State of New Jersey

Governor Phil Murphy

Governor Murphy State of the State 2019 Remarks

01/15/2019

Lieutenant Governor Oliver, Senate President Sweeney, Assembly Speaker Coughlin, Majority Leaders Weinberg and Greenwald, Minority Leaders Kean and Bramnick, members of the Legislature, Chief Justice Rabner and Associate Justices of the Supreme Court, former governors Florio, McGreevey, and Codey, distinguished faith leaders, honored guests, and fellow New Jerseyans.

I had planned to give a very different speech today but, after reading the audit of New Jersey’s corporate tax incentives released last week, this is not a time for business as usual.

One year ago, tomorrow, I took the oath of office as New Jersey’s 56th governor. Three days later, on January 19, 2018, I ordered a full and complete audit by State Comptroller Degnan of our tax incentive programs -- it was one of my highest priorities.

My concern was that those programs were designed to do exactly what they were shown to do -- reward the well-connected while taxpayers and workers paid the price -- rather than actually create jobs and nurture innovative new businesses.

This is about wasted money, phantom jobs, squandered opportunities, and misplaced priorities. This is about a failed status quo and a broken system.

It’s time to fix it and, together, we can.

Together, where there is greed we will restore opportunity. Where there is failure we will forge success. And together, we can replace narrow thinking with common cause.

Between 2010 and 2017, $8 billion in corporate tax breaks were given away. More than $11 billion have been awarded over the past 13 years to lure companies to come to, or stay in, New Jersey. By the close of 2017 we were handing out tax breaks at a cost of more than $160,000 per job.

The Comptroller could not prove that New Jersey got back benefits anywhere near what it handed out. Based on a sample, it could not even prove that 20 percent of the jobs promised to be created or retained actually ever were – meaning money flowed from taxpayers’ pockets into a black hole.

Tax incentive programs should be about the best of what we do in government -- creating good jobs by investing taxpayer dollars with integrity, and subject to real oversight. That’s the test. And, it’s the test our system spectacularly failed.

For the past year, this administration has fought to create a New Jersey that works for everyone. This is just the latest glaring example of what we are up against -- a system that has been rigged to work for a favored few.

Let me be perfectly clear on two things.

First, I do not oppose tax incentives. Carefully crafted, properly enforced, and transparent tax incentives have a place in a successful economic program.

I am a “pro-growth” progressive, and proudly so. I am working every day to support companies and start-ups that want to grow, create jobs, and thrive in New Jersey – and that don’t need to have a “friend” on the inside. Incentives do help. But, we need to do this the right way, the smart way, and the honest way.

Second, the overwhelming majority of companies receiving a tax incentive are good actors. There are many good corporate citizens with whom we want to work, with whom I talk every day, and alongside whom we are proving that New Jersey is the right place for innovative businesses.

Businesses like Mars, Teva Pharmaceuticals, and online retailer The RealReal. These three companies are using their incentives to create more than 1,500 new jobs right here in New Jersey while retaining hundreds more. Our welcome mat is out for them and every business or entrepreneur that wants to play by the rules.

Likewise, a strong and focused EDA is crucial to our economic success. Under the new leadership of Chairman Larry Downes and CEO Tim Sullivan, the EDA is working hard to implement the forward-leading policies our economy needs to grow.

However, the Comptroller verified one of our worst suspicions, that in the most egregious cases, past “business incentives” got turned into “crony capitalism.”

The audit revealed bad policy, badly run -- a program more likely to have been drawn up in a smoke-filled back room than created for New Jersey’s future. It showed that New Jersey did not implement a serious, strategic plan for creating jobs. It showed a stunning lack of controls to ensure that these tax break programs lived up to their promises.

The results underscore why, while the rest of the nation was recovering from the Great Recession, we lagged in both job and wage growth.

What attracts businesses and creates jobs is a skilled and agile workforce, working modern infrastructure, great public schools, cutting edge research colleges and universities, innovative public-private partnerships, an unmatched location, and a culture that encourages innovation and entrepreneurship.

I have used the example of Massachusetts before. It bears repeating. No one calls Massachusetts a low-tax state. But, their economy over the past decade has run laps around us. How? It wasn’t a single-minded reliance on tax incentives -- the average Massachusetts award is nearly one-eighth of what we had been giving out, $22,000 per job. They did it by investing in education and infrastructure, and building connections between higher education and the real economy.

In essence, where we should have invested the bulk of our $11 billion.

In the upcoming fiscal year, these tax breaks from the past will cost us more than $1 billion. 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.

