Murphy not worried about a Florio rerun

Gov. Phil Murphy doesn’t share the concerns held by Senate President Steve Sweeney that increases to the millionaires and sales taxes the former wants to fund his version of the budget.

“We’ve telegraphed this every step of the way. We got elected based on a plan to raise these revenues, so we’re not pulling these out of left field, as it were,” Murphy said at a budget press conference Wednesday, the third in as many days. “This is the basis upon which – I used this phrase yesterday – that we won by over two touchdowns. Everybody saw this coming a mile away, so this is a completely different environment.”

While it’s certainly true that a tax on high earners was a cornerstone of Murphy’s campaign, the same can’t be said of the sales tax hike.

There’s little evidence the latter was a campaign issue for the first-term governor, who said at a townhall last September that he wouldn’t look for further tax increases past ones he planned for millionaires and corporations, as well as a potential tax on legalized marijuana sales.

“We talked about it, but overwhelmingly much more so on the millionaire’s side, admittedly, but we talked about it,” Murphy said. “I’ll tell you, part of the reason we may not have talked about it more, it is a no brainer. This is not turning the Queen Mary around in the Panama Canal – I’m not sure where that came from.”

But, that doesn’t appear to be the case. The spending plan Murphy introduced on the campaign trail would not reverse the sales tax decrease passed late in former Gov. Chris Christie’s last term.

The governor’s other refrain on the sales tax hike lay in a perceived lack of celebration around its reduction last year.

“I want to know a legislator who had a lot of people up around their office celebrating the cut from seven to six and five-eighths, and I’m looking forward to asking the same question assuming we can get it back to seven,” Murphy said. “It’s a broad-based tax – again I take every dollar seriously – but let’s put it in place. It was cut for a simple, personal, political narrative by my predecessor. Period. Full stop. That’s not acceptable public policy.”

Murphy estimates the hike will cost the average New Jersey family $85 a year, a figure he said he doesn’t take lightly, but he expects that residents will be willing to pay the tax in exchange for the value he hopes his programs will provide to the state’s residents.

But, the same could likely be said of former Gov. Jim Florio, whose tax increases cost scores of Democrats their political careers.  Republicans picked up ten State Senate seats and 21 Assembly seats the year after Florio raised taxes, giving them majorities in both houses of the Legislature for a decade.

There are some differences between the two scenarios. For one, Murphy’s tax hikes aren’t near the level of Florio’s. The earlier governor sought increases worth $2.8 billion in 1990. That’s roughly $5.5 billion in 2018 after inflation’s taken into account.

By comparison, Murphy wants close to $1.7 billion in new taxes.

The economy also wasn’t as strong in Florio’s time, meaning that cash-strapped New Jersey residents were asked to empty their pockets more than many felt they were able to.

“People talk about the early 90s – by the way, I want a show of hands how many of you were born in the early 90s or were alive, that’ll cut the group down immediately – this is a whole other time in economic and generational reality,” Murphy said.

But, for all those differences, Sweeney may be right to be worried.

For one, he anticipates local taxes will rise next year, pushed upward by housing prices falling because of the cap placed on the state and local tax deduction by congressional Republicans’ tax bill last year.

Those potential tax hikes aren’t related to the ones Murphy’s pushing, as municipalities, not the legislature, collect and control property taxes. But, whether or not voters know – or care – about that difference remains to be seen.