Day After Budget Address, Murphy Takes Spending Plan on the Road

John Reitmeyer | March 15, 2018 | Budget
Democratic governor wants to get message across, his big budget means big gains for pension system, education, NJ Transit, and New Jerseyans — who will be getting more for their money

A day after putting forward a new state budget that features $1.7 billion in tax increases, Gov. Phil Murphy jumped headlong into a campaign to promote all of the major policy initiatives that are also a big part of his proposed spending plan.

The first-term Democrat touted increased state funding for New Jersey Transit during the agency’s morning board meeting, and then used an appearance on WNYC public radio to talk up planned funding boosts for K-12 education and New Jersey’s grossly underfunded public-employee pension system.

He rounded out the day with a town-hall event in Paramus, Bergen County, telling participants there that he’s making property-tax relief a top priority in his budget, with items like the increased funding for public schools and a planned hike of the state income-tax deduction for local property taxes aimed at addressing that issue.

“We’ve got a crisis, and we’ve got to do something about it,” Murphy said.

Selling the budget

Selling a new state budget proposal with a campaign-style blitz is a time-honored tradition for New Jersey governors, particularly for those who are new to the office and still trying to establish an identity, as Murphy is. But a new wrinkle this year seems to be an initial reluctance among legislative leaders from the governor’s own political party to embrace Tuesday’s budget message.

The early media attention has also focused on his tax-hike proposals, which include the establishment of a new top-end income-tax rate for millionaires, and the restoration of the 7 percent general state sales-tax rate, which would reverse a slight reduction won by Christie in 2016. That means it’s now up to Murphy to get out and promote all of the goodies that are in his budget plan, and to push back against the tax concerns being raised by GOP lawmakers and other critics. And if yesterday provided any indication, it’s a role Murphy seems to relish.

“I’m looking forward to the next couple of months, and I’m very confident we’ll end up in a good place,” Murphy said during the radio appearance.

In all, Murphy’s budget plan for the 2019 fiscal year would spend a total of $37.4 billion, marking a nearly 8 percent increase over the spending plan that former Gov. Chris Christie signed into law last July.

Public-employee pensions

A major chunk of the planned spending increase would go to the public-employee pension system, with a record, $3.2 billion infusion of cash planned, up from the $2.5 billion set aside in Christie’s final budget. Direct state funding for K-12 education that’s known as “formula aid” would also be increased by $284 million, and another $57 million is earmarked for public preschool. Also getting a $167 million funding increase under Murphy’s budget plan is NJ Transit, the state’s beleaguered bus and rail agency.

To help cover the cost of that new spending, Murphy’s budget is asking lawmakers to adopt legislation that will raise $765 million in new revenue by hiking taxes on those with incomes over $1 million, and $546 million by moving the sales tax back to 7 percent from 6.625 percent. New taxes on “sharing-economy” services like Uber and Airbnb would also be levied under Murphy’s budget proposal. He also hopes to legalize and tax the sale of recreational marijuana.

The boost in funding for NJ Transit was the first thing Murphy highlighted yesterday as he stopped by the agency’s board meeting in Newark, with the governor boasting on social media that “there will be no fare hike” during the 2019 fiscal year, which begins on July 1. Murphy also stressed the mass-transit funding during his discussion with WNYC host Brian Lehrer yesterday, saying the emphasis on improving public transportation fits in well with his overall goal to improve the state’s economy.

‘Resetting the narrative’

Murphy also used the radio appearance to tout the proposed boost in state education aid, arguing those dollars would help ease the pressure on homeowners who fund local schools through property taxes. He also highlighted a proposal to increase the state income-tax deduction for local property taxes from $10,000 to $15,000 as a key property-tax relief measure, and one that comes on the heels of a recent decision by President Donald Trump and the Republican Congress to place a $10,000 cap on a similar federal tax write-off known as SALT. And when pressed by Lehrer on the proposed tax hikes — which go beyond those Murphy included in his economic platform as a candidate last year — the new governor said his goal is to “reset the narrative” in New Jersey after eight years of Christie’s tenure, when tax cuts and spending restraint were prioritized.

“The objective is for folks to say, ‘You know what, I’m getting a lot back,’” Murphy said.

Murphy had a similar line in his budget message to lawmakers on Monday, and Patrick Murray, director of the Monmouth University Polling Institute, said the governor is making a “sound argument” when he stresses the need to make sure New Jersey residents feel like they are getting a good value for the high taxes they typically pay.

“I think he’s right. Most New Jerseyans understand New Jersey is going to be more expensive than other places to live,” Murray said.

Murray also doubted that a major protest would develop in the wake of Murphy’s tax-hike proposals, citing as an example the “negligible” impact that the slight sales-tax reduction that Christie fought for has had on the typical New Jersey family. Unhappiness with a 2016 gas-tax hike has already died down, Murray noted.

“The political backlash will likely be short-lived,” he said of Murphy’s tax proposals.

About 150 people came out for Murphy’s town hall last night in Paramus, a traditional swing-community that went for Murphy last year in his contest against Republican Kim Guadagno. During the event — Murphy’s first town hall as governor — he didn’t mention any of his plans to raise taxes, and the audience was generally an adoring one that didn’t press him on that issue. But he spent considerable time emphasizing the many initiatives the new revenue that would be raised through the tax increases will help to fund, including the bigger state pension contribution, the larger property tax deduction, and the financial boost for NJ Transit.

He also stressed again that, when it comes to taxes, New Jersey residents may pay a premium, but he wants to “make that premium worth it.”

“That’s an objective that we have that we’re laser-focused on,” Murphy said.