Gov. Phil Murphy announced a budget proposal that includes a slew of revenue raisers and again calls for a new tax bracket for those in the state making more than $1 million.
“There is no better alternative than a millionaire’s tax. It’s the way we both ensure tax fairness for our middle-class and fairness to the dedicated rank-and-file women and men of our public workforce,” Murphy said. “After all, the millionaire’s tax is a matter of fairness to our middle-class homeowners and renters, our seniors, and the countless working families reaching to pull themselves up and into the middle class.”
In addition to his millionaire’s tax proposal, which the administration estimates will bring in roughly $494 million, the governor is calling for an increase to the tax levied on retail cigarette sales, a fee on health insurers that would add about $200 million to the state’s coffers, a “corporate responsibility fee” that would generate an estimated $180 million per year.
Under Murphy’s plan, the cigarette tax would rise by $1.65 per pack, bringing in roughly $215 million in additional revenue, bringing the total excise tax earnings to about $742 million.
The bulk of that money, $391.5 million, would go to the Health Care Subsidy Fund, a charity that reimburses hospitals for treatment provided to uninsured New Jersey residents.
About $93.5 million would go to bond debt service, and the remaining $257 million would be deposited into the state’s general fund.
Each of those taxes and fees, and others like an increase in gun licensing fees, faces hurdles in the legislature.
In an unplanned gaggle with reporters following the governor’s address, Senate President Steve Sweeney said he opposed revenue raisers aside from the millionaire’s tax, which he has said he would support for an additional $1 billion in funding for the state’s pension contributions.
“Cigarette tax is a big problem. I said I was open to the millionaires’ tax if there was a billion dollars in new funding for the pension. I don’t think we really need the other taxes, period,” he said. “Our revenues are 6% above last year’s revenues. We’re actually doing much better than has ever been projected.”
That 6% figure is based on revenue collections through the end of December. Administration officials project growth for this fiscal year to be lower, around 3%, partly due to a 1% step down of a corporate business tax surcharge.
Further complicating things is Assembly Speaker Craig Coughlin’s stance on the proposed tax increases.
Coughlin has expressed skepticism about the millionaires’ tax deal Sweeney floated, and he’s so far indicated little willingness to increase the tax burden for New Jersey residents and businesses.
“The Governor’s proposal is an encouraging first step and I commend his efforts to cut government costs, provide a healthy surplus and make a record payment into the pension system,” he said in a statement. “The Assembly, I’m certain, will have additional ideas and priorities to discuss during the review process. We will continue to look for more government inefficiencies and cost savings, as we do each year. I remain cautious of increasing broad-based taxes.”
Legislative sources say the reaction from leadership in both chambers is less hostile than it was during budget negotiations over the last two years.
Put simply, there are no lines in the sand, at least not yet.
Murphy’s budget proposal included full funding for the Senior Freeze and Homestead Benefit property tax relief programs, though the latter is only fully funded using aged property tax values.
Coughlin last year sought full funding for both of the programs.
Republicans unsurprisingly opposed the tax increases in the budget, claiming they would push residents and businesses out of the state.
“This governor — and the Democratic legislature — is about to raise taxes over a three-year period that includes a budget that’s 18% growth over three years,” Assembly Minority Leader Jon Bramnick said. “That’s 6% a year over three years, $2.2 billion in more spending and six new taxes.”
The GOP is unlikely to play a huge role in budget negotiations, though Democrats in the legislature and at 225 West State St. may jockey for one or two votes from the opposing side of the aisle if the going gets tough.