New Jersey Govt. Shutdown 2018: Are Your July 4th Plans Safe?

The clock is ticking to avert New Jersey’s second straight government shutdown, which would throw a monkey wrench into the Independence Day plans of thousands of residents and visitors. But what efforts are Gov. Phil Murphy and the Democratic-controlled state legislature making to head off D-Day?

There are now less than three days for Murphy and the New Jersey Legislature to find a way to end their standoff on the FY 2019 budget before a deadline of midnight on Saturday rolls around. If the two sides fail to reach a compromise, the state government will shut down, closing state parks, Motor Vehicle Commission offices and state courtrooms.

A shutdown would also close casinos and racetracks if it lasts longer than seven days, including New Jersey's new sports gambling industry.

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The battle of the spreadsheets between Murphy and state lawmakers is causing flashbacks to last year’s budget standoff between the Legislature and Republican Chris Christie, which shut down the state on the July 4th weekend and ignited a public furor from people who planned to spend their holidays at hotspots such as Island Beach and Liberty State Park.

• See related article: Gov. Christie's Beachgate Fiasco: How It All Went Down
• See related article: Defying New Jersey’s State Park Shutdown (Trespassers On The Beach)

But this year, the financial headbutting is confined to a single political party. Major players include Murphy, who ran as a Democrat in 2017, Senate President Steve Sweeney and Assembly Speaker Craig Coughlin.

The Murphy Administration put forth a proposed budget on March 13. Not happy with that version, the Legislature voted on and approved its own budget last week. There is a $855 million gap between the two, according to the governor, who claims that the Legislature’s version will put the state $104 million in the red.

Other sticking points have included disagreements over how to raise taxes in the state, as well as a controversial funding formula for state aid to schools.

• See related article: 188 School Districts May Have To Raise Taxes To Stop NJ Shutdown

Leaders in the Legislature have defended their budget as “balanced,” and cited a “seal of approval” from the budget experts at the nonpartisan Office of Legislative Services for their revenue forecast, which Murphy has called into question.

“We still have time to get this done,” Murphy said during a press conference on the budget in Newark on Wednesday. “The Legislature and I can certainly come to an agreement by the deadline. If people come with goodwill on all sides, I think we can solve this in 30 minutes.”

However, the governor also said during a previous press conference on Tuesday in Rutherford that "all options are on the table, and sadly that includes shutting the state down."

• See related article: Update On NJ Budget Battle As Shutdown Looms

Sweeney said that the Legislature is also trying to avert a shutdown.

“We are committed to working with [Gov. Murphy] to get this budget enacted and to move forward,” Sweeney said Wednesday, adding that the Legislature is offering to add two new revenue sources to its already approved budget: a tax on luxury home sales and a tax on short-term property rentals. (See more details below)

“We approved a fiscally responsible budget with reliable revenues and fully justifiable cost savings, but we are offering these additional sources of revenue in the spirit of compromise so that we can put a budget in place,” Sweeney stated.

Throughout the week, Murphy and top lawmakers have been trading offers back and forth that may avert a state government shutdown. The Senate and Assembly rescheduled their next voting sessions for Thursday, June 28 to Friday, June 29.

Here are the latest concessions that each camp is making.

MURPHY: ‘IT’S GOT TO BE REAL, IT’S GOT TO BE FAIR’

MILLIONAIRE'S TAX – Murphy is now asking for “sustainable long-term revenues from a modest tax increase on income over $1 million,” although he’s declined to release more specific figures. “We remain open-minded,” the governor said during a press conference on Wednesday. “But it’s got to be real, and it’s got to be fair.”

CORPORATE BUSINESS TAX – Murphy is now calling for a modified corporate business tax that keeps New Jersey competitive. “We didn’t get into levels,” he said after being asked about recent talks with the Legislature. “But a CBT that ends in two years and is really high and would scare businesses off, that’s not going to work. Something that’s modest, that accomplishes the goal, that has a longer life, is something pretty clearly that we would consider. My preferred plan is something that has a longer life that ultimately sunsets to a level below the level it’s at today.”

SALES TAX – The governor has agreed to slow down his plan to raise the state sales tax rate from 6.625 to 7 percent, phasing the hike in over two years.

NJ LEGISLATURE: '2 NEW REVENUE SOURCES'

2 MORE YEARS OF CORPORATE BUSINESS TAX – On Wednesday, Sweeney said that the Democratic Senate and Assembly leadership are proposing “an extension of the corporate business surcharge from two to four years.” People earning net incomes between $1 million and $25 million would pay 11.5 percent, and those with net incomes over $25 million would pay 13 percent.

SHORE RENTAL TAX – Sweeney is proposing that New Jersey starts taxing short-term rental properties, including those at the Jersey Shore. The move would generate an estimated $250 million increase annually, he said. (Read more here)

MILLION-DOLLAR PROPERTY SALES TAX – Sweeney is also proposing an expansion of the tax on transient housing and an increase in the realty transfer tax for property sales above $1 million, which will combine to generate an additional $360 million.

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File Photo: Patricia A. Miller (Island Beach State Park during government shutdown in 2017)