When Gov. Phil Murphy entered the Assembly chamber this week to deliver his fiscal 2020 spending plan, he was burdened by two scandals involving his administration’s hiring practices and a reputation for political ineptitude.
When he left an hour later, he had retaken control of the policy agenda and reasserted the preeminence enjoyed by New Jersey’s chief executives as they seek to put their philosophical stamp on government while building a legacy of accomplishment.
The $38.6 billion budget he submitted to the Legislature stole a considerable bit of wind from the sails of leadership demands that spending be reduced before any mention of tax increases would be tolerated.
He identified more than $1 billion in savings — the lion’s share provided by changes in the public employee healthcare system — while renewing his recommendation for an increase in the state income tax for earnings in excess of $1 million.
It was a come-let-us-reason-together moment, an unmistakable invitation to the legislative leadership to negotiate and compromise with the administration and achieve a conclusion in which all involved could claim victory.
The response from his fellow Democrats was a muted and scripted “good first step,” which can be loosely translated as no longer having the whip hand in developing the budget; Murphy’s hand is on it as well.
While Senate President Steve Sweeney (D-Gloucester) and Assembly Speaker Craig Coughlin (D-Middlesex) reiterated their opposition to the millionaires tax, gone was last year’s “to the barricades” battle cry, replaced by the usual and obligatory pledges to review the budget as objectively as possible with an eye toward additional savings and redirecting spending.
For his part, Murphy opened the three-month budget debate conceding that the spending plan that will reach his desk in June will be different from the one he submitted in March, a sign that he took to heart the experience of last year when his “my way or the highway” approach produced stalemate, a barely avoided government shutdown, and surrender of his tax increase proposals.
Noticeably absent from the speech was a repeat of last year’s recommendation to restore the state sales tax to seven percent, an acknowledgement by the governor that the increase — slight as it is — would fall most heavily on middle- and lower-income taxpayers, undermining his message of protecting them and improving their economic circumstances. The fact that such a recommendation would be dead on arrival in the Legislature and would play directly into the hands of critics of “tax and spend Democrats” was certainly on his mind as well.
Sweeney, Coughlin and several of their colleagues complimented the governor on throwing out the first dollar to open the season in a fashion dramatically different from last year, another subtle indication that the often harshly personal atmosphere that marked the 2018 deliberations is a thing of the past.
Sweeney and Coughlin gave no indication they intend to retreat from their anti-tax increase posture, but they understand clearly that marshaling their forces to protect millionaires while public employees have accepted nearly $1 billion in cost savings is problematic.
Murphy would be wise to accept a few additional reductions in spending to provide cover to Sweeney in particular who has been adamant that raising revenue — even if it’s from millionaires — is off the table in the absence of cost cutting and systemic changes to the public pension and health benefits system.
Murphy has consistently sided with public employee unions in resisting revising the benefits system or requiring greater employee contributions, and his record $3.2 billion appropriation toward pensions combined with the savings in healthcare costs is an adequate response — at least for the moment — to the demands for greater and more substantive changes.
Sweeney is a seasoned pol with finely honed political instincts and recognizes that the budget proposal has considerable appeal to Democratic legislators. Taxing millionaires at a slightly higher rate enjoys broad popular support — taxing the rich as a general principle always does — and there is little downside for incumbent legislators and Democratic candidates to embrace it.
Sweeney himself was a longtime proponent of a millionaires tax, voting for it some five times during the administration of Chris Christie who, of course, vetoed it each time.
His and Coughlin’s task of holding their caucuses together in opposition to Murphy’s proposal is significantly more difficult this year. With Assembly contests topping the ballot this November, incumbents seeking reelection, as well as first time candidates, see little danger in running on a “tax the rich” platform, especially in districts where the overwhelming majority of their constituents won’t be affected. The proposed $206 million increase in aid to public education will be of considerable help as well.
Given the history of exceptionally low voter participation in years when the Assembly leads the ballot and the noncompetitive nature of current legislative districts, it’s a foregone conclusion that Democrats will maintain their majority with a chance — albeit a slim one — to build on it.
There is no question that, with his speech, Murphy has reoccupied the high ground and regained a stronger position in dealing with the Legislature. He seems to have arrived at a considerably greater understanding and appreciation for the political crosscurrents swirling through the Legislature and how to navigate them.
After a year of absorbing more punishment than Rocky Balboa, the governor has — like Balboa — pulled himself up from the canvas and rallied to, at the very least, even terms.
And, while the judges’ scorecards won’t be in for a few months, Murphy is very much in the contest.