This is taxpayer money. For the same price as these tax breaks, New Jersey could have funded our public schools, funded NJ TRANSIT, met our pension obligations, provided more property tax relief, or all of the above. We could have rebuilt the entire Portal Bridge, on our own, seven times. We could have built the ARC Tunnel, or at least financed nearly the entire length of the Gateway Tunnel.

Any of these would have actually boosted our economy and made life better for New Jerseyans.

And, that, after all, is the reason we’re all here -- to make life better for our residents.

Tax incentives must be just one tool in our toolbox. Education, infrastructure, workforce development -- those are the primary tools for building a stronger and fairer economy and a stronger and fairer New Jersey. Tax incentives should be used strategically and sparingly to get us to our goal.

A few tweaks to the status quo cannot, and will not, get us there.

I am calling for a new program that is capped in the amount of money it gives out, has clear eligibility criteria and oversight, has flexibility, and works to achieve our broader goals by investing in the high-wage, high-growth sectors upon which we must rebuild our economy. It is focused. It is smart. It is about fostering the new economy rather than simply helping a few big corporations.

I put forward the principles for such a program in October, when I unveiled my economic master plan -- and I have shared my proposal with legislative leadership.

We need a system that rewards those who invest in their employees through skills development and training, and that cares about growing innovative and promising small and medium-sized companies. We need a program that encourages companies to invest in our communities and our Opportunity Zones.

Several of those zones -- in Newark and Jersey City -- have already been recognized as among the most advantageous in the entire country. They are but a few of the 169 Opportunity Zones we designated in 75 municipalities, at least one in every county.

Plainfield Mayor Adrian Mapp is already moving forward on plans to maximize his city’s three Opportunity Zones. Mayor Mapp is with us, and I share his excitement in Plainfield’s potential.

We need this more responsible and sustainable tax-incentive program to work hand-in-hand with the rest of our pro-growth agenda, and to buttress the new startup incentive programs offered by the EDA, which are now welcoming entrepreneurs to our incubators and co-working spaces.

And, it will work alongside the new Evergreen Innovation Fund, our proposal for partnering with venture capital firms to help grow the next generation of innovative New Jersey companies.

Rising Tide Capital, a non-profit funder, is headed by Alfa Demmellash. Alfa and her team are supporting promising new businesses in underserved communities. Alfa had hoped to be here today, but is currently on an out-of-state business trip, seeking new partnership opportunities. I spoke with her this morning. I know the Evergreen Innovation Fund will give her more New Jersey partners to help fulfill Rising Tide’s mission.

By the way, Alfa came to America from Ethiopia at the age of 12. She ultimately graduated from Harvard, and is now a game-changer in our state. I hope you are watching, President Trump, because her life is the American Dream.

The next transformative company is out there. We know that. With this economic master plan in place, we can increase the odds that that company will be born and bred right here in New Jersey.

The bottom line is that being competitive isn’t a race to give out the biggest tax breaks. It’s about leading the way on education, infrastructure, and diversity and inclusion. Companies want to stay and grow and locate in a state that allows them to flourish and for their workers to prosper in all parts of their lives. New Jersey has the potential to check every one of those boxes.

That is a vision of true success that can be shared by every family. That is how you build a stronger and fairer New Jersey. I ask you now to work with me to enact a new incentive program that will help us create a new economy.

One of my greatest privileges as governor has been getting to know the people who hired me, and for whom I work. Every day, I see the unmatched decency, character, and commitment of our people. That is why, despite these challenges, I am more optimistic than ever about our future.

The people I talk with -- in diners and town halls, on walks down the Shore, in houses of worship, or riding NJ TRANSIT -- never hesitate to give me a piece of their mind. Frankly, the more time I spend outside Trenton the more I learn that all the answers do not come from Trenton.

I often hear, “we need some help.” Help paying our bills ... help paying for college … help saving for the future. That is not a demand for a hand-out, it is an acknowledgement that their struggles are real and there is no shame in that.

I hear people say that the system doesn’t work for them. And, make no mistake, the unchecked corporate tax incentive program is the most glaring example.

In these challenging times, the people of New Jersey are not wrong to be concerned. But they are far more right to be hopeful that we will level the playing field and give them their shot at success.

That is what drives me every single day. And, it is what has led us to do many good things together.

By any measure, working together – with Senate President Sweeney, Speaker Coughlin, and each of you – we had a productive year.

And, because of that, I can proudly say that the state of our state is stronger and fairer than it was one year ago.

Today, more New Jerseyans are working and fewer are unemployed.

Today, more young children are attending a high-quality pre-K program, and many older students are starting on their way to a tuition-free Associate’s degree.

Today, we have more income tax fairness and more property tax relief for working families.

