There are big stakes, and little time to resolve substantial budget differences between Governor Murphy and the leadership of the Legislature – Senate President Steve Sweeney and Assembly Speaker Craig Coughlin. These are the three key players who will determine the outcome. It’s Murphy’s first foray into a budget battle, and it does not appear to be going his way. However, it’s never too late for advocates to make last-minute pleas for causes they champion.
Murphy seeks a millionaire’s surcharge and an increase in the sales tax. His most significant plans to increase funding are for state employees and teacher pension contributions, formula-driven school aid; K-12 education programs, including $57.6 million for preschool, Medicaid, and NJ Transit. He additionally wants funding for a series of small start-up investments including $50 million for community college tuition aid. The Legislature is opposed to Murphy’s tax plans and seeks changes in the Governor’s key expenditures.
It appears that both the Governor and the Legislature are close to an agreement on a revised school-aid formula allocation in which currently some school districts receive more money than needed and some less. There is no plan to fully fund the formula immediately, which would require a significantly larger investment, but rather to make certain adjustments in allocation of funding.
The legislature, most particularly Sen. Sweeney, is opposed to the millionaire tax surcharge. Instead Sweeney appears adamant on implementing an additional 3 percent surcharge on companies expected to earn seven figures this year. It would generate about $657 million per year in revenue about the same figure as Murphy’s millionaire tax plan. Sweeney’s proposal would expire after two years, whereas Murphy’s plan has no sunset. Sweeney argues a millionaire’s surcharge would drive away some of the wealthiest who pay high taxes, while Murphy questions whether the same might be true of the corporate tax hike.
The Legislature is also opposed to an increase in the sales tax. Murphy’s plan would return the tax from the current from 6.625 percent to 7 percent, which was its level two years ago. He says the increase would cost the average family only $85 a year. and raise about $500 million in needed revenue, but its impact would hurt the poorer residents most.
The legislature’s plans for changes in expenditures seem less clear but are likely to include cuts in Murphy’s proposed increases (see above) with Community College tuition high on the list for the chopping block. An outline revealed yesterday regarding the ongoing discussions includes hundreds of millions of dollars in possible spending cuts and projected savings the lawmakers may want. It also seeks a $143 million to restore the Homestead property tax credits, $61.6 million more for school funding and $123 million in Democratic legislative spending priorities Murphy killed in his budget.
Time is running out. The Legislature has scheduled only three more voting sessions, on June 21, 25 and 28, before the Saturday June 30 budget deadline after which a state government shutdown would occur. The most recent closure found former Governor Christie enjoying an outing at a public beach. It appears clear that the Legislature seeks major changes in the governor’s budget. Murphy has the ability to delete items in the budget he does not like, such as expenditures he does not want, but he lacks the option to add items he feels are important. Let’s hope ongoing negotiations will provide a result satisfactory to “the three men in the room.”