Home > Uncategorized > Energy Privatization Legislation Is An Egregious Example Of A “Rigged System”

Energy Privatization Legislation Is An Egregious Example Of A “Rigged System”

Gov. Murphy Urged To Veto Corrupt Lame Duck Special Interest Bill

Tax breaks, eminent domain, fossil subsidies, exempt from bidding & OPRA

We are not just dealing with a broken system; this is a rigged system,” Murphy, a Democrat, said at a Trenton news conference. “This was designed by special interests to benefit special interests.” ~~~ Gov. Murphy decries ‘rigged system’, pledges to veto legislation extending controversial tax programs (Philadelphia Inquirer)

Just months after Gov. Murphy issued Executive Order #52 to conduct an in-depth examination of the deficiencies in NJ’s tax incentive programs” and the Gov.’s Task Force on EDA Tax Incentives issued its scathingly critical Report on what Gov. Murphy has called a “rigged system”, the NJ Legislature has poked a finger in the Gov.’s eye and passed a bill [A4535 [2R]S2958[2R] that is an egregious example of exactly what the Gov. called a “rigged system”.

Before I get to the numerous major flaws in the bill – which is now on the Governor’s desk – let’s first hit the highlights of the Gov.’s Executive Order and Task Force Report.

I will then show how the energy privatization bill repeats exactly the same abuses that the Governor lambasted, e.g. a “rigged system” designed by and for the economic benefit of special interests.

EO#52 harshly criticized NJ tax incentive programs (plural):

the State Comptroller has completed this audit, which has revealed grossly inadequate compliance and enforcement efforts by the EDA that failed to ensure that the tax incentive programs operated to the benefit of the State’s economy…

… it is plainly unacceptable that billions of dollars in taxpayer money were awarded to companies based on promises of job creation and retention that often did not materialize

The Gov.’s Task Force Report further documented these abuses, concluding:

  • Special interests, which prioritized benefits to private parties rather than the State, had a significant impact on the design of statutes and regulations;

  • The EDA did not have adequate procedures in place to ensure that it discovered relevant information, including applicant misstatements the would have led to rejection of some applications or a significant reduction in the amount of awards;

The corrupt “rigged system” promotes corporate profits over the public interest by ceding control of drafting tax incentive policy (AKA corporate subsidies), legislation, regulations and EDA oversight to private corporate interests, who literally write their own ticket.

This is not just about one or two tax incentive programs administered by EDA – the EDA has been discredited as an institution and the entire concept of tax incentives and corporate subsidies has been exposed as a fraud.

NJ Policy Perspective’s Report expands on these corrupt flaws and recommends reforms:

Reining in Corporate Tax Subsidies: A Better Economic Development Playbook for New Jersey

… by removing oversight safeguards and caps on awards, the economic development legislation enabled an unprecedented spike in corporate tax breaks with questionable benefits, depressing future tax revenue for years to come. Today, New Jersey is a national outlier in both the size of its corporate subsidy awards and how little the state receives as a return on its investments.

Now with this context of extreme abuse in mind, how is it even possible that the NJ Legislature just passed a bill – [A4535 [2R]S2958[2R] – that would create another new huge corporate subsidy program, via tax breaks, and administered by the EDA?

Never mind the fact that the energy bill gives short shrift to climate change and would subsidize fossil energy production.

Never mind the fact that the energy bill ignores Gov. Murphy’s soon to be released Energy Master Plan and is “policy neutral” with respect to fossil versus renewable energy.

Never mind the fact that the energy bill is based on model legislation drafted by the right wing American Legislative Exchange Council and has floundered in the legislature for at least 6 years.

Never mind the fact that the energy bill would authorize private corporations to *benefit from the exercise of eminent domain authority, similar to the issue Gov. Murphy’s Attorney General Grewal has litigated in the PennEast pipeline case.

Never mind the fact that the energy bill would exempt the program from the Open Public Record Act, thereby destroying transparency and accountability and frustrating the ability of the public and media to oversee the program.

Never mind the fact that the energy bill would exempt private corporations and government from complying with open competitive public bidding laws, likely leading to gross financial ripoffs and other pay to play corruption.

Never mind that the energy bill could exempt billion dollar energy projects from local property taxes and payments in lieu of taxes (PILOTS). (I wonder if local governments are aware of this? Or NJ’s local taxpayers – who pay the highest property taxes in the country – are aware of this?

Never mind the fact that the energy bill, by classifying these projects as an “essential government function”, would over-ride NJ’s local home rule land use traditions and restrict local governments’ ability to protect local public health, safety and welfare.

Never mind the fact that the energy bill would divert millions of dollars from the Regional Greenhouse Gas Initiative (RGGI) Climate Solutions Fund, revenues that are targeted at reducing greenhouse gas emissions.

Never mind the fact that the energy bill would create all the problems associated with privatization of critical public infrastructure, including putting private profits over the public interest, consumer ripoffs and expanding corporate control.

Never mind the fact that the energy bill lacks any cost containment policies or mechanisms, like caps on energy capacity, economic costs, limits on total subsidies or corporate CEO or executive compensation, or requires that projects pass a cost-benefit tests.

Never mind the fact that the energy bill’s privatization of energy infrastructure conflicts with Gov. Murphy’s “community solar” program and would undermine the emergence of public power and preclude democratic community control of a critical public utility.

Never mind the fact that the energy bill repeats all the same mistakes of NJ’s deregulation of the solid waste industry (i.e. the 1985 “McEnroe” “negotiated procurement” law that eliminated BPU public utility regulation of garbage incineration) and NJ’s 1999 Energy deregulation law.

Never mind the fact that the energy bill lacks effective regulatory oversight and enforcement mechanisms.

Never mind the fact that the energy bill relies on a slogan and makes a sham argument about “resilience”.

Never mind the fact that the energy bill was rammed though, without debate, on the last day of the Lame Duck session.

We can ignore ALL THAT ABUSE.

The mere fact that the Legislature passed another corporate tax break program and housed it in EDA just months after EDA’s corporate tax break subsidy programs were exposed as a massive fraud, is sufficient basis for Governor Murphy to veto the bill.

This is the worst bill I can recall over a 35 year career in Trenton.

If Governor Murphy can’t veto this bill, then he is either part of the corruption or completely politically powerless.

[End Note: Does NJ Gov. Phil “Rigged System” Murphy even know that his own greenhouse gas plan allocates 60% of total funds (about $60 million/year) to EDA for grants, the same policy he has lambasted? See:

NJ Gov. Murphy’s RGGI Funding Plan Will Subsidize Fossil http://wolfenotes.com/2019/10/nj-gov-murphys-rggi-funding-plan-will-subsidize-fossil-threaten-nj-forests/

Of course, perhaps the Gov. supports his Democratic Party’s prior legislation to privatize NJ’s toxic site cleanup program and more recently promote privatization of local water and sewer infrastructure.

In that case, he may have green lighted this bill and will sign it. Time will tell. We are watching.

* revised – clarification of original

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