NJ Gov. Phil Murphy's Millionaire's Tax Hike Is Rejected

Lawmakers officially nixed Gov. Phil Murphy’s proposal for a millionaire's tax, as well as four other fee increases that his administration has proposed, on Thursday.

The state Legislature approved a $38 billion budget on Thursday that will only increase taxes paid by HMOs, but will not raise fees on bear hunters, corporations, gun owners and opioid manufacturers.

The Senate voted 31-6, and the Assembly voted 53-24, to approve a spending plan that includes a $1.4 billion surplus. But it could also include reductions in school aid from what Murphy proposed. Those figures were not completely clear on Thursday.

Read more: These 190-Plus Districts May Face Tax Hike: NJ School Aid Figures

Murphy administration officials could line-item veto portions of the budget that could lead to a government shutdown by the end of the month. Or, if that happens, the Senate and Assembly could vote to override the governor's actions.

Read more: NJ Gov. Phil Murphy Vows Veto As Showdown Looms Over Taxes

Murphy had supporters, such as Sen. Nia Gill, D-Essex, who even called on the state Legislature to "bring on the millionaire's tax" that would bring a "sustainable recurring revenue that could help the middle class."

"The people of the state of New Jersey are for a millionaire's tax," said Sen. Richard Codey, D-Essex, a former acting governor. "We need recurring revenue."

Senate President Stephen Sweeney, however, argued that taxes haven't been helpful in fixing the state's problems, including the broken pension system. He said New Jersey is in a "financial death spiral" that needs to be stopped.

"I don't want to be here when the pension system goes bankrupt," Sweeney said.

The budget also calls for a number of spending cuts and takes money from the governor's rainy day fund. Specifics on the funding cuts and other financial figures were not available at press time.

Murphy is offering New Jersey residents more money if they agree to his proposed millionaires tax. But no amount of money may prevent what seems inevitable: A government shutdown by the end of the month, when the new fiscal budget year starts.

Read more: NJ Government Shutdown Looms As Gov. Murphy Offers Tax Hike Deal

Murphy and Sweeney seem to be at an impasse on the millionaire's tax issue, even as the governor has unveiled details of his proposal to deliver $250 million in additional property tax relief directly to more than 2 million New Jersey tax filers.

The additional relief, Murphy said, is contingent on passage of legislation increasing the tax rate on those earning more than $1 million per year, which would affect approximately 18,000 in-state residents and 19,000 non-state residents.

“The math is pretty simple, as is the logic,” said Murphy. “This is about tax fairness. It’s about answering a simple question: ‘Whose side are you on?’ We stand with New Jersey’s hard-working middle-class, and those striving to join them."

Sweeney, however, has not taken the bait, and he's even dug in his heals a bit, suggesting that the state Legislature will start overriding the governor if Murphy continues to veto legislative priorities.

Here are other points in the legislature's budget:

• A $75 million funding increase for NJ Transit which is $50 million more than proposed in Murphy's budget.
• The budget also fully funds the Senior Freeze Property Tax Relief Program for the first time in a decade with an $18 million increase.
• Almost a $175 million dollars in property tax relief.