Even as he unveiled it last week, Gov. Phil Murphy conceded his spending plan for fiscal 2020 would likely undergo changes. Then legislative leaders foreshadowed their own views by bristling at Murphy’s renewed call for an expanded millionaire’s tax as they also suggested that New Jersey Transit needs more funding.
Now it’s time for New Jersey residents to have their say. State lawmakers are planning to hold four public hearings starting next week as they begin the formal process of scrutinizing Murphy’s budget for the coming fiscal year.
The hearings give taxpayers, public-policy advocates, and interest groups an in-person opportunity to tell lawmakers who serve on the Assembly and Senate budget committees what they like and don’t like about Murphy’s $38.6 billion spending proposal. Testimony taken during the hearings can be influential. In recent years, lawmakers have added funding to line items for things like K-12 school aid and programs combating the opioid epidemic in response to the witnesses who’ve come before them.
“Public hearings are a critical and influential component of the budget process,” said Eliana Pintor Marin, the Essex Democrat who chairs the Assembly Budget panel. “This is our opportunity as legislators to gain insight into the state’s economy and residents’ concerns as we discuss and determine the state’s spending plan for the next fiscal year.”
The Assembly Budget Committee will host two public hearings at the State House in Trenton, on March 20 and March 27. The Senate Budget and Appropriations Committee will also host two hearings, but at locations outside of Trenton — on March 21 in Newark, and April 3 in Carneys Point.
Review process typically goes down to the wire
The public hearings officially kick off a lengthy legislative review of the governor’s budget proposal that typically culminates with the adoption of a new spending plan just days or even hours before a new state fiscal year begins on July 1. The Legislature can draft a spending bill based on what Murphy, a first-term Democrat, has proposed; the New Jersey Constitution also gives lawmakers the option of designing their own budget legislation, and sending that to the governor instead.
In all, Murphy’s FY2020 spending plan would increase spending by about 3 percent compared to the budget he signed into law last year.
Most of the proposed increase would be spent on a record $3.8 billion contribution to the public-employee pension system. The pension contribution is going up by about $600 million after the state budgeted $3.2 billion in FY2019 for the pension system, which is grossly underfunded. Other proposed hikes include $206 million in new direct aid for K-12 education, $68 million for preschools and $25 million for NJ Transit.
Murphy’s proposal also calls for several reductions, including a savings of nearly $900 million from employee and retiree healthcare programs — via an audit of plan enrollees, shifting retirees into less costly Medicare plans, and other administrative changes. An additional $212 million would be cut from departmental budgets through another savings initiative.
Governor is counting on new revenue
The governor’s budget plan also counts on the state collecting $447 million in new revenue by levying a true millionaire’s tax on earnings over $1 million. His budget would also establish a proposed “corporate-responsibility fee” to be levied on employers with more than 50 workers who receive state-funded Medicaid health benefits. Murphy is also proposing to increase taxes on the sale of firearms, permits and ammunition, saying some of those fees have remained unchanged since the 1960s.
But, as the past has shown, lawmakers don’t have to accept Murphy’s proposal. Last year, Democratic legislative leaders initially resisted Murphy’s call to establish a millionaire’s tax before they eventually agreed to increase the state’s top-end marginal income-tax rate to 10.75 percent on earnings over $5 million. They also cast aside the governor’s push to restore a 7-percent general sales-tax rate in a final budget deal reached just hours before the July 1 deadline, after which the government would have been shut down.
Both Senate President Steve Sweeney (D-Gloucester) and Assembly Speaker Craig Coughlin (D-Middlesex) have already signaled their opposition to Murphy’s renewed effort to see the 10.75 percent income-tax rate extended to earnings over $1 million, which right now are taxed at 8.97 percent. Sweeney has also said he wants to boost the subsidy to NJ Transit beyond the net $25 million increase that’s included in the governor’s budget.
While the state constitution gives lawmakers the final say on what the annual spending bill looks like, it also gives the governor broad powers, including the authority to certify the official revenue forecast upon which to base spending. The governor also has line-item veto authority, meaning Murphy can at the last minute remove specific spending items approved by the Legislature.
Want to attend the hearings?
Here is a list of the planned budget hearings. Those who wish to testify can register ahead of time by following this link.
March 20, 9:30 a.m., Assembly Budget Committee, State House Annex, Committee Room 11, 125 West State St., Trenton
March 21, 10:00 a.m., Senate Budget and Appropriations Committee, New Jersey Institute of Technology, Campus Center Atrium, 150 Bleeker St., Newark
March 27, 9:30 a.m., Assembly Budget Committee, State House Annex, Committee Room 11, 125 West State St., Trenton
March 28, 10:00 a.m., Senate Budget and Appropriations Committee, Salem Community College, 460 Hollywood Ave., Carneys Point