Murphy orders audit of corporate tax breaks but won’t tinker with $7 billion Amazon bribe

Gov. Philip D. Murphy signed his third executive order Friday, directing the state comptroller to audit the Economic Development Authority for corporate tax breaks granted during the Christie administration.

“New Jersey’s small businesses are the backbone of our economy,” said Murphy on Twitter. Today I signed an executive order directing the State Comptroller to investigate the failed economic development programs of the past, and lay out a better, stronger plan for the future!”

Murphy claimed his predecessor ignored small businesses in New Jersey while showering big corporations like Holtec, Goya and Panasonic with an estimated $8 billion in tax incentives, an exorbitant cost for promises to remain in New Jersey and create jobs.

“And the people of New Jersey deserve to know exactly what they got for that $8 billion, with a ‘B’ as my son, Sam would say, $8 billion dollars,” said Murphy. “We’re going to compare the actual economic benefits with the projected benefits when the awards were handed out. And we’re going to examine the entire application process including, and I’m sort of bracing myself for this, the fees that were paid to lobbyists and consultants, bless their hearts.”

One example: In 2014, Holtec in Camden got a 10-year, $260 million EDA tax credit in return for creating and retaining 395 jobs. Murphy said New Jersey is spending, on average, $162,000 per job “purportedly created” this way. That’s seven times the $22,000 per job Massachusetts spends.

Meanwhile, Murphy said the state will refocus its approach to small business investment and incubation. New Jersey only has 15 incubators like Tigerlabs, compared to 179 in New York. Murphy’s pitch had a deep impact on Roy LaManna, co-founder and CEO of video technology company Vydia.

“Someone like me who just started from Middletown, New Jersey, who has a startup, who honestly thought New Jersey couldn’t care less whether I had a business here or not, it gives me a lot of high hopes for what’s to come,” said LaManna.

Murphy’s first executive order was described as a measure to promote equal pay for women in New Jersey.

Under Executive Order #1, state agencies are explicitly prohibited from asking a job applicant for their past wage history, or investigating the prior salaries of their applicants, a move Murphy said would ensure that employees receive salaries that are commensurate with their skills, qualifications, and experience.

In New Jersey, women working full-time earn, on average 82 cents for every dollar earned by a man in a full-time position. That disparity worsens to 58 cents for Black women and to 43 cents for Latinas. According to research from the National Partnership for Women and Families, wage inequality leads to a combined loss of $32.5 billion.

On the day after his Inauguration, Murphy signed an executive order outlining ethical standards for the administration and requiring financial disclosures from various officials that are no less vague than existing rules.

Murphy has appointed the following cabinet members: Attorney General Gurbir Grewal, Community Affairs Commissioner and Lieutenant Governor Sheila Oliver, Transportation Commissioner Diane Gutierrez-Scaccetti, Treasurer Elizabeth Muoio, Education Commissioner Lamont Repollet, Health Commissioner Shereef Elnahal, Secretary of State Tahesha Way, Labor and Workforce Development Commissioner Robert Asaro-Angelo, Banking and Insurance Commissioner Marlene Caride, DEP Commissioner Catherine McCabe, Adjutant General Col. Jemal Beale, Homeland Security Director Jared Maples, Corrections Commissioner Gary Lanigan, Agriculture Secretary Douglas Fisher, Children and Families Commissioner Christine Norbut Beyer, Human Services Commissioner Carole Johnson, and Board of Public Utilities President Joe Fiordaliso.

New Jersey is offering a $5 billion tax break to Amazon, on top $2 billion promised by Newark, to attract the corporate giant’s second headquarters but Murphy is not planning to interfere with that deal.

A bipartisan bill passed in Christie’s final days in office would make $7 billion in state and city tax credits available if the retailer comes to the Garden State.

“This was a once-in-a-lifetime. Not everybody comes along with 50,000 jobs,” said Murphy.

The conservative political group Americans for Prosperity and the liberal think tank New Jersey Policy Perspective denounced the Amazon incentives package as “obscene,” and claimed tax breaks for large corporations “unfairly rig the state’s tax code and make it harder for small, local businesses to compete.”

Murphy expects his audit to take weeks or months, but wouldn’t speculate about whether accountants will find discrepancies.

“I’d like to wait and see this begin to unfold, to see the magnitude or the gap between the purported and the actual,” said Murphy, but if it reveals companies didn’t create the jobs they promised, the new governor says he will consider action. He said some states actually clawed back some of those tax breaks.

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