Gov. Phil Murphy on Sunday signed a $38.7 billion budget for the coming fiscal year which starts at midnight – although it lacks his much sought-after millionaire’s tax, cuts $48.5 million of spending the Legislature desired and froze another $235 million they wanted.
Murphy’s signature of the 2020 spending plan marks the end of a relatively quiet budget negotiation process, despite pointed and, at times, derogatory terminology used by the governor and his political opponent: Senate President Stephen Sweeney, D-3rd District.
Even still, at the Sunday afternoon press conference where Sweeney stood in the back of the room, Murphy took repeated jabs at the legislative leadership, while not pointing out the Senate president by name.
“While progressive change is taking hold all across our country, Trenton largely remains a holdout. Have no doubt, change is coming to Trenton, and I invite all those willing to join us,” Murphy said Sunday at a press conference which more resembled a political rally, with catering, chants, cheers, applause and standing room only attendance.
The budget includes $16.49 billion from income tax, $10.24 billion from sales tax and $3.35 billion from increased corporate business tax, according to budget documents.
All told, the 2020 budget is supported by $39.86 billion of revenues – meaning that the state will close with a $1.276 billion surplus. Murphy allocated $401 million from the rainy day fund, as opposed to the $1.4 billion unrestricted surpluses where money could be used for any purpose the governor sees fit.
This infusion into the rainy day fund will be the first in over a decade, ever since the Great Recession.
Opponents to the original $317 million rainy day fund allocation argued that the state has too many pressing bills to justify stowing money away in a lockbox. The Murphy administration has argued the move is necessary given the prospect of an economic recession and the ensuing lag in tax revenues that could affect the nation within the next two years.
“The Legislature’s plan ignored the statutory obligation to deposit hundreds of millions of dollars into the rainy day fund. To allow that to happen would leave us weaker in the eyes of the bond rating firms, and vulnerable to the next economic downturn,” Murphy said in his Sunday afternoon prepared remarks on the budget.
This year’s budget flat out cuts – or line-item vetoes – $4 million the Legislature appropriated for school choice and $1 million for the East Orange General Hospital.
It cuts out $5 million for the “Vulnerable Communities Access to Care” grant towards Cooper University Health Care – the hospital where Sweeney ally and Murphy’s political opponent George Norcross is an executive.
Murphy denied that the cut to Cooper funding was political in any way.
“We call balls and strikes on this. It’s only $48.5 million, the budget is $38.7 billion. There are five items, there was a formula to determine whether or not there was Murphy said. “There was a formula to determine whether or not there was a program behind the money.”
Still, Sweeney was not convinced, saying at a press conference following the budget announcement that the move was “punitive” and hurt “people that are underserved.”
Cooper has fallen under scrutiny by the Murphy administration for how it may have falsified information about its plans to move out of state if it did not win $40 million of corporate tax breaks, despite the executives actually having no such plan to leave New Jersey.
Murphy’s budget cuts $500,000 from a Rutgers University Camden workforce study that was being done with Cooper’s Ferry Partnership.
It also cuts $30 million from implementing school district consolidation, an often-touted “Path to Progress” proposal by Sweeney, who has argued the move could cut taxes and local government spending. It would leave just $10 million for the proposal.
“We need to stop spending what we shouldn’t have, and what we don’t have,” Murphy added.
Those vetoes could be overridden by the legislature. However, the proposed $235 million which was frozen could not be subject to the same actions by the state legislature.
It is not clear what spending items the Legislature sent Murphy will be held up in the budget, but the senior officials said those items could only be released. The $235 million will be on hold “until savings assumed in this budget materialize, current revenues reliably overperform, or the Legislature authorizes new revenues,” Murphy said.
“Unlike the list of line-item vetoes, the overwhelming amount of the up to $235 million are programs we like,” Murphy said. “At the end of the day, the buck stops with me. I’ve got to certify these revenues.”
Even still, but Murphy and Legislative leadership agreed that much of what Murphy initially sought made its way into the budget he signed.
“Spending in this budget is, in fact, very close to that which I first proposed in March. It shares a great deal of the same middle-class priorities. It follows my lead on many important initiatives,” Murphy said in his prepared remarks Sunday afternoon.
“I’m happy that the governor recognized that we gave him a very sound, fair budget,” Sweeney said, a view also shared by Assembly Speaker Craig Coughlin, D-19th District, in a statement later that day.
The Legislature’s budget which lawmakers sent Murphy does not include the roughly half a billion dollars from the millionaire’s tax.
“The simple question that should drive all of our actions is this: Whose side are you on?” Murphy said.
“The voices of the vast majority of New Jerseyans who support a millionaire’s tax were left in the ether. Instead, the budget that I was sent protects 19,000 millionaires and leaves the other almost 9 million residents to pick up the tab,” the governor added.
It also does not include $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 heavily criticized by Murphy.
“The budget the Legislature sent me still protects opioid manufacturers instead of those suffering with addiction, still protects big businesses who push their employees on to Medicaid and push the financial burden for their health care onto our shoulders, and it even still sides with the gun lobby over a commonsense effort to raise handgun fees for the first time since 1966,” the governor added.
Sweeney took his own shot at Murphy, arguing that Murphy cheered political victory when he – for the second year in a row – failed to see through his proposed millionaire’s tax.
“This actually reminds me of Donald Trump in some ways,” Sweeney said told reporters. “He declares victory if he doesn’t get his way. That’s a little of what happened today.“
It includes $173 million for property tax relief programs, $50 million for NJ Transit on top of the $25 million net increase Murphy proposed and $65 million for wage increases for child care and health aides.
The budget cuts Murphy’s proposed $28.5 million expansion of the tuition-free community college program – something which Sweeney could have been put back into the budget if Murphy and his office actually sat down for negotiations.
Ultimately there were no such negotiations over the budget after the Legislature sent its proposed spending plan to Murphy on June 20.