Governor Murphy yesterday said, “I’m not going to certify a budget based on gimmicks … When you build a financial house of cards year after year, and see it fall year after year, at some point you have to realize the same old way of doing business in Trenton isn’t working.” He promises a veto of the Legislature’s proposed budget.
Part of the problem is the Legislature’s short-term vision as all of its assemblypersons and some senators will be up for re-election next year. Murphy, with his four-year term, takes the longer view. He is concerned about generating sufficient tax income on an ongoing basis to start investing in key projects that will strengthen our economy. He wants a surcharge tax on millionaires who can afford it, while not hurting working people, and a small increase in sales tax which would return it to the same level as two years ago.
The Legislature facing upcoming elections is skittish about increasing any taxes that would affect voters and seeks instead a tax on corporations. Even this tax could affect voters as corporations might increase their prices or leave the state. More importantly the plan will sunset after two years which provides no ongoing basis on which to support new investments. It returns us back to needing more gimmicks or finding a permanent solution to finance our government.
As Gordon MacInnes, President of New Jersey Policy Perspective, points out in an opinion piece in the Star-Ledger, “The millionaires tax is supported by 70 percent of New Jersey’s voters, so there’s no political danger there. And the assertion that the wealthy will flee the state if asked to pay their fair share is belied by the fact that, when combining the effects of the Trump tax cuts and Murphy’s budget proposal, millionaires will be made whole with a modest bonus.”
MacInnes continues, “As for the sales tax, when legislators cut it from 7 percent to 6.625 percent, it cost the state nearly $600 million in revenue. Since then, the average New Jersey family has enjoyed less than $100 more in its pocket every year while the wealthy are saving a ton on big-ticket items. Like the proposed millionaire surcharge, the sales tax provides a reliable source of ongoing monies.
Just one of the Legislature’s gimmicks is implementing Tax Amnesty, which would generate an uncertain amount of income and only for one year. The Ledger’s Tom Moran today says, “Murphy is the adult in the room pelted with budget gimmicks including “hundreds of millions of dollars in savings, mostly based on audits that have yet to be completed. That’s sort of like enjoying a fancy dinner based on faith that you will eventually find a way to pay for it.”
Paul Mulshine in today’s Ledger, references a Mick Jagger song. He points our that responding to Murphy, President Steve Sweeney stolidly protested,”This is the ninth budget I’ve worked on and I’ve never been told to pass the budget without any changes.” Mulshine goes on to indicate “Sweeney ended his formal education at Pennsauken High School. Murphy ended his with an MBA from the Wharton School after his undergrad days at Harvard.” Mulshine ends his column saying, “If I were the governor, I’d dig up a copy of that old Stones hit and listen to the lyrics: ‘You can’t always get what you want/But if you try sometimes/You get what you need.’”
For Julius Caesar crossing the Rubicon river was a bold event that precipitated the Roman Civil War. For Democrats and New Jerseyans crossing the Rubicon would also mean a war, moving into an unpleasant and divisive shutdown and could require an extensive/time-consuming revision of the budget to include different taxes and end some gimmicks. Although Caesar ultimately failed in his effort, Murphy, still in his first year, could well feel it’s a war worth fighting, succeed in gaining a better budget, and return to a smiling, “happy Warrior” as opposed to the stern, unhappy one pictured above.
(photos credit NJ.com)