Opinion: Note to Governor: Take the Hint, and the Revised Revenue Estimates

Carl Golden | June 4, 2018 | Opinion
Sweeney and Coughlin & Co. have put Murphy in a bind: Go with their revised numbers or risk further alienating Democratic lawmakers

Carl Golden
In the normal interactions between a governor and the Legislature, there comes a time when hints become declarations, statements of nonnegotiable intentions to pursue goals and determinations and not be deterred by contrary points of view.

As the current Legislature considers what is arguably the most significant legislation in any session — the proposed state budget — it appears that point has been reached. And it bodes ill for Gov. Phil Murphy’s $1.7 billion tax-increase plan and places his ambitious agenda in serious doubt.

The report that the Democratic leadership’s plan to send a budget to the governor balanced by increasing anticipated revenue estimates by $200 million and tossing in a few one-shot fiscal enhancers consigns his tax program to its deathbed.

The revised estimates are the logical and inevitable result of months of increasingly hardening opposition to Murphy’s recommendation to increase the income tax on earnings in excess of $1 million while restoring the sales tax to seven percent and extending it to a variety of consumer services.

His budget proposal was greeted coolly by Senate President Steve Sweeney (D-Gloucester) and Assembly Speaker Craig Coughlin (D-Middlesex) and, in the ensuing months, their view was gradually accepted by their membership, a troubling sign that Murphy either ignored or felt he could persuade them to come around to his point of view.

The governor’s office initially rejected the upward revision in the revenue estimates, contending that it had taken all factors into account in arriving at its figures and that any significant changes would create future shortfalls which would create a need to either seek additional revenue or sharply reduce spending.

A familiar scenario

If this scenario rings familiar, it’s because it became a common occurrence during the Christie administration when it was routine practice to overestimate revenues to keep the budget in balance and avoid tax increases.

At the time, Christie caustically mocked his critics, suggesting that questions raised by the nonpartisan Office of Legislative Services were politically motivated and, in one memorable attack, called the OLS budget officer “Dr. Kevorkian of numbers,” only to see the officer eventually proven correct and the administration wrong.

Sweeney was among those who criticized Christie for his fiscal optimism and for predicting unrealistic and unsupportable economic growth rates in excess of national estimates as well as those of neighboring states.

Such is the legislative antipathy toward Murphy’s tax increase program, though, that legislative Democrats are willing to adopt to some extent that which they so recently criticized a Republican governor for embracing.

Sweeney has attempted to steer the debate toward a comprehensive review of the state’s overall tax structure, how it raises money and how it spends what it raises, insisting that revenues are sufficient and that a great deal of spending is either misplaced or unnecessary.

It’s not exactly the hackneyed “government doesn’t have a revenue problem, it has a spending problem” posture, but it’s close.

The 2019 midterm legislative elections are certainly on Sweeney’s mind — and understandably so — and he’d prefer to lead a party and its candidates into a campaign based on policy achievement rather than defending a multibillion tax increase program.

Boxing in the governor

The revised revenue estimate scheme has erected another wall in the box surrounding Murphy.

Under the state Constitution, it is the responsibility of the governor and only the governor to certify anticipated revenue, an authority Christie used to great advantage.

If the Legislature accepts the increased estimates and includes them in the budget along with nonrecurring revenue sources — a tax amnesty has been suggested, as well as restoring in full or in part the estate tax repealed two years ago — Murphy’s options are limited.

He can either agree and certify the revised numbers or use his line-item veto power to strike them from the budget while deleting an equal amount of spending to maintain a balanced plan. The Legislature, of course, could force a veto override effort while the governor renews a push for his tax-increase program.

Sweeney, in particular, has taken advantage of a rookie governor and in outmaneuvering him has provided more than ample — if not unassailable — cover for next year’s Democratic candidates to drive a message of fiscal responsibility and rebut potential Republican charges of typical “tax and spend” Democrats.

The increased-revenue budget solution appears to be considerably more than the normal trial balloon floating lazily above the State House waiting to be shot full of holes.

It is an acceptable and defensible way for legislators to solidify their bona fides as diligent, careful stewards of the taxpayers’ dollars while continuing to express support for ongoing programs that are affordable and essential.

Murphy coasted into office on a tide of ambitious, left-of-center progressive promises, but his was a candidacy supported more by a backlash against his predecessor than by any yearning for his agenda. He achieved an overwhelming plurality but did not secure a mandate.

The hint has become a declaration, and Murphy can either take the hint or widen the gap that has grown between his administration and the Legislature.

(Hint: Live to fight another day.)