The state Legislature sent Gov. Phil Murphy a $38.7 billion budget without a millionaire’s tax despite threats from the governor that he would eliminate many of the lawmakers’ spending priorities through line-item vetoes if the levy were not included.
The spending plan, which the Assembly and Senate approved by a 53-24 and 31-6 respectively, also lacked fees on opioid manufacturers, certain businesses with employees on Medicaid, and gun and ammunition permits that Murphy has been seeking.
“To be clear, if this budget contains revenue for your added spending, I will work with you,” Murphy wrote in a June 19 letter to Assembly Speaker Craig Coughlin and Senate President Stephen Sweeney. “But if not, I will be forced to take corrective action. Tax fairness is an issue that will not go away on June 30.”
Sweeney, D-3rd District, wrote in response letter Murphy later in the day that he hoped the governor would issue the line-item vetoes early so lawmakers have time to override them before the June 30 deadline.
Legislative leaders and the governor must reach a deal no later than midnight on July 1, otherwise Murphy will have to order a government shutdown. That occurrence was narrowly avoided that last year when the two sides announced a deal hours before the deadline.
Murphy proposed a 10.75 percent tax rate – up from 8.99 percent – on every dollar earned above $1 million, a measure opposed by Sweeney and Craig Coughlin, D-19th District.
The governor has argued that the millionaire’s tax would advance his goal of “tax fairness” for the state’s middle class. He contends that the levy would generate about a half-billion dollars in revenue.
Murphy dangled $250 million of property tax relief – a $125 tax credit per household – in an effort to win support for the proposal, but lawmakers remained unmoved.
Still, the Legislature’s budget does propose $250 million for the gross income tax property tax credit and $173 million for property tax relief.
“The budget we will be sending the governor tomorrow is fiscally responsible and sustainable,” Coughlin said in a June 19 statement. “It funds our shared Democratic priorities, provides property tax relief for our most vulnerable citizens, fulfills our debt obligations and provides more than $1.4 billion in surplus funding in the event of a downturn.”
The legislative plan would create a surplus of $1.4 billion – over $250 million more than the governor’s proposal – because the blueprint eliminated the governor’s proposed rainy day fund appropriation.
Murphy could still could put the money into a rainy day fund or use it for other priorities.
The Legislature’s Fiscal Year 2020 budget also cuts the $30 million of revenues from the $125 “corporate responsibility” fee on certain employers whose workers enroll in Medicaid, $1.4 million from the proposed firearms fee, $3.2 million from the proposed ammunition fee and $21.5 million from fees on opioid manufacturers—all moves criticized by Murphy.
At a June 18 news conference Murphy accused lawmakers of relying on “fuzzy math” and “voodoo math,” because their budget blueprint cut those revenue sources.
The Legislature proposed an additional $50 million for New Jersey Transit, on top of the $25 million net increase Murphy sought. That spending would not, as some advocates worried, entail raiding money from elsewhere in the budget.
The state’s senior property tax freeze program would get $18 million more under the legislative budget, and the veteran property tax deduction program would expand by $23 million.
The proposal includes $65 million to cover the costs of wage increases for direct support professionals, who handle the care of intellectually and developmentally disabled individuals.
And the plan would appropriate $48 million to study and provide grants for municipal-level shared services, one of the three central planks of Sweeney’s “Path to Progress” proposals for cutting local government spending.
Thursday’s budget also includes local add-ons such as $3 million for the Turtle Back Zoo, $750,000 for the East Brunswick Senior Center and $5 million towards for Cooper University Hospital – where Sweeney ally and South Jersey political powerbroker George Norcross serves as chairman of the board of trustees.
Additionally, the budget cuts $28.5 million from Murphy’s proposed expansion of a program that provides free community college for thousands of state resident. The governor lambasted the move both in the June 18 news conference and his June 19 letter.
“I would like the people who are cutting that to meet, live and in person, an individual who has benefited from the community college opportunity grant,” Murphy said Tuesday. “It’s a game-changer, unlike any other state in America. Why we would cut it, collectively we, I have no idea.”