Today, the cost of health insurance is significantly down for thousands of New Jerseyans.

Today, Planned Parenthood is funded.

Today, women and their families benefit from the nation’s strongest equal-pay law. And, the rights of our LGBTQ community are further safeguarded.

Today, our loved ones are more secure because we passed a national model for earned sick leave.

Today, more of our veterans have access to medical marijuana to treat their PTSD, so they can get their lives back, and go to work or school. We thank our veterans for their service, and may God bless them all.

Today, companies from around the world are coming here to create good jobs in the innovation economy.

Today, unions – from educators to laborers – are back at the table.

Today, New Jersey is leading the nation in fighting climate change, from promoting clean energy alternatives to rejoining RGGI.

Today, our communities are safer because we have strengthened common sense gun safety laws.

Today, that is what stronger and fairer looks like.

The vision of a stronger, fairer New Jersey was born from an understanding of what it’s like for families who struggle, and a commitment to helping everyone succeed.

You may have heard me say – once or twice – that I grew up “middle class on a good day.” It is the job of each of us in this chamber to make sure that New Jersey’s families can have many more good days than bad.

I know what it is like taking out student loans and having to work to be able to afford the cost of college. I didn’t pay off my loans until I was in my thirties. Most of all, I know what it’s like when a community, a government, and our leaders have your back. And, when they work together to pull you ahead rather than push you back.

Yet, I am worried -- we should all be worried -- that my story, and the story of so many, seems further and further out of reach. The opportunities that could be earned by hard work, a good education, and playing by the rules are not there today as they were when I was growing up.

Today would have been the 90th birthday of Reverend Dr. Martin Luther King, Jr. His gospel of love and sharing common ground still inspires. Dr. King famously said, “We may have all come on different ships, but we're in the same boat now.”

Our wealth gap shows how far we have to go. According to research from the New Jersey Institute for Social Justice, the median net worth of the average white family in New Jersey stands at $271,000. For Latino families it is $7,000. And, it is just $5,900 for African-American families. That is a startling statistic we must address.

But, the struggles of poverty and income know no color. Look no further than the 2018 ALICE study done by the United Way of Northern New Jersey -- more than one-third of all New Jersey households, encompassing all ages and races, in every county, still can’t earn enough to afford basic needs. The fact that many of these households are headed by someone working full time, including at more than one job, shows us the need for action.

The working poor of New Jersey are no longer invisible. We see them.

Their needs point to our need for a new approach that reaches deep into every community and puts growing and sustaining a thriving middle-class before anything, or anyone, else.

It’s really this simple – as governor, I’m fighting to give every child and every family in New Jersey the same opportunities I had growing up in a tight-knit, working-class family, and I won’t stop fighting until they do.

Those who have been left out must be lifted up. Those who work hard must have their effort repaid. And those who are doing well should see a path to doing better.

Changing this mindset has been our Administration’s charge for the past 364 days.

Overcoming these economic disparities begins by ensuring equal opportunity to a good job. Last year, from the time I took office through November 2018, our economy created 50,000 new private-sector jobs. Our unemployment rate is at its lowest level since 2001. And, we saw the creation of more than 100 new apprenticeship programs that hired more than 2,000 new apprentices and issued over 1,000 industry-recognized certificates of completion, giving more of our residents a strong start to a good career.

To prepare our kids for a better future, we invested hundreds of millions of dollars in our schools and pre-K. Now, 4,000 more three- and four-year-olds are attending a high-quality pre-K program. And, starting this semester, 13,000 worthy students are attending community college tuition-free.

We were able to make these investments by asking those with incomes over $5 million to pay a little more, and by ensuring a more equitable distribution of school aid. We are proving that investment in our kids is also an investment in middle-class tax relief. To help our property taxpayers, we are also taking steps to promote common sense shared services.

We met our pension obligation and, working in partnership with our public employees, we reached an agreement that will save state and local taxpayers half-a-billion dollars in health care costs over two years.

These advancements are taking some of the weight off the shoulders of our property taxpayers. In 2018, New Jersey saw the lowest increase in statewide average property taxes on record.

We know we have much more to do to crack the back of our property tax burden – including working with our federal delegation to reinstate the SALT deduction. But, it’s a start.

While some in Washington continue their assault on our health care, we protected health care for hundreds of thousands of residents, by restoring funding for Planned Parenthood and women’s health care, enacting paid sick leave protections for 1.2 million residents who couldn’t take a day off, and safeguarding the Affordable Care Act -- an effort that resulted in a more than nine percent reduction in premiums on the individual market.

