Murphy’s cash grabs to balance NJ budget reminiscent of Christie

Before jumping into the governor's race two years ago, Phil Murphy criticized the environmental cleanup settlement Chris Christie's administration reached with ExxonMobil.

Murphy, then the leader of the "New Way for New Jersey" committee, called the deal a pennies-on-the-dollar sellout to "big oil and gas interest." And he also blasted the Christie administration practice of diverting nearly $1 billion in environmental funds to plug shortfalls in the state budget.

“Under my watch that will end,” he said at the time.

But Murphy hasn't ended the maneuver. He's become one of its more aggressive practitioners.

More than half of the $225 million Exxon settlement, for example, will be spent to patch up holes in state spending rather than for its intended purpose of cleaning up contaminated wetlands near oil refineries in Linden, Elizabeth and Bayonne.

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And it's not the only planned diversion. Murphy is seizing funds from other dedicated environmental and affordable housing funds for more short-term budget balancing. His administration also plans to take nearly half of the state's $141 million from its settlements with Volkswagen for cheating on emissions tests, instead of using it for clean-vehicle initiatives,

As "New Way" Murphy finds his footing in his first six months in office, he is also operating, at times, very much like an old school New Jersey governor, particularly in the mold of his much-criticized Christie. Yet, there also appears to be a kind of strategic design behind Murphy's cash grabs. While they may anger some of his ardent and early liberal backers, the raids also help Murphy make the case for raising taxes, which will, in theory, fund much of his liberal agenda.

The proposed budget raids are examples of the "short-sighted" gimmickry that Murphy, an ex-Goldman Sachs' executive, vowed to end. But now that he's in office, Murphy is undergoing the harsh, rite-of-passage of that all new governors face: the idealism of the campaign quickly gives way to a do-whatever-it-takes pragmatism in the face of a July 1 deadline to balance the state budget.

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"Campaigning is easy, governing is hard,'' said Carl Golden, who served as spokesman for former Republican Governors Thomas H. Kean and Christie Whitman. "When you come in, you sit down with the Office of Legislative Services, their own budget people and start running the numbers. And they aren't real good. You start lifting the couch cushions in the executive office looking for money."

Murphy is also hewing to another Trenton tradition of blaming the fiscal mess on his predecessor and leaving him with no options other than unpopular, tough-love steps to clean it up.

"We’ve been dealt a lousy hand," Murphy said last week at a bill signing in South Brunswick. "I wish we were dealt a better hand... it's not ideal. We’re doing the best we can. Rome wasn’t built in a day or rebuilt in a day."

Murphy's moves earned him a surprising dose of sympathy from Senate President Stephen Sweeney, who has clashed with Murphy in the first few months.

"He’s not doing anything he said he wouldn’t do. So give him credit for that," said Sweeney, a Gloucester County Democrat, referring to Murphy's pledge to restore Planned Parenthood funding, bolster "pay equity" laws for women, and other items on his mostly liberal agenda.

"But, what he realized is just how bad things are here. I keep saying, we’re broke. We’re broker than broke," Sweeney said.

Yet, Murphy set a higher bar of expectations than most incoming governors. Vowing to end fund raids like the Exxon settlement helped Murphy draw a sharper contrast with Christie during last year's campaign against Christie's lieutenant governor.

Angering the liberal base

In the eyes of some, it's particularly galling to see Murphy targeting long-cherished funds set aside for progressive constituencies -- his political base. And in the case of the Exxon settlement, Murphy startled supporters in March when his administration filed papers to block an appeal by advocacy groups' challenge to the original settlement.

That struck many as a hardball, Christie-esque move, and a slap in the face to voters who passed an amendment to the state constitution that restricted the use of these kind of settlements for environmental cleanup. Nearly 60 percent of the voters approved the measure, which was on the same ballot as Murphy.

"There hasn't been one governor in my past 40 years that haven't blamed previous administrations and reasonably so,'' said Ray Lesniak, the retired Union County Democrat who helped lead the legal challenge on the settlement. "But that's not a valid excuse to not use the money for its intended purpose, particularly when it was overwhelmingly approved by the voters at the ballot box last November."

Jeff Tittel, director of the New Jersey chapter of the Sierra Club, put it bluntly: "Yes, we have a financial problem. But there are other ways of dealing with it instead of turning the environment into an ATM or cash cow.''

Administration officials argue that the ExxonMobil settlement is not bound by the new restrictions because the settlement was reached before the voters approved the constitutional amendment. (About $50 million will be used for actual cleanup after legal fees and other costs are paid.)

Ironically, Murphy has argued that it was this kind of scrounge-for-any-available dollar approach -- so-called short-term gimmicks -- that caused New Jersey's fiscal problems.

"We are climbing out of the deep hole that our state has been stuck in for too long,'' he said in his first budget address in March. He is offering an alternative path -- raising revenue with higher taxes on millionaires, restoring the sales tax to 7 percent and possibly a tax on recreational marijuana use if and when it becomes legal.

The new revenue will provide the state long-needed resources to cover neglected needs for public schools, mass transit and public worker pensions, Murphy says. It would also generate enough to begin expanding preschool programs and free community college tuition, he says.

Murphy tax hikes questioned

On that issue, Sweeney has been less sympathetic. A long, overdue reckoning of how the state spends its money is finally at hand, Sweeney says, and he is pressing for consolidation and cuts in services as well as reviving talks for another round of public employee benefit savings. Tax hikes, Sweeney says, are a "measure of last resort."

With a July 1 budget deadline looming, Murphy and the Democrats that rule the Legislature will be forced to reconcile Murphy's taxes and Sweeney's push to cut.

"Over the next five weeks will tell what that 'last resort' looks like,'' said Assemblyman John Burzichelli, D-Gloucester, chairman of the Assembly Appropriations Committee.

But even if there is an agreement to raise taxes, Murphy is still expected to tap some of the existing funds, given that a much hoped-for windfall from April tax collections didn't materialize. He'll need the money.

On Wednesday, the usually smiling, optimistic Murphy took an almost wistful tone when defending his use of the Exxon money. The candidate was now the governor with a budget deadline. "It's not how we expect things to be going forward or want to be going forward.''