Gov. Phil Murphy — file photo
By Joshua Burd
Gov. Phil Murphy has officially rejected a bill that sought to extend the state’s tax credit incentives, which lawmakers hoped would have provided time to find a long-term solution for the controversial programs before they expired earlier this summer.
The governor on Friday conditionally vetoed S3901, two months after both houses of the Legislature passed the bill by large majorities. The measure would have extended the Grow New Jersey and Economic Redevelopment and Growth programs through January 2020, although Murphy had vowed almost immediately to strike down the bill amid his ongoing concerns about the subsidies.
The governor made good on his promise last week. With a conditional veto, Murphy instead returned the bill with changes that largely mirror a proposal for new incentive programs that he unveiled late last year.
“For the past six years, New Jersey has operated under a severely flawed tax incentive program that wasted taxpayer money on handouts to connected companies instead of creating jobs and economic growth,” Murphy said in a prepared statement. “The program I’ve outlined in the conditional veto is one that creates good jobs and works for everyone, not just the connected few, and one that will help restore New Jersey’s prominence as the state of innovation.”
The veto is the latest step in a saga that has gripped state policymakers and the business community, including a commercial real estate industry that had come to rely on both Grow New Jersey and ERG. Murphy has been critical of the incentives — which proliferated under Gov. Chris Christie — since his days as a candidate in 2017, but his scrutiny has intensified over the past year.
In January, the state comptroller released the scathing findings of an audit of the incentive programs, which alleged poor oversight by the state Economic Development Authority and raised concerns about whether some recipients were meeting their job commitments. Murphy later assembled a task force to investigate potential abuse and installed a new board chairman at the authority.
The governor’s own proposal for a new tax credit platform calls for five programs with a combined annual limit of $400 million — including replacements for Grow New Jersey and ERG, along with new tax credits tied to venture capital funding, brownfields redevelopment and historic rehabilitation. The new slate of incentives would support both innovative, high-growth companies and large corporations that may be looking to relocate to New Jersey.
Top lawmakers in the Senate and Assembly, who had supported the creation of the most recent incentives in 2013, were skeptical of Murphy’s proposal and instead sought to buy time to reach a compromise. Yet stakeholders had faced the looming June 30 deadline, which has come and gone and left the state without a program to attract and retain businesses.