Democrats are on a mission. As lawmakers stare down the short barrel of an Oct. 1 deadline, both the Senate and Assembly budget committees convened to hear a single day of testimony and then vote on the $32.7 billion spending plan posted on Sept. 21 by top Democrats. Designed around an economy slammed by COVID, it raises $700 million in new taxes, spends $300 million more than Gov. Phil Murphy envisioned in his budget message and borrows a whopping $4.5 billion. That’s half a billion more than even the governor’s proposal.
“Everything in this budget is negotiated. Everything has been agreed upon between the three leaders,” said Sen. Paul Sarlo (D-Bergen). “There’s some revenues here that have been to insure government can continue, if there’s a second wave, if the economy doesn’t rebound as quickly as we are hopeful it will.”
“On the budget, we’re done. We’re in agreement,” said Senate President Steve Sweeney (D-Gloucester). “We’re concerned about a very strong return of this virus and we didn’t want to take a chance. The spending is, in my mind, pretty easily justified.”
“If the government says we’re in such dire shape and he and Democrats come out with a budget like this, and there’s not one cost reform in it? To me, that’s shameful,” Sen. Steve Oroho (R-Sussex) said.
Republicans objected, but the Democrats’ list of revenue raisers kicks off with the governor’s long-sought millionaires tax, which would yield $390 million, except that it includes a $500 rebate for certain families earning less than $150,000, payable next year. Other tax hikes include a higher levy on Health Maintenance Organization premiums, $103 million, and a freeze on the Corporate Business Tax surcharge at 2.5%, $210 million. Republicans consider the rebates a political candy machine.
“That whole rebate program that they came up with, I call it the ‘Murphy Re-Election’ rebates because I think that’s exactly what they’re intending to do,” Oroho said.
“Giving the middle class a $500 tax credit, I don’t think is a gimmick,” Sarlo said.
Business advocates claim the budget underestimates revenues and over-borrows billions.
“And what are we doing? Kicking our businesses when they’re most down. Raising taxes on them while they’re still prohibited from fully opening,” said Michele Siekerka, president and chief executive officer of the New Jersey Business & Industry Association.
The Democrats’ budget does not include tax hikes on cigarettes, boats, firearms or limo rides that the governor proposed and it also doesn’t create his “Baby Bonds” $1,000 nest-egg program for newborns. While it will make a $4.7 billion public worker pension payment, that’s $200 million short of the governor’s plan. His staunch public union allies are taking a politically pragmatic view.
“When Chris Christie was in office and we had a hard year, he just didn’t make the pension payment at all. So overall, this is a good budget,” Communications Workers of America state director Hetty Rosenstein said.
The Democrats’ budget sets aside an even bigger surplus, $2.5 billion, that’s $300 million more than the governor wanted as a hedge against pandemic emergencies through the next nine months of the fiscal year. It also adds subsidies for hospitals to pay for uninsured patients. While it keeps school funding flat, the plan restores money for school-based mental health services.
“Teamwork has been exceptional and the one piece of this that we’re very happy to unveil is the millionaires tax that will be a part of it. Beyond that, stay tuned,” the governor said.
In this trifecta state, Republicans get mostly sidelined during this budget process. The full Senate and Assembly are slated to vote on the budget bill on Sept. 24 and then it heads to the governor, who ultimately has the power of line-item veto.