We put $100 million into fighting our opioid crisis, and have dedicated these resources to better strategic use, through access to treatment and recovery, careful data compilation and analytics, and helping law enforcement keep fentanyl out of our communities.

The stark reality is that we have far to go. Over 3,000 lives were senselessly lost last year. But we are putting ourselves in a better position to attack this epidemic head-on.

We are emerging as a global leader in offshore wind energy, where each dollar of investment will return nearly double to our economy, and where we are working to create thousands of good-paying new, union jobs. The Board of Public Utilities recently closed the first solicitation for potential partners in building an 1,100-megawatt wind farm off our coast -- enough energy to power half-a-million homes and businesses.

I don’t think it’s a stretch to say that realizing our offshore wind-energy potential is much smarter than drilling for oil off the Jersey Shore.

We opened up our democratic process through the nation’s broadest Automatic Voter Registration law, and through reforms to our vote-by-mail law that helped fuel the highest statewide midterm voter turnout in a generation.

We stood up for our DREAMers -- young immigrants who are just as American as our four kids -- by finally giving them access to in-state college tuition assistance programs.

One of these students, Gloria Rodriguez, from Orange, is now attending Bloomfield College, where she is a member of the honors college. She’s studying to become a special education teacher. Gloria represents the promise and spirit of our DREAMers, and is with us today -- I cannot wait to see her achieve her dream.

And, we’re investing in NJ TRANSIT to make the system work again for the nearly one million New Jerseyans who depend upon it every day. There is still much to do, but I am committed to making NJ TRANSIT the turnaround story of New Jersey.

When our Administration took office, passenger safety was not a priority, and work on meeting the federal government’s December 31, 2018 Positive Train Control requirement -- nearly nine years after Congress mandated it -- was just 12 percent complete. No one thought we would make it, but, in eleven months, we met the federal requirement.

There is still more to be done to have this system fully operational by the end of 2020, but our commitment -- and the hard work of NJ TRANSIT’s employees -- sends a strong signal to commuters that we are listening to them and working hard to get things right at every level.

This year, NJ TRANSIT’s full focus will be on improving customer communications, service, and reliability. Four classes of new rail engineers will graduate, joining newly hired bus operators. And, in my budget address six weeks from now, I will outline additional investments to continue improving NJ TRANSIT service by hiring even more engineers to fill staff shortages and get our trains running on time.

 Fixing NJ TRANSIT is the right kind of business incentive.

Our focus on improving operations and instilling a customer-based mindset is changing the culture within NJ TRANSIT. And, our bipartisan reform to NJ TRANSIT’s operations is sending the message to customers that NJ TRANSIT now works for them, and not the other way around.

We’re not done yet, but we will get there.

All of this progress was made possible through the 169 new laws we enacted together in our first year, more than any first-year administration in over two decades. In addition, I signed more than four dozen executive orders, advancing our priorities of job creation, environmental protection, equal rights, and fair pay.

I am eager to build on this progress together with Senate President Sweeney, Speaker Coughlin, and each of you. There is still much to do. And, no one is blind to the challenges that remain.

So, let’s start 2019 by finishing what we began in 2018 -- putting the minimum wage on a clear and responsible path to $15 an hour, and legalizing adult-use marijuana. We must remember that when we talk about policy we are talking about people, not politics.

Our minimum wage workers got a 25-cent per hour increase on January 1 -- a scant $10 more on a 40-hour work week. That’s completely inadequate.

Working together with the Senate President and Speaker, we have made great progress over the past several days on final legislation to raise our minimum wage. I appreciate the progress we have made and I know, working together, we will get this done.

A $15 dollar an hour minimum wage will give more than one million families a stronger foothold in the middle class, and allow those who aspire to enter the middle class the means to do so. The people this will help are the same people all of us rely on – maintenance workers, child-care workers and home health aides, security guards, and many more.

Doing so will allow us to invest more in education, in infrastructure, and in other critical needs. A higher minimum wage strengthens all of New Jersey.

And, it will also strengthen our businesses. Talk with Ron Rivers, the owner of Love2Brew, a successful homebrewing supply company in North Brunswick. Ron pays his employees a starting wage of $15 per hour because he knows better pay gets him better employees who serve the customer better.

Ron is here today, and I thank him for setting an example for others to follow.

By legalizing adult-use marijuana – first and foremost – we can reverse the inequality and unfairness left from years of failed drug policies and shift public safety resources to where they can do the most good. We must ensure that those with a past mark on their records because of a low-level offense can have that stain removed, so they can move forward to get a stable job or an education.

