Property Taxes, Drug Prices, Climate: 3 Ways Major Senate Package Impacts NJ

WASHINGTON — The smoke has cleared from negotiations and battles on the Senate floor, and the Inflation Reduction Act of 2022 has taken shape. The legislation could have major impacts for New Jerseyans in the sweeping climate and economic package.

The bill passed the Senate during an overnight session that resulted Sunday in a 51-50 vote — Vice President Kamala Harris cast the tiebreaking vote.

But the legislation notably excluded one thing that New Jersey's Democrats have tried to secure. The $10,000 fixed cap on state and local tax (SALT) deductions will remain in place, if the bill's language stands in the House.

The bill has also received criticism for climate provisions that benefit the oil and gas industries and its limits on cuts to drug prices. But many members of New Jersey's Congressional delegation say the package is nonetheless worth it.

"This is not a perfect bill," said Sen. Bob Menendez (D-NJ). "It does not repeal the Republican-imposed SALT cap or reform our broken immigration system — but the benefits of this legislation for New Jersey families cannot be understated."

Here are three ways the legislative package impacts New Jerseyans:

Climate Funds, Olive Branch For Oil Companies

New Jerseyans have gotten a taste of climate change's potentially devastating impacts, with recent heatwaves and deadly hurricanes in the past decade that have caused significant damage and strained the state's infrastructure. Much of the federal bill's spending covers investments to tackle climate change.

The Inflation Reduction Act includes incentives for farmers and ranchers to reduce methane emissions, extensions of the electric-vehicle tax credit, and a launch of the National Climate Bank that would invest in clean-energy technologies and energy efficiency.

Oil industry giants have praised the legislation, which has raised doubts about its effectiveness to fight climate change from some environmental advocates and politicians. The law would block the Interior Department from issuing any wind and solar development rights of way before first holding oil and gas lease sales. The federal agency would also have to offer at least 60 million acres of federal waters in oil and gas sales per year before leasing any waters for offshore-wind development.

Sen. Bernie Sanders (I-VT) urged the Senate last week to amend the bill.

"In total, this bill will offer the fossil fuel industry up to 700 million acres of public lands and waters to oil and gas drilling over the next decade — far more than the oil and gas industry could possibly use," Sanders said on the Senate floor.

SALT In The Wounds

Reps. Mikie Sherrill (NJ-11) and Josh Gottheimer (NJ-5) have stated "No SALT, no deal" on previous spending packages. But both New Jersey Democrats expressed support Sunday for the Inflation Reduction Act.

Ultimately, the bill doesn't include a lift on the $10,000 fixed cap on SALT deductions. Filers who itemize deductions on state and local taxes in their federal returns get capped at $10,000 — a result of the 2017 tax cuts Republicans enacted in 2017.

Since then, Democrats from high-tax states, such as New Jersey, have pushed for eliminating the cap. But with midterm elections approaching, Democrats are running out of chances to address the issue while they hold the presidency and majorities in the House and Senate.

Sherrill said she supports the bill because of its investments in clean energy and "good-paying jobs," allowing Medicare to negotiate costs on prescription drug prices, and its minimum tax on corporations. Gottheimer expressed support for the bill because it doesn't raise taxes in his district and marks a "huge win" for lowering prescription drug prices and boosting manufacturing.

Prescription, Insulin Prices

The legislation would empower Medicare to negotiate prices with pharmaceutical companies for the first time, cutting prescription drug prices for people 65 and older. The savings would help pay for a three-year extension to Affordable Care Act subsidies, which would stave off an expected rise in health insurance premiums that had been set to go into effect next year.

The package also includes a cap on the price of insulin for seniors on Medicare. But an amendment that would have capped insulin at $35 per month failed. The amendment received a 57-43 vote but required 60 votes to waive special budgetary rules.

An estimated 10.4 percent of the Garden State's adults had diabetes as of 2018, according to the New Jersey Department of Health.