NJ Gov. Phil Murphy Wants To Raise Sales Tax: 1st Budget Address

Gov. Phil Murphy gave his first budget address on Tuesday, saying two of his first orders of business will be pushing for a sales tax hike and a millionaire's tax (see video below).

"Yes, a millionaire's tax is the right thing to do and now is the right time to do it," Murphy said during his budget address in Trenton on Tuesday.

Murphy, who drew some boos when he made the sales-tax hike announcement, said a recent sales-tax cut approved by the state Legislature and former Gov. Chris Christie was "nearly imperceptible" and did little to help the New Jersey family. "But it has directly impacted our ability to provide services" to those families, he said.

"This is the time to make our state stronger," Murphy said as he got a mixed response from lawmakers at the Statehouse in Trenton.

Murphy plans to raise at least $1.3 billion in new revenue from taxes and closing loopholes for the $37.4 billion budget, saying he wants the state sales tax raised back to 7 percent. If approved, the hike would wipe out an earlier 1/3-of-a-cent cut approved by Christie and lawmakers in 2016.

The hike would help support an increase in funding for public schools, pensions and higher education, Murphy said, generating an estimated $581 million in revenue.

"It's no secret that we face real challenges," Murphy told lawmakers, saying he wanted to offer every New Jerseyan "their fair share of the American dream."

"We will make decisions for the next generation, not the next election," he said.

Murphy has pushed for a millionaire's tax – a top-tier tax rate of 10.75 percent – on earnings of more than $1 million that could generate $765 million in new revenue. Some Democratic lawmakers have not fully embraced the measure, however.

And some lawmakers were already criticizing Murphy's reported plans before he even took the stage to deliver his budget address on Tuesday.

Assembly Republican Leader Jon Bramnick said he was "shocked" to hear that Murphy’s budget plans begin with "a course of higher taxes and new spending."

“Governor Murphy is taking New Jersey in the wrong direction,” said Bramnick, R-Union. “This is going to force more middle-class New Jerseyans to flee the state. Now it is up to the majority in the legislature to stop this plan. This is déjà vu all over again.”

Raising the sales tax would reverse what Christie and lawmakers agreed to when the former governor signed a controversial 23-cent gas tax hike into law in late 2016. The plan included cutting the sales tax gradually over two years.

On Jan. 1, 2017, the sales tax went from from 7 percent to 6.875 percent, followed by a decrease to 6.625 percent on Jan. 1, 2018, for a total reduction of 0.375 percent.

Murphy's budget for fiscal year 2019 also aims to promote education, mass transit and "tax fairness to make New Jersey stronger and fairer," his office said in a statement. The budget includes appropriations totaling $37.4 billion and a projected surplus of $743 million.

“This is a budget that is balanced both fiscally and morally,” Murphy said. “Our constitution requires the former, but our conscience demands the latter. It is a budget that recognizes that we will not solve the problems facing our middle class, seniors, and working families with short-term fixes. It is a budget that puts New Jersey families ahead of the wealthy and special interests – and that recognizes that we cannot build a brighter future by acting timidly and thinking small.”

“Together we will build a stronger, fairer New Jersey that works for all our families,” said Murphy. “Let’s prove to the people of New Jersey that government can be responsive, reliable, and effective.”

Some additional points in the budget:

• Murphy’s budget provides $14.9 billion, including pension contributions from the Lottery Enterprise Contribution Act, for pre-K through 12 public education and increases the current investment in formula aid and pre-K programs by $341 million, including $283.6 million in formula aid to school districts.
• The school budget appropriation builds on the $25 million in new funding the Legislature ensured for this current year and includes $57.6 million in new pre-K funding, the largest increase in over a decade, for a total investment of nearly $83 million. This funding continues to support fiscal 2018 expansion districts and focuses additional resources on additional districts that can launch programs quickly and effectively. Under this budget, more than 3,500 4-year-olds are expected to gain access to pre-K this year.
• The budget would reduce the financial obstacles to earning an associate’s degree. Murphy proposes a $50 million additional investment to establish new assistance programs for recent high school graduates and adults who have yet to complete their degrees.
• Murphy would strengthen Tuition Aid Grants (TAG) and the Educational Opportunity Fund (EOF). The additional funding will provide for approximately 3,500 new TAG awards and bolster support for the EOF program.
• The governor proposes a $2 million grant program to help high schools offer college-level computer science courses and to support teachers’ professional development. The budget also provides start-up funding for STEM-focused high schools that allow students to earn advanced degrees while preparing them for high-skilled jobs. Further along the education continuum, New Jersey will launch a loan forgiveness program this year for STEM graduates who remain in the state.
• Murphy’s budget nearly triples funding for NJ Transit, appropriating an additional $242 million to support light rail, rail, and bus operations, and help fill staffing gaps. The additional funding represents a 172 percent increase over last year.
• This budget plans for a 4-year phase-in to a $15 minimum wage, including an increase to $11 per hour in fiscal 2019. When fully phased-in, raising the minimum wage to $15 an hour will boost the incomes of 1.2 million New Jerseyans.
• Working families would benefit, the governor's office says, from Governor Murphy’s budget through an increase to the Earned Income Tax Credit (EITC). The budget allots an additional $27.2 million to the EITC this year, a change that will help over 510,000 low-income families. Over time, the state would provide eligible families with 40 percent of the federal credit for an average benefit of over $1,160.
• Murphy proposes a new tax credit tied to a federal program to help more than 70,000 New Jerseyans, providing families earning less than $60,000 with assistance to support the care of a child or other dependent.
• Murphy supports bipartisan legislation to raise the property tax deduction from state income taxes to $15,000. Nearly half of the budget, almost $17 billion, is allocated to direct and indirect property tax relief programs.
• The Department of Labor and Workforce Development will use over $30 million of current WDPP funds to create the New Jersey Career Network, revamp apprenticeship and on-the-job-training options, and upgrade current workers’ skills.
• The budget continues on the path to fully funding the state’s pension system, his office said. Including funding from the Lottery Enterprise Contribution Act, fiscal year 2019 contributions will total $3.2 billion, more than the entire first term of the previous administration and a 28 percent increase from last year.
• The budget proposes a fee on carried interest to end an "unjust advantage," his office said, for Wall Street earnings, generating a projected $100 million in revenue.
• The budget proposes a new business tax model that will close loopholes and benefit small businesses through a fairer system based on combined reporting.
• The administration plans to legalize adult-use marijuana by January 1, 2019 to "help end the cycle of non-violent, low-level drug offenses holding individuals back." Legalizing marijuana will generate an estimated $80 million in revenue for this year, his office said.
• The governor is committing to spend $100 million on a coordinated strategy that prioritizes data-driven policy and integrated behavioral care, as well as addressing social risk factors including unemployment and homelessness.
• New Jersey will establish the Center on Gun Violence Research to provide research.
• The budget begins restoring clean energy spending by reallocating an existing $5 million from the Clean Energy Fund to the Energy Savings Improvement Program (ESIP) to drive important energy efficiency projects in state government.

The idea of raising the sales tax was also drawing some criticism on Twitter on Tuesday:

Here is the video that will show the live feed of Murphy's address:

YouTube photo/video, NJTV