State Senate President Steve Sweeney on Tuesday acknowledged one of the underlying fears behind his and Assembly Speaker Craig Coughlin’s adamance on opposing the millionaires and sales tax hikes purposed by Gov. Phil Murphy – they could hurt legislators at the polls next year.
“Listen, next year’s a problem period because the Trump stuff hits next year,” Sweeney said in one of several press gaggles he held throughout the day. “Your property values on average they say it’s going to drop 7.4%, which means governments, local government, are going to be looking for money to run their governments because the values are going to drop, which means taxes are going to go up throughout the state.”
“People are going to be saying, ‘Oh, the governor talked taxes? My taxes went up,’” Sweeney said.
Sweeney’s figure on declining home values comes from a January report by Moody’s Investors Service.
The credit-rating agency predicts that the cap placed one state and local tax deduction by congressional Republicans’ tax bill, which caps the deduction at about 56% of the average deduction claimed by the state’s residents, will lead to a drop in property values and a leave the state’s residents with less money in their pockets.
The legislature doesn’t levy property taxes. Those are handled by municipalities, which derive much of their own budgets from taxing homeowners within their borders, but Sweeney fears that the nature of that relationship will escape voters, replaced by the knowledge that their taxes went up.
“They don’t hear millionaires tax. They don’t hear sales tax. They hear the word ‘tax,’ and people are so weary of the word tax,” Sweeney said. “I’ve tried to explain to people in the gym at 4:30, ‘Hey, you know, the governor’s talking about a millionaires tax.’ ‘Yea, well that’s all they do is raise our taxes around here. When are you guys going to fix this?’”
To combat that perception, Sweeney and Coughlin have pushed through a budget, which Murphy promised to veto, that relies on temporary increases of 2.5% and 4%, relatively, to the state’s corporation business tax for companies making with more than $1 million and $25 million in gross annual income.
The problem there for Murphy is that those hikes fade out after two years. The governor has taken to targeting such temporary measures, and others that he has taken to calling “gimmicky,” in recent days.
Still, legislative leaders and the governor are all Democrats. Personal feuds aside, they’d all like to keep their seats, and that might help push them towards a compromise as the budget deadline approaches, even if it might keep those feuds unresolved.
“I think that it wasn’t a happy day when I got reelected, for him, well, in his mind,” Sweeney said.