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Murphy budget targets cigarette sales, corporate responsibility fee (updated)

Gov. Phil Murphy is having another go at requiring businesses to pay the state for every one of their employees enrolled in Medicaid.

The corporate responsibility fee calls for tiered levels of penalties that businesses would pay depending on how many employees are at the company. Lawmakers blocked the proposal last year.

Companies would have to pay $325 per person if they have between 50 and 250 employees receiving Medicaid benefits, $525 per person if they have between 250 and 500 employees enrolled in Medicaid, and $725 for employers with more than 500 employees in Medicaid.

There are 200,000 Medicaid enrollees whose employers do not provide health coverage, according to State Treasurer Elizabeth Maher Muoio. Combined with spouses and dependents, that number balloons to 450,000 enrollees in the system.

“[T]here are large corporations in New Jersey that do not provide health benefits to their employees and their families, or who offer policies that their employees cannot afford,” Murphy said in his prepared remarks. “Our budget will require these corporations to pay their fair share.”

His budget also calls for increasing the tax on cigarette sales in New Jersey, which would make it the highest cost in the country, though there was no mention of it in his address.

Under the proposal, and what would be the first increase in 11 years, the state would tack on $1.65 to the existing $2.70 per pack, currently the 10th highest in the nation.

The proposed $4.35 per pack would make New Jersey’s cigarette tax the highest of any state in the nation. Only Washington, D.C. has a tax rate anywhere near as high – at $4.50 a pack – according to the Tax Foundation. New York City smokers pay $5.85 per pack.

This increase could bring in upwards of $218 million, meaning the state would earn a total of $742 million every year from the sale of cigarettes.

Murphy’s budget also calls for $20 million from a so-called “opioid fee.” Murphy tried and failed to bring in $21.5 million from fees on opioid manufacturers. The Legislature blocked the proposal last year, to much criticism from Murphy.

Editor’s note: This story was updated to indicate that employee-based fees for companies are for employees receiving Medicaid benefits. The largest of these fees would be for employers with more than 500 employees enrolled in Medicaid; a previous version of the story incorrectly indicated that the $725 fee threshold was 1,000 employees.

Daniel J. Munoz
Daniel Munoz covers politics and state government for NJBIZ. You can contact him at

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