Update On NJ Budget Battle As Shutdown Looms

As the budget battle between New Jersey’s governor and legislature threatens to send the state into its second consecutive government shutdown, a new battleground has emerged in the fiscal standoff: NJ Transit.

On Tuesday, Gov. Phil Murphy said that the Legislature’s recently passed budget – which is about $855 million more than his administration’s proposal – may put the kibosh on several “key infrastructure investments” at the beleaguered transportation agency.

The governor spoke about the possible effects to NJ Transit commuters during a press conference on Tuesday at the Rutherford Train Station (see video below).

According to Murphy, the Legislature’s budget would:

• “Put the public at risk for a potential fare hike”
• Jeopardize “workforce expansion to hire over 114 employees”
• Place “bus and rail service expansion” at risk
• Place “on-time performance enhancements” at risk

If Murphy and lawmakers are unable to agree on a budget by midnight on Saturday, the state would shut down, causing closures to state parks, Motor Vehicle Commission offices and other state offices/courts. A shutdown would also close casinos and racetracks if it lasts longer than seven days, including New Jersey’s new sports gambling industry.

“We still have four days to go… we can get this done,” Murphy said Tuesday. However, the governor added that “all options are on the table, and sadly that includes shutting the state down.”

• See related article: Closed Beaches On July 4? What Could Happen In NJ State Shutdown

Much of the budget kerfuffle involves taxes and school funding. Murphy said he's put forward a budget backed-up by "sound and sustainable revenues" from an increase in the income tax on residents with taxable incomes of over $1 million, closing corporate tax loopholes that benefit multi-state companies and restoring the state sales tax to 7 percent.

Senate President Steve Sweeney has resisted tax hikes – though he's pushed for a temporary, two-year corporate tax increase with a possible extension – and says the Democratic Legislature will insist on providing increased state aid to underfunded school districts.

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

Last week, Murphy said that he and state legislators – led by Sweeney and Assembly Speaker Craig Coughlin – have come to “broad agreement” about some aspects of the budget, including “a near-tripling of state aid” for NJ Transit in the near term.

But during Tuesday’s press conference, Murphy seemed to back away from his cautious optimism about the $242 million in proposed investments that his administration is seeking, calling lawmakers’ budget a “hollow” promise.

"Five days ago, the Legislature sent to my desk a budget that would make the strong initial investment we need in NJ Transit to help the thousands of commuters here in Rutherford, and the nearly one million more across our state, who rely daily on safe and reliable mass transit," Murphy said. "But there’s a problem with what they sent me – it’s nearly $1 billion short of where we need to be to have a responsible budget."

Murphy said that the Legislature’s budget would end with a $104 million deficit and zero dollars in surplus, which is about $855 million short of his administration’s target goal.

In addition, lawmakers’ budget also proposes $75 million in cuts that “put much needed infrastructure improvements at risk” and may accelerate the need for an increase in the gas tax and raise tolls, Murphy asserted.

On the flip side of the coin, Coughlin, Sweeney and other top Democratic officials have defended the Legislature’s version of the budget, including the funding for NJ Transit. According to Democratic leaders in the Assembly, the spending plan provides an additional $167 million in funding to help improve service at the agency.

Coughlin released the following statement in the wake of Murphy's press conference in Rutherford on Tuesday:

"As Gov. Murphy said this morning, the budget we sent him would help NJ Transit better serve the thousands of commuters who rely on our public transportation system. The Legislature's budget mirrors the governor's priority to increase funding for NJ Transit by $167 million. NJ Transit has unfortunately become synonymous with delays and service interruptions. Our budget maintains the additional funding proposed by the governor to help this beleaguered agency turn things around and improve service. As we've been saying from the get-go, our budgets share many of the same priorities. Our commitment to making NJ Transit a more reliable system for commuters is one of them."

On Monday, Coughlin said their revenue estimates had a seal of approval from the distinguished budget experts at the nonpartisan Office of Legislative Services.

"The bottom line is this… the legislature has presented a balanced budget to the governor,” Coughlin said.

With previous reporting by Tom Davis

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Photo: Edwin J. Torres/NJ Governor's Office