New Jersey Governor's Budget Would Boost Aid for Schools, Pensions, Rails -- 2nd Update
25 February 2020 - 10:34PM
Dow Jones News
By Joseph De Avila
New Jersey Gov. Phil Murphy called for pumping more money into
education, mass transit and the state's beleaguered pension system
in a $40.8 billion budget proposal.
Mr. Murphy's budget plan, a 2.2% increase from the prior year,
calls for boosting K-12 spending by $337 million dollars and pre-K
services by $83 million. It adds $132 million to NJ Transit,
allowing the commuter rail service to avoid raising fees this
year.
The Democrat's pitch also might have made a breakthrough in his
mission to raise taxes from about 9% to 11% for people with incomes
above $1 million, his signature campaign pledge that he has pursued
unsuccessfully since he came into office in 2018.
In his first two years, he ran into opposition from fellow
Democrats, Senate President Steve Sweeney and Assembly Speaker
Craig Coughlin. But Mr. Sweeney has recently changed course, saying
for the first time he would support raising taxes on millionaires
if the governor increased pension payments by $1 billion. If
enacted, the higher tax rates on high earners would raise an
estimated $494 million.
"I thank the Senate president and welcome his willingness to
embrace a millionaire's tax in this budget," Mr. Murphy told
lawmakers Tuesday. "When we have tax fairness, we can continue our
historic investments in our pension systems and in our middle-class
families."
A millionaires tax still isn't a done deal. Mr. Coughlin isn't
on board with this compromise on raising income-tax rates.
"I remain cautious of increasing broad-based taxes," Mr.
Coughlin said. He also isn't backing Mr. Sweeney's proposal to
raise taxes on corporations to create a dedicated funding stream
for NJ Transit.
Republicans also remained opposed. "If the governor continues
driving taxes higher and shunning reforms proposed by the
Legislature to cut the cost of government, we're going to see a
continued exodus from New Jersey," said Senate Republican Leader
Tom Kean Jr.
Democrats control both chambers in the statehouse. Legislative
leaders will now develop their own spending plans and then begin
negotiating a deal with the governor.
The governor's budget would raise pension payments by $523
million over the previous year, to $4.6 billion -- the state's
largest to date. The contribution would still fall 20% short of the
state's goal to make full payments.
Mr. Sweeney wants an additional $1 billion on top of what Mr.
Murphy proposed paid to the pension system in exchange for
supporting the millionaires tax. He said he expects the governor to
assist the legislature in finding a way to reach that figure.
"He has to help if he wants us to do a millionaires tax," Mr.
Sweeney said.
It was the first time Mr. Murphy has publicly addressed
lawmakers since he disclosed over the weekend that he will undergo
surgery next month to remove a likely cancerous tumor on his
kidney.
"The outpouring from every corner of this room and every corner
of this state has been overwhelming," Mr. Murphy said Tuesday.
He added, "I'm not going anywhere."
The governor's budget also raises taxes on cigarettes, opioid
manufacturers and guns and ammunition.
During his budget address, Mr. Murphy touted his
administration's efforts to curb growing property taxes. New
Jersey's property taxes rank as the fourth-highest among the 50
states, according to the conservative think tank Tax
Foundation.
Statewide, property taxes rose by less than a percentage point
in Mr. Murphy's first year in office, according to the
administration. They rose 2.1% for his second year. This cumulative
3% increase is the lowest figure for any governor over the first
two years in office since the state began tracking this, according
to the Murphy administration.
The administration attributes the slower growth in property
taxes largely to increases in education funding. State aid to K-12
schools and pre-K services has increased more than $1 billion since
Mr. Murphy came into office. Property taxes are assessed at the
local level in New Jersey to pay for schools and other things. More
state funding for local school systems leads to less of a need for
property-tax increases, officials with the Murphy administration
said.
Write to Joseph De Avila at joseph.deavila@wsj.com
(END) Dow Jones Newswires
February 25, 2020 17:19 ET (22:19 GMT)
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