25,000. His campaign has spent $7.25 million of the $7.83 million raised.

Ciattarelli’s campaign in 2017 had $1.8 million in receipts for his party’s five-candidate primary, which ended in his defeat. For Tuesday’s race, his campaign spent nearly $6 million of the $6.57 million it raised. Ciattarelli, who stayed on the 2017 campaign trail while he was being treated for throat cancer, said the disease is gone and he’s healthy.

Health Emergency

Covid hospitalizations have fallen 81% in two months and the state is 95% to its goal of fully vaccinating 4.7 million residents by June 30. Murphy lifted most major pandemic restrictions on June 4 -- 15 months to the day he woke up from successful surgery to remove a cancerous growth on his kidney and learned of New Jersey’s first Covid case.

Murphy early on ordered the closings of retail, workplaces, schools and restaurants. While he had early bipartisan support for those moves, enthusiasm waned over 15 months.

“This procedure, by executive order, went on without public debate,” said Assembly Republican Leader Jon Bramnick. “He really shut down democracy.”

Murphy, though, stood by his decisions, including keeping New Jersey’s indoor masking rules in place for weeks after federal guidance said otherwise.

“The 15 days that we held on got us several hundred thousand first-dose vaccinations and allowed us to drive the public-health metrics on the virus continually down,” Murphy said.

The governor himself was exposed to the virus, forcing him and his family to quarantine at times, but he tested negative. His overall health is good, he said, and two post-cancer surgery screenings were clear of disease.

Nursing Home Scandal

To quash nursing-home outbreaks, Murphy and New York Governor Andrew Cuomo ordered hospitalized Covid-19 residents to return to care centers to make room for sicker patients. But fatalities soared amid short staffing and scarce personal-protection equipment.

A report by New York Attorney General Letitia James found Cuomo aides deliberately under-counted nursing home deaths by as much as 50%. Cuomo has said “there was a delay” on data, and his administration is cooperating with a federal inquiry.

Murphy declined to comment on the New York investigation. He said New Jersey’s figures were as accurate as possible and pointed to his order to separate residents and staff to keep down contagion.

“There’s evidence that operators may have ignored those directives but the record is quite clear: We were explicit,” he said. “That does not take away from the tragedy.”

Business Help

Despite improving virus and vaccination numbers, New Jersey’s economic recovery is sluggish. Unemployment hit seventh-highest in the country. Almost 40% fewer small businesses were open in May than in January 2020, according to TrackTheRecovery.org, a Harvard University project.

Small employers looking for workers say they can’t compete with hiring incentives from Amazon.com and other conglomerates, plus the state and federal government’s unemployment payments. Murphy says New Jersey won’t join dozens of Republican-led states rejecting the $300 weekly benefits.

“I believe it’s temporary,” Murphy said of the state’s 7.5% unemployment. Spending on vocational and technical education, infrastructure and public health will aid “a strong recovery in New Jersey but also get our unemployment rate down meaningfully.”

Murphy’s administration plans to distribute $235 million in aid to small businesses, atop the $250 million disbursed to 55,000 companies. But critics say the governor should have moved faster.

“We are thankful for every penny that came to New Jersey small business -- the issue is it took a long time to come,” said Michele Siekerka, president of the New Jersey Business & Industry Association.

The Pension Problem

Boosting the underfunded pension system remains paramount in a state whose credit rating is second-worst, behind Illinois’, and Murphy has ended decades of skipping or skimping on payments. His four budgets directed a combined $18.3 billion to the retirement fund, more than what the state allocated in the 20 years prior. The cash infusions, and better-than-expected revenue, have helped lower the state’s borrowing costs to pre-pandemic levels.

“The pension is the top of the list of the issues the state has financially,” said Daniel Solender, head of municipal securities at Lord Abbett & Co., which holds $34 billion of state and local debt. “To be making this kind of progress is a really big deal.”

Still, as of July the fund had about half the assets needed to cover an estimated $103 billion owed to current and future retirees. If New Jersey continues to make recommended payments, the system will be fully funded by 2049.

Right now the state is flush with cash. Murphy, with the legislature’s blessing, borrowed almost $3.7 billion via deficit bonds to address expected revenue gaps. His administration on Wednesday reported $5.1 billion in unexpected revenue. He has yet to detail how he’ll use $6.4 billion in federal stimulus funds, but analysts warn the windfall could lead to unsustainable programs.

Murphy pledged that wouldn’t happen. “We’re not going to be spending like drunken sailors,” he said. “We’re going to do it right and also not set up programs that when the federal money goes away, the state is left holding the bag.”

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