Murphy & Cuomo deliver SOTS’s; Frangione named Acting COS

NorthStar Strategies TrueNorth Insights

Yesterday was a day for major policy addresses across the region. New Jersey Governor Phil Murphy delivered his rookie State of the State while third term New York Governor Andrew Cuomo delivered his ninth. We break down both and highlight key takeaways. Following his address in Trenton, Murphy announced a new Acting Chief of Staff. It’s all in this edition of TrueNorth.

Murphy SOTS

New Jersey Governor Phil Murphy delivered his first State of the State address in Trenton yesterday. Reprising the tagline from his campaign, Murphy proclaimed that the “State of our State is stronger and fairer than it was one year ago.”

Murphy devoted the first third of his 55-minute address to an admonition of New Jersey’s corporate tax incentive program. Enacted by the Democratic Legislature and implemented by the Administration of former Governor Chris Christie, the program was intended to attract corporations to New Jersey by offering tax credits in exchange for creating or retaining jobs in the State. The Office of the State Comptroller last week released a scathing audit that concluded that New Jersey awarded $11 billion in incentives to companies, some which failed to deliver on promised jobs. The Comptroller’s audit told of a broken system and lack of controls or oversight by the New Jersey Economic Development Authority (EDA). Murphy assessed the program as “rigged to work for a favored few.” In his response following the speech, Senate President Steve Sweeney disagreed with Murphy’s assessment that the program failed in its mission and instead clarified that the Comptroller’s audit criticized the lack of EDA oversight. With the Attorney General now looking into EDA’s administration of the tax incentive program, it doesn’t look like this story is going away anytime soon.

Murphy used the bulk of the middle of his speech touting first year accomplishments including equal pay protections; protections for the LGBTQ community; funding of Planned Parenthood; enhanced earned sick leave; expanded medical marijuana access for veterans; climate change protections including New Jersey’s decision to rejoin the Regional Greenhouse Gas Initiative (RGGI) and the New Jersey Board of Public Utilities’s work to create a 1,100 megawatt wind farm off New Jersey’s coast; and various efforts to reform and rebuild NJ TRANSIT, an effort Murphy hoped would become “the turnaround story of New Jersey.” Murphy lauded his work with the Legislature, citing 169 bills passed in 2018, the most by any Governor and Legislature in decades.

During the last third of his address, Murphy outlined a number of 2019 priorities including $15/hour minimum wage and legalization of marijuana for recreational use, two initiatives that the Governor and legislative leaders had hoped to approve last year. Murphy also called for improved water infrastructure in light of recent revelations that the City of Newark continues to be plagued by significant lead contamination of its water supply. The Governor also outlined continued focus on NJ TRANSIT including improved service, customer communications, and reliability. Murphy committed to hiring a new crop of train engineers in 2019 and promised to outline a funding plan in his upcoming budget address.

Murphy’s address was interrupted numerous times by boisterous applause, coming frequently from attendees seated in the balcony of the Assembly chamber. Republicans criticized Murphy’s speech for failing to discuss fiscal reforms, high taxes and affordability. Senate Minority Leader Tom Kean focused on the unpredictability of the tax rate year over year and called for a stable tax rate. Assembly Minority Leader John Bramnick quipped that of the 169 bills passed, none addressed fiscal reforms. Former Lieutenant Governor Kim Guadagno, Murphy’s opponent in the 2017 election, decried the speech for effectively ignoring property taxes, historically one of New Jersey’s major issues.

Cuomo SOTS

New York Governor Andrew Cuomo kicked off his third term by delivering his State of the State address yesterday in Albany. It was Cuomo’s ninth State of the State but first to a Legislature under total Democratic control.

As he has done several times before, Cuomo used the backdrop of his State of the State to roll out his 2019-2020 budget. The $172 billion budget includes a number of major policy proposals including legalization of marijuana for recreational use, sports betting at upstate casinos, and implementation of a “Green New Deal.”

Victories in November’s election handed Democrats control of the State Senate, a point not lost on Cuomo who declared “we are in control” as he listed a number of key progressive priorities that have a much better chance of passage in 2019.

Cuomo outlined new revenue sources to offset an anticipated $3 billion budget deficit, specifically changes in the collection of internet sales tax and expansion of the State’s bottle bill. Cuomo’s proposed budget anticipates $300 million in revenue from recreational marijuana sales, however this hinges on the Legislature taking action on legalization as well as a labyrinth of regulations to be promulgated.

The Governor reiterated his support for congestion pricing and outlined a plan that would impose a fee on drivers entering the busiest parts of Manhattan and use revenues generated to fund New York City’s subway system, operated by the Metropolitan Transportation Authority (MTA). Congestion pricing revenues are not anticipated to be sufficient to fund all of MTA’s needs however, and Cuomo has proposed a 50-50 cost share with New York City to cover the remaining priorities. This has put him at odds with NYC Mayor Bill de Blasio who attended Cuomo’s address and panned the MTA funding proposal afterwards. Congestion pricing continues to face objection from legislators representing neighborhoods outside of Manhattan, making the proposal’s 2019 passage uncertain. What is clear is that one of Cuomo’s biggest policy pushes this year will also be one of the most controversial.

Frangione Named Acting COS

Governor Murphy has announced that Kathleen Frangione, currently serving as Chief Policy Advisor to the Governor, will serve as Acting Chief of Staff. Murphy made the announcement in a written statement following his State of the State address yesterday in Trenton. The appointment of Frangione coincides with outgoing Chief Pete Cammarano’s last day in the Governor’s Office. Murphy thanked Cammarano for his service and contributions while praising Frangione’s experience and policy expertise.

We haven’t been shy in our own praise of Cammarano and we’re going to be equally effusive in our assessment of Frangione, a public policy expert who cut her teeth on Capitol Hill working in various capacities including as Senior Policy Advisor on the Senate Foreign Relations Committee under then-Senator John Kerry.

Frangione’s appointment isn’t expected to be permanent; she will provide leadership while Murphy continues his search for a new Chief.