Murphy’s Veto Leaves N.J. Without Broad Tax-Credit Incentives

(Bloomberg) -- New Jersey Governor Phil Murphy rejected a reprieve for an expired $11 billion tax-credit program that’s under review for suspected abuse.

“In light of the myriad and well-documented issues with the current tax incentive programs, I cannot in good conscience approve this bill,” Murphy wrote in a message accompanying his conditional veto of a bill sponsored by fellow Democrats.

The legislation -- to extend the program to applicants through Jan. 31 -- had sat on his desk without action since June, which its backers had seen as a sign of potential compromise between the first-term governor and Assembly and Senate leaders. Murphy said he would support the bill if lawmakers altered it to include his suggestions for a replacement program capped at $400 million annually.

Two of the state’s biggest job-creation incentive programs, Grow New Jersey and the Economic Redevelopment and Growth Grant, expired on July 1. A state comptroller’s report released in January showed sloppy record-keeping by the programs’ administrator, the New Jersey Economic Development Authority, and signs that some businesses may have gamed the system to qualify for roughly $11 billion in credits promised statewide.

The matter is under investigation by the state Attorney General’s Office and a five-member panel, appointed by Murphy, that includes three former federal prosecutors. In a 163-page report released in June, the members raised questions about deals that had ties to Democratic power broker George Norcross in Camden, one of the nation’s poorest and most crime-ridden cities.

Norcross, who doesn’t hold elective office but has a crucial role in fundraising for influential South Jersey legislators, has said he has done nothing improper. So have some entities that have benefited from the tax-break programs, including: the Conner Strong insurance company, where Norcross is executive chairman; Cooper University Hospital and Holtec International, on whose boards he serves; and the Parker McCay law firm, where his brother Philip Norcross is chief executive officer.

Murphy, a retired Goldman Sachs Group Inc. senior director, has said he favors tax credits. But he says New Jersey’s broad system benefited political insiders, and he wants it narrowed to high-growth industries that can revive the middle class. Legislation to replace the programs hasn’t been introduced.

Murphy’s veto message, though, included his proposal’s blueprint.

“The five programs would provide a maximum of $400 million in annual incentives to create jobs, renew communities and welcome new businesses to our state all while providing the oversight that the prior programs desperately lacked,” the governor wrote.

To contact the reporter on this story: Elise Young in Trenton at eyoung30@bloomberg.net

To contact the editors responsible for this story: Flynn McRoberts at fmcroberts1@bloomberg.net, Michael B. Marois

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