Before state Treasurer Elizabeth Muoio read her opening statement, the committee chairman made a prediction.
“I think you’re gonna hear a lot this budget cycle about finding more cost savings, especially in the area of health care. I think you’re gonna hear a lot more about the impact of a proposed millionaire’s tax — what does that mean to our state budget?” said Budget Committee Chair Sen. Paul Sarlo.
Those are two highlights of the budget — $1 billion in cost savings identified and half a billion in new revenue from a millionaire’s tax.
The ranking Republican likes the savings, not the tax.
“I do appreciate the fact that there were address some significant savings in the budget. We need to go after more savings so that we wouldn’t need any kind of tax increases at all,” said Sen. Steve Oroho.
The treasurer defended the tax hike.
“What this means is that the vast majority of millionaires will pay roughly two cents on every dollar over $1 million. As the governor has repeatedly said, this is about tax fairness,” said Muoio.
Another feature of the budget is the surplus — more than a billion dollars for the second year in a row.
The Office of Legislative Services testified that’s not bad, but not great.
“A billion dollars isn’t a terrible surplus, but it all depends on what goes wrong,” said Frank Haines, budget and finance officer of the Office of Legislative Services.
“The focus on the increase in surplus is exactly where our focus should be,” said Sen. Declan O’Scanlon.
Senate President Steve Sweeney expects a less contentious budget process this time.
“We’re off to a better start than where we left off last year. I mean, the governor came with a different tone. And it was welcomed and appreciated by, I know myself and my members, and the Speaker was happy with the tone,” Sweeney said.
Democratic leaders like Sweeney are reluctant to impose a new millionaire’s tax.
“Would the administration consider, if the Legislature was to come up with and additional $447 million in sustainable savings to offset the millionaire’s tax. Is that something the administration would consider?” Sarlo asked.
The treasurer resisted that idea, explaining that the state needs that revenue.
“We have increased pension payments, we have increased education payments, just to name a couple,” Muoio said.
Republicans argue that the wealthy are already paying the lion’s share of taxes and that the state keeps going back to the same well for more.
“Why should they believe us each time we say pay your fair share, we are going to go to this number with sort of the hint that that’s when we’re gonna stop, and then we never do,” said O’Scanlon.
The rich are leaving New Jersey, Republicans cry. Not so, say Democrats.
“We are now ranked number one in households with more than one million in investable assets, so we are not seeing the results of an outmigration,” Muoio said.
This is the argument that’s going to play out this spring. It’s expected to get more complicated when Senate President Sweeney unveils new pension and health care legislation in the coming weeks.