Some of the good news: Murphy says, There will be no fare hike for NJ Transit riders and he will fix the agency “if it kills me.” He is still fighting for a stronger Millionaires’ tax. He will make another record-setting pension payment. There will be more money for Pre-K and community college tuition assistance.
Of course all of his proposals will be scrutinized by the Legislature. Sen. President Sweeney said, “Murphy’s budget is a positive step forward,” but more ominously he added, “It’s not the budget he expects to sign.” Speaker Craig Coughlin in his response talked about the importance of “efficiencies.” With all his Assembly members up for election this year he is not eager to increase taxes.
- Extending the current marginal tax rate for incomes above $5 Million to all income in excess of $1 Million. This change will impact more non-resident than resident tax filers and will help the State support critical programs.
- A Corporate Responsibility Fee for employers that have 50 or more employees receiving state Medicaid benefits. The fee is designed to encourage large employers to provide health benefits to their employees, thereby reducing reliance on public benefit programs.
- $1 Billion in corporate tax revenue reductions due to legacy incentive agreements (from Christie administration.)
- More than $1.1 Billion in direct savings – including nearly $800 Million in savings in public employee health benefits negotiated with unions, and more than $200 Million in departmental savings.
- $100 Million in increase for NJ Transit.
- $206 Million in new K-12 formula aid, and $68 million to maintain and further expand access to high-quality pre-K.
- $3.8 Billion total pension payment (18.0% over current year).
- 59 Million to be restored to Affordable Housing Trust Fund completely ending the practice of diverting monies from the Fund.
- $58.5 Million to expand Tuition free Community College.
- Over $70 Million to be returned to Clean Energy Fund.
- $20 Million to pilot a new funding formula for four-year colleges.
- $100 Million again to fight the opioid crisis.
- Funding for the first year of a statewide increase toward a $15 minimum wage.
- Over $164 Million of increased dedications from Corporation Business Tax revenue are available for open space preservation, with additional funds for drinking water oversight.
- $30.2 Million to increase the Earned Income Tax Credit (EITC) for the second consecutive year.
Most State departments are receiving little change in their budget except for Transportation: +9.4%, Law and Public Safety: -6.7%, Agriculture: -52.2%, and Environmental Protection: -17.8%.
The complete state budget which is not often mentioned is:
State Appropriations: $38.606 Billion; Federal Funds: $14.602 Billion; Transportation Trust Fund: $3.037 Billion; All Other Dedicated Funds: $5.315 Billion; Independent, Authorities, Colleges and Universities: $12.385 Billion; Special Revenue/ Trust/ Bonds / Proprietary Fund: $6.303 Billion; Grand Total: $80.250 Billion, about the same as projected for the current year ($79.418)
The 2020 budget proposal for $38.832 Billion represents a realistic increase of 2.9%. Our prior governor used to project much higher increases, which resulted in him having to make drastic cuts at the end of most fiscal years. Nonetheless, Murphy may face a similar problem near the end of the current fiscal year. Through January year-to-date Total Major Revenues increased by 3% but were budgeted for a 7.5% increase. The largest shortfall is in Gross Income Tax which is a -6.0% year-to-date but budgeted for +5.0%.
For more information go to the Budget in Brief here.