Governor Murphy vetoes nonprofit loan guarantee bill backed by top Democrats
Gov. Phil Murphy vetoed a bipartisan bill backed by top Democratic legislators Monday that would have required the Economic Development Authority to create a loan guarantee program for nonprofit organizations.
The bill — sponsored by Assembly Speaker Craig Coughlin (D-Middlesex) and Senate President Nicholas Scutari (D-Union), and unanimously passed by the Legislature — was intended to help nonprofits obtain loans allowing them to fund revenue-generating capital projects.
“While I am not opposed to the idea of establishing programs for, or otherwise providing funding to, nonprofit organizations to create new physical spaces for our residents; the program established by this bill is unworkable in its current form,” Murphy said in his veto message.
The governor said he feared the bill would have forced the state to create strenuous underwriting standards and imposed prevailing wage requirements on workers involved in projects launched under the program.
A loan guarantor becomes responsible for the debt if the initial borrower defaults.
He also warned using money from the Economic Development Authority’s economic recovery fund would subject nonprofits to statutory feasibility and loan repayment standards meant for for-profit entities. Nonprofits, the governor said, may be unable to overcome the costs.
Murphy said funding nonprofit capital projects through the annual budget or through disbursements of COVID-19 federal aid dollars would be more appropriate.
Spokespeople for the speaker and Senate president declined to comment.
Though the governor has enjoyed a cordial relationship with Democratic legislative leadership in recent years, he repeatedly butted heads with top legislators during his first two years in office. There’s no indication that Monday’s veto will chill relations between the administration and Statehouse Democrats.