NJ Government Shutdown Looms As Gov. Murphy Offers Tax Hike Deal

Gov. Phil Murphy is offering New Jersey residents more money if they agree to his proposed millionaires tax. But no amount of money may prevent what seems inevitable: A government shutdown by the end of the month, when the new fiscal budget year starts.

Murphy and Senate President Stephen Sweeney seem to be at an impasse on this issue, even as the governor has unveiled details of his proposal to deliver $250 million in additional property tax relief directly to more than 2 million New Jersey tax filers.

The additional relief, he said, is contingent on passage of legislation increasing the tax rate on those earning more than $1 million per year, which would affect approximately 18,000 in-state residents and 19,000 non-state residents.

“The math is pretty simple, as is the logic,” said Murphy. “This is about tax fairness. It’s about answering a simple question: ‘Whose side are you on?’ We stand with New Jersey’s hard-working middle-class, and those striving to join them."

Sweeney, however, has not taken the bait, and he's even dug in his heals a bit, suggesting that the state Legislature will start overriding the governor if Murphy continues to veto legislative priorities.

The dispute over the millionaires tax is the first and foremost reason for why a shutdown seems inevitable. But it seems that there is more that is driving the state Legislature and the Murphy administration apart.

Indeed, there are at least three other reasons – the veto override threat among them – that may explain why a shutdown seems inevitable:

The veto override threat: The governor has vetoed some bills that the Legislature has passed, much to the displeasure of Sweeney. One of the bills would require “dark money” political organizations to disclose their donors. Sweeney signaled that the state Legislature is ready to override anything – including a budget bill – if it doesn't meet their approval. "At some point the legislature has to say, hey, if you're going to continue to do this, we're going to have to start overriding," Sweeney told NJTV.

Sweeney's politics seem more alligned with former Gov. Chris Christie than Murphy: Murphy seemed to poke at Sweeney's solid relationship with the Republican governor in a recent NJTV interview, and wondered aloud why the Senate president appeared to accommodate Christie during his tenure more than he has Murphy. Indeed, Sweeney, a moderate Democrat, seems more in line with Christie's no-tax hike conservative agenda, and the former governor also seemed to allign himself with Sweeney's childhood friend, political boss George Norcross, much more so than Murphy ever has. "I don't want to let facts get in the way. But 72 percent of the state supports it (millionaire's tax) including a majority of Republicans. It was passed five times and voted on five times in the previous administration. Nothing has changed except the governor," Murphy told NJTV.

George Norcross: It always seems to start here. Norcross is an insurance broker and a long-time South Jersey political boss who is also a childhood friend of Sweeney. Sweeney's politics seem to reflect those of the so-called political boss: fiscally moderate and socially liberal. But in Murphy, the insurance executive has encountered Norcross's stiffest challenge yet – and the so-called political boss has become the subject of various news reports that show his influence may be shrinking, and the things he's done to build up his reputation are now being called into question. Norcross has found himself possibly targeted in a Murphy administration probe into the state's tax incentive programs, and he's even sued the governor for what he considers overreach. As the Norcross-Murphy battle continues, the Murphy-Sweeney relationship appears to continue to deteriorate. Both sides, according to various reports, don't even appear to be talking. Read more: Troubles Surrounding NJ's 'Most Powerful Unelected' Man?

The governor’s property tax-relief proposal, meanwhile would deliver $250 million in additional tax relief in the form of a one-time, $125 refundable tax credit on 2019 Gross Income Tax (GIT) returns.

The credit would be in addition to other existing property tax relief programs – Homestead Benefit, Senior Freeze, Veterans’ Deduction, and the increased Property Tax Deduction Cap – while impacting a much broader base. An estimated 2,013,049 New Jersey income tax filers are expected to benefit, which represents roughly 46 percent of all resident returns.

"The budget we proposed is built on principles of strong fiscal stewardship and investing in core needs and middle-class property tax relief. The millionaire’s tax is how we ensure these principles for the long-term,” Murphy said.