Murphy Signs Budget, 10 Bills Into Law: Here's What You'll Pay

New Jersey Gov. Phil Murphy has finally signed a new $37 billion budget that averted a near shutdown over the weekend, but the new fiscal plan includes some nickel-and-dime taxes that you may not like.

Besides raising taxes on those making $5 million or more, the new charges are supposed to include: a surcharge on Uber and Lyft riders, an online sales tax, a tax on liquid nicotine used in e-cigarettes, a corporate business tax hike and a sales tax on short-term housing rentals.

"I am very pleased to have reached a deal with my partners in the Legislature concerning the fiscal year 2019 state budget and supporting revenue bills," Murphy said. "With the budget I signed, we are truly building a stronger and fairer New Jersey."

Here are the new taxes that you may have to pay:

Uber/Lyft taxes

This bill imposes a 50-cent tax on solo trips and 25 cents on shared rides. The original bill would have imposed a 20-cent tax, but budget negotiations over the weekend led to the increase.

The bill said money collected from the fee is to be deposited in the Property Tax Relief Fund and be used as aid to school districts.

Airbnb taxes

The bill (A-1753) will impose the same taxes and fees that hotels and motels currently must pay to the state on “transient accommodations,” or residences used as temporary lodging.

The bill would impose the state sales and use tax, and the hotel and motel occupancy fee on these rentals and authorize municipalities to impose the following taxes and fees where applicable: the hotel occupancy fee, the Atlantic City luxury tax, the Atlantic City promotion fee, the Cape May County tourism sales tax, the Cape May County tourism assessment, the municipal occupancy tax, the sports and entertainment facility tax and the Meadowlands regional hotel use assessment.

Under the bill, permanent residential rentals would continue to be exempt from the taxes and fees listed above. The bill also would exempt charitable, non-profit organizations from collecting the taxes and fees when providing transient accommodations in furtherance of the non-profit’s mission.

“Our laws need to be updated to keep up with changes brought about by new technology,” said Annette Quijano, D-Union. “The fact that taxes are not paid for stays at locations rented through sites like Airbnb but are applied to stays in hotels is an unfair advantage that hurts the hospitality industry and takes funding away from municipalities for important programs. This bill levels the playing field and provides tax fairness for the entire hospitality industry in New Jersey.”

“We can't allow rules to apply to one business but not another when they essentially provide the same service," said Vainieri Huttle, D-Bergen. "Accommodations booked through sites like Airbnb are used like hotel rooms. They should be subject to the same obligation."

Internet

The Senate approved legislation that helps "restore tax fairness" for New Jersey businesses which have been operating at a competitive disadvantage as out-of-state online sellers have effectively avoided collecting sales taxes, lawmakers say.

The bill, S-2794, will follow through on a decision by the U.S. Supreme Court that will close a loophole that has allowed online competitors to ignore required sales taxes in states where they don’t have a physical presence, lawmakers said.

“This will help restore competitive balance for the retail stores in New Jersey and for the online businesses located here,” said Senate President Steve Sweeney. “It will also produce more ongoing and sustained revenue for the state at a time when it is needed. We can reasonably expect an annual increase of more than $100 million a year.”

The General Accounting Office – the independent, non-partisan federal financial accounting agency – estimates that New Jersey will generate $216 million to $351 million in annual tax collections.

E-cigs

This bill, A-4132/S-2731, imposes 10-cent per fluid milliliter tax related to sales of liquid nicotine.

Electronic cigarettes and similar tobacco-substitute smoking devices are designed to deliver liquid nicotine to users of the product, according to the legislation. The term “liquid nicotine” is defined in the bill to mean any solution containing nicotine that is designed or sold for use with an electronic smoking device.

The tax is imposed on the sale, use, or distribution of liquid nicotine within New Jersey by a distributor or wholesaler to a retailer dealer or consumer.

Corporate business tax hike

A corporate business tax surcharge was approved that averages 2 percent over 4 years.

For the first 2 years the surcharge is 2.5 percent, which will provide $425 million. The third and fourth year will be 1.5 percent.

Here are the other bills signed into law:

• ACS for A-3088wGR/SCS for S-64, 1515, 2407 (Jimenez, Dancer, Mukherji/Turner, Singleton, Ruiz, Pennacchio) - Increases earned income tax credit; provides credit for child or dependent care expenses; taxes "investment management services
• A-3438wGR/SCS for S-1841, 2523 (Karabinchak, Coughlin, DeAngelo/Diegnan, Cryan) - Requires director of the Division of Taxation to establish 90-day state tax amnesty period that ends no later than January 15, 2019
• A-4207/S-2657 (Greenwald/Sarlo) - Establishes Medicaid emergency room triage reimbursement fee for low acuity emergency room encounters
• A-4229/S-2772 (Calabrese, Schaer, Jimenez/Sarlo) - Applies Meadowlands regional hotel use assessment to all municipalities that participate in Meadowlands tax sharing program

The Murphy administration and state lawmakers reached an agreement on the budget after weeks of acrimony on Saturday. On Sunday, both sides continued to argue over details in the language of the budget, and Murphy finally announced the signing around midnight.

The agreement, which carries a $765 million surplus in an approximately $37 billion overall budget, includes:

• An increase in the income tax to 10.75 percent on filers with incomes of $5 million and above, providing approximately $280 million in new annual revenues
• Adoption of a Combined Reporting standard which will ensure companies cannot place their profits in other states
• Raising the state property tax cap deduction from $10,000 to $15,000
• Increasing the Earned Income Tax Credit (EITC) through an additional investment of $27.2 million to help over 510,000 families
• Creating a Child and Dependent Care Tax Credit to help over 70,000 New Jerseyans earning less than $60,000 per year care for a child or other dependent
• A $3.2 billion pension payment, the largest in state history

The budget agreement also maintains the governor's investment of $242 million for New Jersey Transit in addition to $402 million for education, including pre-K; and the restored funding sought for Homestead Rebates.

The budget also restores $25 million in aid for community colleges to put New Jersey on the path toward tuition-free community college.

Much of the disagreement involved taxes and school funding. Murphy said he put forward a budget backed-up by "sound and sustainable revenues" that would also close corporate tax loopholes.

Sweeney resisted tax hikes – though he pushed for the corporate tax increase –and said the Democratic Legislature would insist on providing increased state aid to underfunded school districts.

It was not immediately clear how this agreement would impact school funding, but Sweeney said it will put New Jersey "on the road" toward reaching his objective of "fully funding" school districts, while cutting funding from others.

The Murphy administration said the budget includes "the means to implement Senate President Sweeney's modernization of the school funding formula."

Read more: 188 School Districts May Have To Raise Taxes To Stop NJ Shutdown

State lawmakers say they've wanted to avoid the embarrassment caused by last year's shutdown, when ex-Gov. Chris Christie was caught by a photographer as he set with his family on the closed Island Beach State Park beach.

Gov. Murphy photo