Background: Murphy presented his original budget to the Democrat-controlled Legislature in late February. Less than two weeks later, the coronavirus took hold in New Jersey, wreaking havoc on the state’s finances.
As a result, New Jersey’s traditional June 30 budget deadline was pushed back to Sept. 30 as officials worked to get a clearer sense of the state’s financial picture. In June, Murphy and the Legislature agreed to a $7.7 billion, three-month stopgap spending plan that covered July 1 to Sept. 30. The revised, nine-month budget, which the Legislature passed last week, covers the period from Oct. 1 to June 30.
What’s in the budget: Under the plan and accompanying bills, the tax rate on income of more than $1 million will increase from 8.97 percent to 10.75 percent. The millionaire’s tax fulfills one of Murphy’s major campaign promises and matches the tax rate paid on income of more than $5 million. Murphy unsuccessfully sought the tax in each of his previous two budgets.
As part of the budget agreement, Assembly Speaker Craig Coughlin brokered a deal that will provide rebates of up to $500 for hundreds of thousands of New Jersey families whose single-parent incomes are less than $75,000, or $150,000 for two-parent households.
The budget also includes another increase on the annual assessment levied on HMO premiums from 3 percent to 5 percent. New Jersey raised that assessment from 2 percent to 3 percent last year.
In addition, it reinstates a 2.5-percent surcharge on corporations that will be phased-out in a few years. Moreover, the budget boosts the state’s surplus to more than $2.5 billion, calls for $4.5 billion in borrowing to help close a multibillion-dollar revenue shortfall and holds school funding flat.
However, the budget does not include some of the smaller revenue-raisers Murphy asked for in his revised proposal, including taxes on cigarettes, an increase in gun fees and a tax on boat purchases and limo rides. Also not included is the governor’s so-called baby bond plan to give tens of thousands of newborns $1,000 bonds.
What they are saying: Senate President Steve Sweeney, who has frequently sparred with Murphy, thanked the governor for the “level of cooperation that you showed us.”
“I think sometimes really bad things, like the pandemic, bring out the best in us,” Sweeney said during Tuesday’s ceremony. “You put your differences aside and you realize that we all need to be in this together.”
Republicans have decried the spending plan for being filled with “pork” at a time when the state should be practicing fiscal restraint, citing the inclusion of money for things like golf programs and town hall renovations.