Sweeney shoots down cigarette tax, other fees in Murphy’s $40B budget

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Senate President Stephen Sweeney, D-3rd District, on Tuesday shot down a proposal by Gov. Phil Murphy to raise taxes on cigarette sales and certain businesses whose workers are on Medicaid, saying only that he would entertain a millionaire’s tax.

Murphy’s budget, unveiled Tuesday, clocks in at $40.9 billion for the 2021 fiscal year, which starts on July 1.

It calls for a cigarette tax increase of $1.65 per pack onto the existing $2.70 per pack, which would make it among the highest in the nation. If enacted, the state would earn an additional $218 million, a total of $742 million, from the sale of cigarettes.

“Cigarette tax is a big problem. I said I was open to a millionaire’s tax if there’s a billion in additional funds for the pension,” Sweeney told reporters Tuesday following the budget address. “I don’t think we really need the other taxes, period.”

Likewise, the Senate president shot down a proposed corporate responsibility fee, which would penalize certain employers based on how many workers they have who are enrolled in Medicaid.

Murphy’s budget calls for a millionaire’s tax of 10.75 percent on every dollar earned above $1 million, which would generate $494 million in the next year under Murphy’s proposal.

Sweeney said over the weekend he would support a millionaire’s tax in return for $1 billion in additional funding to the state pension, on top of the $4.6 billion originally proposed. Murphy responded by throwing in an additional $279 million in pension payments, upping the total this year to $4.9 billion.

“If he wants the millionaire’s tax, he’s going to help,” Sweeney added. “They’re going to have to show a pathway to get where they belong.”

The prospects of that deal surviving seem far from certain, and lawmakers are showing more support for the cigarette tax and corporate responsibility fee, according to a source in the Legislature, who requested anonymity to speak freely on the matter.

Assembly Speaker Craig Coughlin, D-19th District, indicated in his statement only that he would be “cautious of increasing broad-based taxes.”

Legislative Republicans, meanwhile, widely condemned the cigarette tax, and questioned whether Murphy, Coughlin and Sweeney would be able to settle on a deal for the millionaire’s tax ahead of the June 30 budget deadline.

“They understand that another income tax in this state is dynamite – it is a real serious threat,” Assembly Minority Leader Jon Bramnick, R-22nd District, told reporters following the budget address.

And Murphy’s budget could find itself under the watchful eye of a powerful budget lawmaker – Sen. Budget Chair Paul Sarlo, D-36th District.

Sarlo hinted Tuesday afternoon that he would be particularly hard on the governor’s budget, suggesting a “deep dive” into the spending plan that “goes beyond the traditional focus that was limited to new programs and spending increases for existing ones.”