Companies that receive or transfer business tax incentives greater than $25,000 should disclose their political contributions to New Jersey's election authority, Gov. Phil Murphy said Monday as he conditionally vetoed a bill that would show the public big-spending political donors whose names are usually kept secret.
"The bill contains egregious loopholes that fail to create reasonable and consistent disclosure standards across the board," Murphy said in a news release, recommending that lawmakers expand the scope of a bill intended to address "dark money" in elections.
Murphy's fight to overhaul two expiring Economic Development Authority tax break programs, over which he hired a task force to investigate, is seeping into his legislative priorities and seeming to stall action on other matters, such as marijuana legalization, securing a millionaires tax and, now, efforts to make public who is bankrolling mysterious political groups.
“We’re caught up with trying to make everything fit this narrative right now, and it’s a pox on all of our houses because we really need to focus on governing,” said Sen. Troy Singleton, D-Burlington, the bill's sponsor.
The legislation Murphy rejected Monday was intended to reveal the donors to a growing number of mysterious “dark money” groups that pour millions into influencing political races, ballot questions and legislation, including high-profile, secretive groups backing the governor and other Democratic leadership.
The law would require such social welfare nonprofits and other so-called 527 political organizations to report contributions of more than $10,000 and spending of more than $3,000 to the New Jersey Election Law Enforcement Commission.
The measure passed by a wide majority in both houses, and Senate President Stephen Sweeney, D-Gloucester, said he would try to override the veto if the bill's sponsor, Singleton, wanted it. Singleton said he couldn't support Murphy's veto and would try to get fellow senators' support before he made a decision.
"While we are pleased we were able to draw attention to this important issue, and elevated the conversation about the need for true reform in this area, the governor’s actions today are, ironically, an example of politics at its worst," Singleton and sponsor Assemblyman Andrew Zwicker, D-Mercer, said in a joint statement.
Murphy sent the bill back to the Legislature, also recommending that lawmakers strike language that prohibits elected officials from being involved in these so-called independent-expenditure groups, saying in his veto that it raised constitutional concerns.
"It is not clear ... how a blanket ban on officeholders establishing or managing an
independent expenditure committee will deter quid pro quo corruption or further any other sufficiently important government interest," he said.
This piece of the law would appear to apply to former Murphy campaign manager Brendan Gill, who is an Essex County freeholder and also involved in a dark-money nonprofit pushing Murphy's agenda.
Bill fast-tracked after 'dark money' fight
Despite languishing in past years, the legislation sped through both chambers in a few months after spats between Murphy and lawmakers over nonprofits closely tied to Murphy and Democratic leadership.
The legislation would apply to 501(c)(4) nonprofits such as New Direction New Jersey, a group stacked with Murphy’s former aides and for which Murphy himself solicited funds before he became governor. The nonprofit aired ads boosting Murphy’s agenda, and reported spending more than $500,000 on lobbying expenses for cable and internet ads in 2018.
Despite originally promising to promote transparency and voluntarily disclose its donors, New Direction New Jersey leaders backtracked and refused to do so, citing a “toxic political environment.”
Murphy has tried to distance himself from the group, telling WNYC that the nonprofit is “not me” but “an organization that does a lot of amplification and work on the progressive agenda in the state.” The group did not listen to Murphy when he publicly said the group should disclose its donors.
Shortly after the group’s reversal, Sweeney endorsed the “dark money” bill. New Direction New Jersey aggravated lawmakers, like Sweeney, when it aired ads during strained 2019 budget negotiations last year.
In his veto, however, Murphy claimed that a loophole in the bill meant it would not have covered groups like New Direction New Jersey: If independent-expenditure committees had "limited interaction with candidates," they could exempt themselves from the law, he said.
Jeffrey Brindle, executive director of the Election Law Enforcement Commission, which handles campaign finance and lobbying disclosure, disagreed.
"I think the legislation is really pretty clear preventing any kind of coordination," he said. If an independent committee were to coordinate with a candidate, Brindle said, the group would become a political action committee, which has more stringent requirements for disclosure.
An earlier version of the legislation would have forced groups like New Direction New Jersey to post all large donors since Jan. 1, 2018, but lawmakers removed that retroactive language in a later version.
Currently, for the public to find out the backers of a nonprofit or 527 political group on New Jersey's campaign finance website, the organization must voluntarily post its funders. Or a donor could make a mistake: Politico New Jersey found that the energy company Public Service Enterprise Group accidentally donated $55,000 to a super PAC called General Majority, which has to disclose its donors, instead of its partner “dark money” group, General Growth Fund, which would have kept the donation confidential.
That donation came four months after the Legislature approved a $300 million nuclear subsidy bill pushed by Sweeney. General Majority, tied to political power broker and Sweeney ally George Norcross, backed Sweeney’s reelection campaign.
A new nonprofit aligned with Assembly Speaker Craig Coughlin, NJ United, has reportedly started raising money. But a spokeswoman for the group, Julie Roginsky, said it will voluntarily be open about its donors.
"In order to be as transparent with the people of New Jersey as possible and to reflect the spirit of the legislation Speaker Coughlin was proud to shepherd through the General Assembly, NJ United will be disclosing its donors by the end of this year," Roginsky said.
The legislation's $10,000 threshold to report donors is still less than what state and local candidates have to disclose: donations worth more than $300. An earlier version of the bill originally put this same limit on nonprofits but increased the amount after push-back from organizations such as the American Civil Liberties Union protested, saying that requirement might prevent donors from giving the group money.
Murphy's wish list of changes
Murphy also sought to strike a distinctive piece of the bill, which said grassroots groups airing ads about legislation, policy or appointments, instead of ads just opposing or supporting a candidate, will need to post their donors. This is not required on the federal level and in many states.
But Brindle, of the state campaign finance agency, said these grassroots groups already disclose this activity in annual lobbying reports. Taking out this requirement would just prevent the information from being posted in a more timely manner, he said. Instead of learning about donors in quarterly reports, the public would get the information the next year on an annual basis.
LLCs and other corporations should be forced to disclose their donors, Murphy also said in his veto, and the bill should expand New Jersey's pay-to-play laws to make sure any company that received $17,500 or more in public contracts must disclose all donations made to independent expenditure committees.
Currently, companies with public contracts worth more than $50,000 have to disclose if they give money to candidates, parties and political committees, but not nonprofits and 527 committees.
"I'm not sure if it's a good idea to add it, because the major focus of this bill is dark-money disclosure," Brindle said. "I am personally disappointed but want to stay positive and work with the governor and Legislature to get this bill back on track."