From left, Assembly Speaker Craig Coughlin, Gov. Phil Murphy and Senate President Stephen Sweeney at the governor’s Fiscal Year 2020 Budget Address on March 5, 2019. – AARON HOUSTON
Lawmakers plan to move ahead with their own version of a state budget proposal on Monday which, according to a person close to budget discussions, will nix Gov. Phil Murphy’s sought-after millionaire’s tax but include many of his other spending priorities.
The budget, hashed out over the weekend, will be very close to the $38.6 billion spending plan that Murphy introduced in March, according to the source who requested anonymity to speak freely on the matter.
It will bring in a total spending plan of $38.7 billion supported by $38.7 billion of revenues, according to another legislative source. That is compared to Murphy’s proposed $38.6 billion spending plan supported by $38.8 billion of revenues.
The state will finish with a closing balance of $1.4 billion by this time next year, according to that source – over $250 million more than what the governor proposed.
Both the Assembly Budget and Senate Budget and Appropriations Committee are voting on the measures Monday afternoon, followed by votes in both full chambers on Thursday, after which it would head to the governor’s desk. The governor will have the option to sign the budget, line-item veto whatever he does not like in the spending plan, veto it in full or hash out further agreements about what to put in the spending plan.
Murphy and legislative leaders, all Democrats, have until July 1 to agree on a budget for the 2020 fiscal year, otherwise, the governor would have to order a government shutdown.
Last year, the administration narrowly avoided a shutdown when it announced a deal just hours before midnight.
The Legislature’s budget will keep Murphy’s $3.8 billion proposed pension payment – the largest deposit to date– and result in a $1.3 billion surplus rather than the $1.1 billion called for in the governor’s initial proposal.
We’re right at where the governor is. Ours does more without spending more.
Lawmakers will add $50 million toward New Jersey Transit, in addition to the net $25 million increase Murphy proposed; $175 million into property tax relief; a boost to the veteran income tax deduction; and full funding of the state’s senior property tax freeze program. It will include $65 million to finance wage increases for direct support professionals tasked with assisting people with disabilities and employees at certain child care centers. It will also add $23 million more towards the veteran’s income tax deduction.
They will also include $250 million for the gross income tax property tax credit and $173 million for property tax relief.
Murphy initially dangled $250 million of property tax relief to residents in exchange for the millionaire’s tax proposal, though legislative leaders said the proposal was still a non-starter.
The budget includes $21 million for the regulation of adult-use marijuana, according to the one source.
Lawmakers are also proposing $65 million to offset the costs that businesses might incur from the statewide minimum wage increase, which goes up to $10 in July and to $15 an hour by 2024.
That money includes $9 million for the wage increase of childcare staff, $15 million for the wage increase of nursing home staff, $20 million for the wage increase of direct support professionals, and $21 million toward the wage increase to $19 an hour for Medicaid personal care assistants.
The only tax would be one levied on the health maintenance organizations for the state’s public worker health care plans, and take more money out of the state’s rainy day fund.
Legislative leaders have argued putting the funds into a lock-box is inappropriate given the state’s many bills which it still has to pay.
Lawmakers are also proposing to cut Murphy’s fees on gun owners, opioid manufacturers and bear-hunting permits.
It is not certain whether the Legislature’s budget will include the so-called corporate responsibility fee, which Murphy wants to levy on certain companies that have employees enrolled in Medicaid.
The budget calls for $100 million from the repatriation of offshore dividends, and another $175 million from businesses cashing in tax credits.
“We’re right at where the governor is,” one person said. “Ours does more without spending more.”
This person added: “All without raising taxes.”
High earners
Senate President Stephen Sweeney, D-3rd District, Murphy’s often-time political opponent, has fiercely opposed the millionaire’s tax, as has Assembly Speaker Craig Coughlin, D-19th District.
The proposal would increase the tax rate to 10.75 percent for every dollar earned above $1 million, which the administration pegged at earning roughly half a billion dollars for the state.
Murphy tried unsuccessfully last year to push for a millionaire’s tax, but instead got a mega-millionaire’s tax levying the rate on those earning above $5 million annually.
The person close to budget discussions said lawmakers do not want a millionaire’s tax, especially because of how much revenue the state reported over the past year which wiped out the need for new taxes.
Murphy has also pushed for a one-time $125 property tax credit – his office said it could benefit up to 2 million residents – but the proposal has been rejected by both Coughlin and Sweeney as a “one-time gimmick.”
The governor’s office declined to comment on the current proposal from the Legislature.
However, earlier Monday New Direction New Jersey – a group tied to Murphy which has come under fire for the so-called “dark money” controversy – put out a statement that it will heavily advertise during the last days of budget season in support of the millionaire’s tax.
“Seventy percent of New Jersey residents support the millionaire’s tax and they’re joined by major policy voices, grassroots progressive activists and even a leading Presidential candidate, but legislative leaders still seem determined to do the bidding of party bosses and choose millionaires over the middle class,” reads a statement from New Direction NJ spokesperson Philip Swibinski.
Last week, the Communications Workers of America and the New Jersey Education Association – Murphy allies and two of the state’s largest unions – held a massive rally in front of the statehouse in support of Murphy’s millionaire’s tax.
