What to Know
New Jersey Gov. Phil Murphy criticized the tax incentive programs issued by Chris Christie during his State of the State address Tuesday.
On Wednesday, Murphy unveiled five new incentive programs. Two of the biggest programs he put forth would be worth a combined $300 million.
Murphy's focus on tax incentives comes after an audit that failed to verify if businesses met their benchmarks before getting awards.
Murphy, a Democrat, criticized the tax incentive programs, which were issued during Republican Chris Christie's tenure and expire this year, in his first State of the State address Tuesday. Murphy said the state "awarded" $11 billion - $8 billion of which came under Christine, who left office last year - over 13 years.
"To those who bemoan our inability to pay for even the most basic items in our budget, let me say that this, simply put, is nuts," Murphy said.
Murphy focused on and criticized $11 billion New Jersey approved for businesses that are supposed to be contingent on them meeting certain conditions, but did not mention the state only paid out about $700 million under Christie.
On Wednesday, Murphy unveiled five new incentive programs, but he's proposing a cap for how much the state could award under his plan. Two of the biggest programs he put forth would be worth a combined $300 million.
His focus on tax incentives comes after a state comptroller audit showed the Economic Development Authority, which runs the awards programs, failed to verify if businesses met their benchmarks before getting awards.
A closer look at the issue:
WHAT ARE THE TAX INCENTIVES IN QUESTION?
New Jersey has offered businesses tax incentives for about two decades. The audit that Murphy focused on programs going back 13 years. Most of the awards came during Christie's administration.
The Legislature intended the incentives to be performance-based, meaning awards would only be paid after certain conditions were met, like creating jobs.
WHY IS MURPHY SAYING THE STATE AWARED $11 BILLION IF ONLY $700 MILLION WAS PAID OUT?
The short answer is it's accurate, but there's more to it than Murphy laid out in his State of the State.
The Economic Development Authority, through five different incentive programs, approved $11 billion in credits over a 13-year period. That means the authority's board, which is appointed by the governor, approved the credits in return for the promise of creating or maintaining jobs in the state.
But not all of that cash was paid out, given that the law creating the programs required companies to create or maintain jobs, according to the authority. In fact, the authority said $696 million has actually been paid out to businesses under the Christie-era programs in response to the audit Murphy commissioned.
WHY IS MURPHY SO OPPOSED TO THE CREDITS?
At the heart of his critique is a concern the state is not getting its money's worth and, if all the incentives were redeemed, that could put pressure on an already strained state budget.
He pointed to the audit, which found that among the 48 of 401 projects it surveyed, the authority could not verify whether the jobs promises were actually maintained or created.
WHAT'S HAPPENING NOW?
In response to the audit, Attorney General Gurbir Grewal said he is investigating whether any laws were broken. Murphy unveiled a host of new incentives Wednesday, but the difference is they cap the amount of money that can be awarded.
Lawmakers would also have to sign off on them before they're enacted. The authority says that it set up a new division to monitor how businesses are complying with requirements and work more closely with the Department of Labor and Workforce Development to share information.