By most accounts, last week’s debate between Gov. Phil Murphy and former Republican Assemblyman Jack Ciattarelli went as expected. Both candidates swung at each other over topics such as masking, COVID-19 vaccines, abortion and LGBT issues, and were frequently interrupted by applause or jeers from the audience.
But the lack of policy details left many observers wondering just how the state would be run over the next four years. It’s a problem that’s persisted for much of the campaign during the summer and into the fall.
“They’re both very firm in their beliefs and they stick by their beliefs,” said Tom Bracken, who heads the New Jersey Chamber of Commerce. “I just wish that one of the two debates … they really focused on economic issues … our economy and our recovery, economically, is so vitally important to the future of this state.”
Both candidates were prodded several times by moderators to answer the questions. Ciattarelli, for example, was pressed on what he would cut from the state budget; Murphy on the cost of his 2050 clean energy goals, and who would foot the bill.
Since Murphy took office,the current state budget, which runs July 1 to June 30 the following year, increased by roughly $10 billion. Murphy was questioned on how the state would meet its obligations once federal relief and $4 billion of borrowed money runs out. But he did not provide concise answer. Ciattarelli came up short on data that would justify optional COVID-19 vaccinations or masking.
Murphy stopped short of saying why there wasn’t yet a reliable and dedicated source of funding for New Jersey Transit, which has instead raided its long-term projects budget to keep the lights on. Sen. Loretta Weinberg, D-37th District, pressed for some of the state’s $6.2 billion from the American Rescue Plan to go toward that purpose, but that plan never materialized.
Ciattarelli does have some proposals that his supporters point to as solid recommendations for turning around the state economy. Regina Egea, who was previously Republican Gov. Chris Christie’s chief of staff, pointed to Ciattarelli’s plan to slash the corporate tax rate in half over the next five years, and another to adopt Delaware’s lenient corporate laws.
Such proposals “will measurably improve the state’s brand as being serious about being business-friendly,” said Egea, who’s now president of the conservative think tank Garden State Initiative.
Ciattarelli’s plan also calls for simplifying some of the state’s tax code and making the first $50,000 of business income tax-free. He’s repeatedly knocked Murphy on a 2019 comment in which the governor said “if you’re a one-issue voter and tax rate is your issue, we’re probably not your state.”
Murphy contends that the quotes were taken out of context, and during an Oct. 13 COVID-19 briefing said that “when you’ve got the number one public education system in America … health care state in America, the best state in America to raise a family, a location that’s second to none with the density we have, the talent we have, that’s what we sell.” And, he added, “none of that comes free.”
“If you don’t want to pay the taxes and get the benefit of the quality of life you get for it, then you’re in the wrong place,” Bracken said. Although he contended that the governor “would probably like to have a redo,” Murphy, when asked on Oct. 13 if he would have worded those comments differently, stood by his remarks.
Since taking office in 2018, Murphy and the Legislature, where Democrats hold a sizable advantage, have pushed through several tax increases. The state has a top corporate tax rate of 9%, with a 2.5% surtax tacked on through 2023 for any businesses making at least $1 million.
Under the budget Murphy signed in 2018, the surtax would have dropped to 1.5% in 2020, where it would have stayed for two years. But the spending plan he signed in September 2020 eliminated that reduction. Republicans and business groups were critical of the move, saying they were essentially promised that relief would come in the near future.
A February report from the Tax Foundation, a right-leaning Washington, D.C. think tank, pegged New Jersey’s 11.5% CBT rate as the highest in the nation. There are 30 states and Washington, D.C that have a CBT rate in the single digits. Meanwhile, Nevada, Ohio, Texas and Washington do not have a CBT but rather a gross receipts tax, according to the Tax Foundation.
“There needed to be more details” on proposals like auditing the state agencies to cut down on overspending, and proposals like “reducing red tape and regulations for businesses,” said Ralph Albert Thomas, president and chief executive officer of the state’s accounting trade group the New Jersey Society of CPAs. “That’s always been a big issue.”
He continued: “There was a lot of talk about cutting the corporate tax rate, but then what’s the alternative to that? What has to go? You can’t say we aren’t going to raise taxes each year” given the “cost of the budget.”
