A Regressive, Downward Spiral Led By a Progressive Governor

Higher taxes, more and expanded government programs, and another government tax on business, are not the ingredients to creating a booming state economy, yet they are the hallmarks of Governor Phil Murphy’s FY 2020 proposed budget.

Adding another millionaires’ tax will not help the state raise more revenue or improve business investment. The millionaires’ tax has been tried before and failed – just ask former Governor Jim McGreevey who created the first millionaires’ tax, purportedly designed to offset property taxes. Today however, NJ has the highest average property taxes in the nation at $8,767

The Governor also expects to squeeze another $447 million out of people with incomes over $1 million. But his gambit last year to increase taxes on people with incomes over $5 million has not worked as envisioned. The state is facing a $415 million budget shortfall this year and is hoping to make it up by the time the fiscal year ends on June 30

The governor mentioned the middle class more than dozen times in his speech – yet he failed to identify who they are (and I’m not entirely sure he even knows). He talked about property tax relief by claiming he will increase state funds for education. But under the current school state aid funding formula – most of that money goes to urban areas, not to middle class towns. For example, the city of Passaic receives more state school aid than all of Bergen County combined – which means Bergen County taxpayers receive only pennies from the state to support their schools - which is not likely to change under Governor Murphy

The governor went on to say that he will provide property tax relief to homeowners through the Homestead Benefit Program. However, that benefit reaches only a small number of people - mostly seniors - and does very little to help the middle class.

To make matters worse, the state is still processing homestead rebates from2016 – nearly two-and-a-half years after property taxes were paid!! -- and the rebate is underwhelming at best. Eligible seniors and disabled residents can expect to see a property tax reduction of approximately $259 for seniors and $202 for eligible non-seniors (people making less than $75,000 in 2016.) This does little to relieve the burden of an average property tax bill of more than $8,700

Finally, if businesses needed another reason to leave the State or to rethink their investment in NJ, Governor Murphy just gave it to them: he plans to tax small businesses (those with 50 or more employees) that do not provide health benefits to their employees, $150 per employee. This tax will almost certainly discourage hiring, and create an additional burden for small business owners that is sure to grow over time -- $150 this year, $250 in a couple of years and so on.

There are still a lot of details that the governor has yet to explain in his budget, such as the alleged $800 million in savings on health benefits he negotiated with the CWA but failed to discuss.

It appears for the time being, that NJ is stuck with a governor who prefers to spend more of our money than to cut their own spending. The only way New Jersey is going to dig itself out of the deep financial hole it is currently in, is to begin a series of rational and honest dialogue on where to reduce spending rather than how to raise taxes.