With budget season at hand, a competition for ears in Trenton

Joanna Gagis, Correspondent | February 19, 2020

A new budget season is about to begin in Trenton, but the public jockeying over which fiscal concerns get the attention of Gov. Phil Murphy and state lawmakers is already well underway.

For example, several progressive groups that are coordinating their efforts under the banner “For The Many” are calling for a series of tax hikes to better support a wide range of programs, including those that fight poverty, housing scarcity and the effects of climate change.

Among their policy goals are boosts in the state income tax, including a true millionaires tax — something Murphy, a first-term Democrat, has been trying unsuccessfully to get the Democratic-controlled Legislature to support for over two years.

But others are pitching a far different message, renewing calls to address New Jersey’s significant debt burden and counter the state’s reputation for high taxes.

And then there’s Murphy himself, who has long made a direct link between improving New Jersey’s overall economic growth to the state’s ability to tackle its formidable and entrenched fiscal challenges, such as shorting the state’s school-aid formula, which the governor has been working with lawmakers to slowly reverse.

“We have started to re-level that playing field,” Murphy said during a recent speech before the Morris County Chamber of Commerce. “Please stay tuned.”

A multi-month process

New Jersey’s next budget season will formally kick off next week when Murphy unveils his spending plan for fiscal year 2021 before a joint session of the Legislature. From there, a series of public hearings will be held in the State House and at other locations around the state to scrutinize the governor’s spending proposals. The budget process culminates in mid- to late-June when lawmakers craft an appropriations bill that is then sent to the governor for final approval.

But there’s also a time-honored tradition of using the annual budget process to highlight policy issues, such as revisions to public-worker pension and health-care benefits that were passed in 2011 when Republican Chris Christie was governor. And this year, Senate President Steve Sweeney (D-Gloucester) has already indicated he plans to propose the establishment of a dedicated source of funding for New Jersey Transit, the state’s beleaguered mass-transit agency, before Murphy’s budget speech in Trenton.

“We need to invest in NJ Transit in a huge way, it’s a driver of our economy,” Sweeney said last week while talking to reporters in the State House.

In his last few budgets, Murphy has called for the adoption of a true millionaires tax that would increase revenue collections by raising the income-tax rate charged on earnings between $1 million and $5 million. (He already persuaded lawmakers to increase the rate on earnings over $5 million in 2018.)

Despite long-standing resistance from Sweeney and other lawmakers, the governor is widely expected to again propose the millionaires tax in his FY2021 proposal. Murphy alluded to how his overall budget plan could continue to boost both K-12 education funding and state spending on property-tax relief during last week’s speech before the Morris County Chamber of Commerce.

“When you look at our budgets over the past couple of years, and when you look at our budget invariably that we’ll unveil in a couple of weeks, there’s an enormous amount of straight up, hardcore, direct, point-of-attack property-tax relief,” Murphy said.

Income tax hike for household making $250,000 and up?

Going even further than Murphy on taxes is the “For The Many” coalition, comprising labor, environmental and other advocacy groups. During a news conference in Trenton on Tuesday they backed a series of tax hikes that would raise a combined total of more than $3 billion annually. By comparison, Murphy’s true millionaires tax could boost state revenue by an estimated $500 million each year.

Beyond its embrace of the millionaires tax, the coalition also supports raising the income tax on households earning more than $250,000 annually.

Among the group’s tax proposals are resetting the sales-tax rate at 7% and reinstating the estate tax for all estates worth $1 million or more. New Jersey’s estate tax was phased out and the sales tax reduced to 6.625% under a series of tax-policy revisions signed into law by Christie in 2016.

“We need responsible taxation,” said Sue Altman, state director of the New Jersey Working Families organization, during the news conference.

Among the uses for the added revenue would be better funding of programs that address poverty and income inequality, the group said. The revenues should also be used to improve access to affordable housing and to boost environmental initiatives, such as the replacement of lead water-service lines and combating climate change.

“We need to think about the budget as a moral document,” said Rev. Sara Lilja, director of the Lutheran Episcopal Advocacy Ministry of New Jersey. “We call for a budget that’s fair and just for all residents.”

“We are tired of waiting for a healthier state,” said Brandon McKoy, president of New Jersey Policy Perspective, a left-leaning think tank based in Trenton.

Debt viewed as key problem

But Assembly Minority Leader Jon Bramnick (R-Union) says New Jersey’s “biggest problem” is its debt. The state’s total long-term obligations soared to over $200 billion, according to the Department of Treasury’s most recent accounting, when all bonded and non-bonded liabilities, such as unfunded pension and retiree health-care obligations, are tallied. That’s nearly five times the size of the state’s annual budget.

“We need to cut taxes to be more competitive and direct the revenue we have to bills we already owe instead of new ideas,” Bramnick said.

He also said the state’s current tax burden is already “too much for the people we represent to afford.”

“Murphy needs to wake up and recognize the reality that our state is the worst in the nation for affordability,” Bramnick said.