That doesn’t mean Ciattarelli’s proposals are bad, Thomas said, but “he just needs to articulate them more.”
Murphy and lawmakers also enacted a “millionaire’s tax” that raised the top rate from 8.97% to 10.75% for income above $1 million. In 2018, Murphy only managed to push through a “mega-millionaire’s tax,” which raised the rate on income above $5 million. Eight states have no income tax, according to another Tax Foundation report, while only California and Hawaii have higher rates than New Jersey.
At the first debate, Murphy pledged not to raise taxes over next four years should he be reelected.
But Ben Dworkin, one of the moderators at last week’s second debate, noted that unforeseen circumstances could necessitate a tax increase. “We don’t know if there’s going to be a new pandemic, some kind of recession,” said Dworkin, who heads the Rowan Institute for Public Policy and Citizenship. “The state coffers are full right now. We’ll have to see where they are over the next four years in order to know whether that kind of pledge was wise or foolish.”
One Trenton insider who asked to remain anonymous said that “If this election is about taxes, Murphy could actually be in trouble.”
“Fortunately for him it’s not. It’s about COVID, and Murphy’s not going to lose on that topic.”
Recent polling shows Ciattarelli with an edge over Murphy on taxes, business and the economy. For example, a Stockton University poll from Sept. 29 showed that 46% of New Jersey voters felt Ciattarelli would do a better job on handling taxes, compared to 38% who felt that way about Murphy.
Similarly, 43% of voters said Ciattarelli would better handle the state economy, a narrow lead over the 42% who preferred Murphy.
In a Monmouth University poll released a week before Stocktonn, 39% of voters said Ciattarelli would handle taxes better than Murphy, while 33% said the incumbent Democrat would do a better job. Meanwhile 36% of voters felt Ciattarelli would do a better job helping small businesses, compared to 34% who felt the same way about Murphy.
But the governor had wide support for his handling of the pandemic, Monmouth showed, with 50% saying Murphy would do a better job compared to 23% who felt that way about Ciattarelli. And the governor had a 39% to 32% over his GOP challenger on handling the economy.
“From a campaign perspective, they might be important issues,” Patrick Murray, who heads Monmouth’s polling institute, said of Ciattarelli’s economic proposals. “But in terms of campaigning and catching fire with the electorate, he doesn’t have something he can really show as his unifying message.”
While Ciattarelli has said he would revamp the school-funding formula and lower property taxes, that’s “just not enough of a message to get to voters” who “want to know ‘what are you going to do for me?’”
“They need to move the conversation away from COVID to another issue like taxes where they could have a bit of an edge,” Murray continued. “The problem is that they haven’t.”
And Murphy has gotten high marks for his handling of the pandemic, and even as those ratings have softened, they still show him with a sizable lead over Ciattarelli.
Ciattarelli’s campaign did not respond to requests for comment for this story. Some of the top lawmakers who would need to work with whoever the governor is – like Senate President Stephen Sweeney, D-3rd District – did not return calls seeking comment.
“Governor Murphy has demonstrated a great deal of success in his economic plans,” Coughlin told NJBIZ at an unrelated New Brunswick event on Oct. 14.
Murphy, when asked at his Oct. 13 briefing how specifically he would improve New Jersey’s economy, instead focused on his record over the past four years. He cited recent successes like the $50 million HAX accelerator in Newark, where the state would cover half of the costs, and the relocation of fintech giant Fiserv to Berkeley Heights in return for a $109 million state tax break. The latter move would retain or create 3,000 jobs.
“Those are examples of what can happen,” Bracken said, but those sorts of things need to happen “at a much greater magnitude.”
And Ciattarelli, when asked about those wins after the Oct. 12 debate, responded that the state was essentially picking winners and losers by putting up so much state financing. He’s indicated that he would phase out the “unfair” $14.5 billion tax incentive regime, arguing that a much more competitive tax code would be enough to attract businesses.
He vowed to “declare economic warfare on our neighbors” and “build a better business environment” in the state,” arguing that “our neighboring states are eating our lunch because New Jersey has not made itself regionally competitive.”
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