But, it will also allow us to broadly benefit from creating an entirely new and legal industry, much as we did last year with sports betting. We are learning from the states that went before us on what not to do, but we are also seeing the positive economic impacts. Massachusetts’ new industry is creating an estimated 19,000 new jobs. And, in Colorado, legalization fostered an industry that has an annual statewide economic impact measured at $2.4 billion, with 18,000 new jobs created in research, agriculture, processing, and retail.

We can do that here, and in a smart way that ensures fairness and equity for minority-owned businesses and minority communities.

Last year, we enacted seven new common-sense gun safety laws which returned us to our rightful place as a national leader. Let’s take additional steps this year to close remaining loopholes -- to make it easier for prosecutors and police to keep illegal guns off our streets, regulate and track ammunition sales, and assist community-based organizations in implementing coordinated, evidence-based, violence-intervention strategies. Let’s work together to get this done.

Our collective conscience has been moved by Parkland and Pittsburgh, but we have acted because of people like Hessie Williams of Jersey City, who channeled the grief of losing her own son to gun violence to organize A Mother’s Pain, which brings together other mothers who have also lost children to gun violence for mutual support – and to support non-violence efforts in their community.

Hessie is with us today, and I ask that she stand and be recognized for all she is doing to stop the scourge of gun violence.

Let us use this year to also turn our attention to our aging water infrastructure. More than 1.5 million residents – north, central, and south, rural and urban – are currently serviced by water with elevated lead levels. We must leverage every opportunity to build a modern water infrastructure network that ensures the delivery of clean water to every child, and every family.

We have inherited water infrastructure that is, in some places, a century old, if not older. Some of Newark’s water lines were installed in the 1880s. Mayor Ras Baraka has been on the frontlines of this, and I applaud him and his team for their work to protect Newark’s residents.

Outdated infrastructure is a national problem, and it requires a federal solution. I will continue working with our Congressional delegation to press the federal government for greater support and assistance -- whether it pertains to clean water, or getting the Gateway Tunnel built.

Let’s open the doors to our democracy even wider. Let’s work together to allow residents to register to vote online and at the polls on Election Day. Let’s enact true early, in-person voting for our residents. Let’s allow 17-year olds to register and vote in our June primaries if they will turn 18 by the November general election.

Let’s restore voting rights for individuals on probation or parole, so we can further their reentry into society by allowing them to exercise the most sacred right offered by our society -- the right to vote.

 And, let’s work together to allow all residents -- regardless of status -- to obtain a valid New Jersey driver’s license. Twelve states, as varied as Delaware and Utah, plus the District of Columbia, have already done so. All they’ve seen is an increase in the number of licensed and insured drivers, safer roads, and lower auto insurance premiums. Let’s do the same here.

One year into our work, our vision for how to move New Jersey forward has not wavered. We have stayed true to our values and true to those we serve.

We are who said we would be – and we did what we said we would do.

It comes down to this -- you can’t have economic progress without social progress, and you can’t have social progress without economic progress. That’s where this journey is taking us – to a New Jersey that is both strong and fair.

It’s not one or the other. It’s both. I was not sent here to continue peddling the false choices of the past. I was sent here to build a brighter future for our people and change our state for the better.

I look forward to working with you – and with Senate President Sweeney and Speaker Coughlin and their teams and across the aisle – to build a state that leads for all the right reasons and in all the right ways. The state others point to and say, “that’s what the future looks like.”

It’s a state with an economy that isn’t content to be equal with our peers in terms of creating jobs or raising wages, but which leads the pack.

It’s a state where the light bulb first flickered on, the transistor age started, and medical miracles were born that now has a strategic economic vision for growth, and reclaims our mantle as the world’s home for innovation.

It’s a state where young people from across our nation will want to come to start their careers, where they can find good jobs, affordable housing, and diverse and inclusive communities.

It’s a state where young families can grow and prosper.

A state that redefines public education for our nation, with access to a free education from pre-K all the way to an Associate’s degree.

A state where our higher education system and the real economy are connected, where good jobs can sustain middle-class dreams.

A state where our seniors can retire safe in the knowledge that someone is looking out for them so they won’t have to leave for elsewhere.

It’s a state where we shrink the economic inequities that have stubbornly persisted, where poverty is meaningfully reduced, and the playing field is level.

It’s a state that doesn’t just provide a good value, but thrives through living its strong values.

It’s the New Jersey we should be -- the New Jersey, that together, we can be.

As Eleanor Roosevelt said, “the future belongs to those who believe in the beauty of their dreams.”

My energy and optimism for the job ahead are boundless. They are shared by the residents I have met along this journey. I know we can make this vision a reality.

This is my charge as governor. This must be our charge as a state.

Thank you. May God continue to bless the great people and state of New Jersey, and the United States of America.

 

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