Tensions continue as New Jersey lawmakers battle over a budget deal in the last days before a potential government shutdown.
After weeks of contention, Gov. Phil Murphy offered a compromise with Senate President Steve Sweeney and Assembly Speaker Craig Coughlin late Wednesday.
While Sweeney has pushed for a 3 percent surcharge on a corporate business tax, or CBT, that would phase out after two years, Murphy has argued that raising the state’s CBT to 13 percent would devastate New Jersey’s business climate, and accused legislators of “one-shot deals” reminiscent of the Christie administration.
Murphy instead offered a recurring CBT at a lower, undisclosed rate that “would not make New Jersey an outlier nationally.” However, in a press conference Wednesday, Sweeney stood by his proposal to keep the CBT a one-time tax.
Murphy has long pushed for a millionaire’s tax on the state’s highest earners, and expressed frustration with the Legislature, who he says has voted for a millionaire’s tax five times, but now, “would be protecting 20-odd-thousand millionaires, and in exchange for that we would have to gut the budget or shut the state down. That is particularly mystifying.”
In his letter, Murphy offered a “marginal rate on personal income in excess of $1 million,” although no specific number was proposed.
But Sweeney rejected the tax increase, admitting that he’s voted for it numerous times in the past, but that “it’s not the right tax for now” given the impact of the Trump administration’s SALT deduction limit. He explained in a news conference today that when millionaires leave the state, they often take their businesses with them.
In 2016, lawmakers hammered out an agreement with former Gov. Chris Christie that included a gas tax hike in exchange for a reduced sales tax from 7 percent to 6.625 percent, a move that Murphy had vowed to undo. His compromise now offers a two-year, phased in reversal of the cut. But Sweeney today rejected the proposed changes, saying that, “it’s a problem,” and that, “the poor bear the greater burden.”
Murphy also agreed to accept Coughlin’s proposal to restore the Homestead Rebate to its prior level, effectively lowering property taxes for many New Jersey residents, and he agreed to accept the historic school funding formula modernization pushed by Sweeney.
After a meeting between Murphy, Sweeney and Coughlin Wednesday, Sweeney proposed new sustainable revenue sources, including a tax on short-term property rentals, or seasonal shore rentals, saying that New Jersey is, “the only state in the nation that doesn’t tax our seasonal homes.” He also proposed a 1 percent real estate tax on property transfer fees, which combined, he says will boost the budget by a total of $360 million.
“At the end of the day, we’re not looking to shutdown government. I don’t think the governor’s looking to shut down government,” said Sweeney. “We passed a budget that was responsible, that funded all of his priorities and we stand by our numbers.”
“We still have time to get this done,” said Murphy. “The Legislature and I can certainly come to an agreement by the deadline.”