Gov. Phil Murphy used much of his March 8 budget address – his first in-person speech at the statehouse in two years – to list economic successes he attributed to his administration’s policies. The address also put property tax relief at the center of the governor’s agenda and seemed designed to reassure residents and businesses that Murphy had taken to heart concerns about affordability.
The main component of the administration’s effort toward that end is the Affordable New Jersey Communities for Homeowners and Renters program, dubbed ANCHOR. In the first year, the program will allocate $900 million for direct property tax relief. Murphy said the relief offered will reduce the effective cost of what homeowners pay in taxes to 2016 levels. At its full funding level in two years, ANCHOR would provide $1.5 billion in direct relief, according to the governor.
“It is true that we here in Trenton do not set property taxes directly,” Murphy said in the text of the speech. “Property taxes are the result of decisions made at the county, local, and school board levels. But one thing we here in Trenton can do is take some of the sting out of those tax bills.”
According to Murphy, more than 1.15 million homeowners with incomes up to $250,000 will get an average of $700 in direct relief. And more than 600,000 renters making up to $100,000 will receive as much as $250.
The ANCHOR program is designed to meet the relief levels set out in the state’s 2007 property tax relief law over the next two years. If that happens, Murphy said, direct property tax relief for homeowners will average more than $1,150 per household.
Murphy’s budget allocates about 24% of its total expenditures to direct aid to education. The governor noted that the administration has spent $3 billion more on K-12 education than the administration of Gov. Chris Christie spent during his second term. The new budget would add $650 million in education spending for a total of $9.9 billion.
“Great schools protect a homeowner’s investment,” Murphy said. “They make communities more attractive to prospective new residents. They prepare our workforce for the future. No one wants to see our schools backslide.”
The budget projects a surplus of $4.2 billion and includes a $6.82 billion payment to the state pension fund. And the proposal would pay down another $1.3 billion in debt, on top of the $3.7 billion payment announced last June.
Continuing on the theme of affordability – one that lawmakers on both sides of the aisle have been reciting for months – Murphy also proposed a new $300 million Affordable Housing Production Fund. He said the goal of the fund is to build the entire current backlog of 3,300 approved, but still yet-to-be-built, 100% affordable housing units by the end of his second term. The funding would come from federal pandemic relief programs.
The Affordable Housing Production Fund will provide real stability for communities,” the governor said. “It will ease the burden on municipalities. And it will short-circuit potential lawsuits by developers. But, most importantly, it will get working families into homes.”
Elsewhere, Murphy said his proposed budget will cut a variety of state fees by a combined $60 million. Those provisions include one-year fee holidays for driver’s license renewals, marriage licenses, state park entry, and for roughly 130,000 health care professionals.
More help needed
Business groups generally applauded the investments included in the budget but suggested that the moves fall short of what’s necessary to maintain the economic recovery. Tom Bracken, the president and CEO of the New Jersey Chamber of Commerce, said in a statement that the governor should deploy more funding from the American Rescue Plan to help the state’s businesses.
“In his speech, the governor cited the growth performance of the state economy and cited a number of indicators to support his claim. But the real question is how does New Jersey’s economic improvement compare to that of other states? That is the real measure of economic progress,” Bracken said. “The pandemic has left lingering issues in the business community – capital shortage, labor shortage, and inflation – that we must address if New Jersey’s economy is to experience a full-throttle economic recovery. The budget address was silent on these.”
Similarly, New Jersey Business & Industry Association President and CEO Michele Seikerka said the organization welcomes the new education spending but called for an overhaul of the state’s funding system. And she decried the lack of attention to the depleted unemployment insurance fund.
“While this is the very start of the budget process, we are frustrated that this budget does not speak to direct affordability for our small businesses. With nearly one-third of small businesses shut down during the height of the pandemic and business closings still occurring on a regular basis, these surviving employers, who have seen little in the way of tax incentives, are still very much in need of assistance,” Seikerka said. “One immediate way to help them is to address the nearly $1 billion in unemployment insurance tax hikes that New Jersey businesses are now slated to pay over three years for an unemployment crisis they did not create. This should not be overlooked amid the fanfare of ‘no new taxes’ in the FY23 budget.”
Ralph Thomas, the executive director of the New Jersey Society of Certified Public Accountants, echoed many of those sentiments – noting the lack of clarity on deploying American Rescue Plan funds and inaction on unemployment insurance. While most states have used federal relief funds to eliminate or reduce that burden, New Jersey has not,” Thomas said. “We urge lawmakers to make UI tax relief a key part of the budget discussions.”
Chemistry Council of New Jersey Executive Director Dennis Hart said the state must do more to boost manufacturing. “In an effort to encourage greater in-vestment in our existing manufacturing facilities and to attract new companies, we would urge the administration and the Legislature to examine the current state agency fees and taxes, which are not capped and continue to hamper the manufacturing sector,” Hart said. “I look forward to working with the administration and legislators to make sure this budget helps attract and keep businesses in New Jersey and motivate companies to increase their investment in our state.”
The governor opened his speech by criticizing Russia’s invasion of Ukraine, noting that the state boasts one of the nation’s largest Ukrainian-American populations and is the home of the Ukrainian Orthodox Church of the United States of America. Murphy said the administration is studying the state government’s exposure to Russian businesses and securities, including in the pension fund.
“And let me make it perfectly clear — we will take whatever actions are needed to ensure New Jersey taxpayer dollars are not supporting Putin’s unlawful invasion of Ukraine,” he declared.