New Jersey’s Democratic-led legislature approved a $38.7 billion budget that scraps Governor Phil Murphy’s proposed millionaire’s tax, raising the risk of a government shutdown should warring sides miss a July 1 deadline.
A day before the Assembly and Senate vote, Murphy, himself a Democrat, sent a two-page letter to lawmakers outlining “many of our shared progressive priorities” in the spending plan he introduced in March. Higher levies on incomes above $1 million, he wrote, would help fund education, transportation and health care, and relief from the highest property taxes among U.S. states.
The lawmakers’ plan, Murphy wrote, “includes indefensible and needless cuts to wildly successful programs, such as tuition-free community college.”
In a three-sentence response, Senate President Steve Sweeney, a Democrat from West Deptford, promised “to evaluate any of your line-item vetoes, in case we need to override them.”
Murphy and fellow Democrats last year were hours from a shutdown when the governor agreed to abandon proposed revenue sources that lawmakers had called too burdensome for residents of one of the highest-cost U.S. states. They agreed on stiffer taxes on those earning more than $5 million annually, rather than $1 million, and ditched Murphy’s proposal to return the sales tax to 7%, after it was cut to 6.625% in 2016 by Republican Governor Chris Christie.
The Democrats’ proposal for the fiscal year that starts July 1 omits the millionaire’s tax — and with it, Murphy’s promise of a resulting $250 million in property-tax relief. It also doesn’t include Murphy’s fee on opioid manufacturers or his $317 million deposit in the state’s rainy-day fund, which has stood empty more than a decade. Murphy has said that Wall Street wants demonstrations of fiscal responsibility after downgrades under Christie left New Jersey with the second-worst credit among U.S. states, behind Illinois.
The lawmakers’ budget does preserve Murphy’s $3.8 billion pension payment, a record, though still far short of the actuarial recommendation.
It also includes $75 million for New Jersey Transit, the commuter service reeling from eight years of spending cuts, rather than the $25 million net increase in Murphy’s plan. NJ Transit’s railroad has had record-low on-time performance and its worst breakdown history since Murphy came to office in January 2018 with a promise to improve safety and reliability.
This article was provided by Bloomberg News.
