New Jersey Gov. Phil Murphy praised a budget that includes $4.5 billion in new borrowing from the federal government and an additional tax on income over a $1 million.
The budget pitched by Murphy in August was $32.4 billion, but an additional $300 million was added by majority Democratic lawmakers after a compromise was reached with Murphy, bringing the amount to $32.7 billion.
Murphy can borrow an additional $500 million from the federal government under the new spending plan. Faced with heated criticism from Republicans, the governor justified the increase at his news conference Wednesday, comparing the economic crisis to the 1860s and 1930s.
“You are borrowing to offset revenue reductions,” Murphy said. “And while revenues may have settled on a little bit of a stronger number than when we originally submitted, it is still off dramatically.”
Legislative leaders reached a compromise to keep the millionaire’s tax in the budget. Assembly Speaker Craig Coughlin proposed offering couples with children who meet income requirements up to $500 in a tax rebate as part of a compromise to keep the millionaire’s tax in the budget. Families will not receive the rebates until next year. A 2.5 percent surcharge on corporations that make more than $1 million that runs through Dec. 31, 2023, is also included.
Gone are higher taxes on cigarettes and firearms which Murphy had advocated. Also gone, a Murphy proposal to give a $1,000 bond to each new baby born in New Jersey whose parents met certain income requirements.
“But I will keep advocating for the programs and causes I believe in and I know the legislature will do likewise,” Murphy said. “I will say especially on baby bonds, it is something that I remain committed to and I put it very much in the category of not ‘if’ but ‘when.’”
Republicans have criticized the budget plan, saying it will put the state deeper in debt and hurt the middle class.
Assemblyman Jay Webber cited a report this week from Truth in Accounting, which puts New Jersey’s debt highest in the nation when it comes to the tax burden on its residents. Each New Jersey taxpayer would have to pay $57,900 to pay off the state’s debt, according to the report.
“And Gov & Dems are about to in-debt us $4,500,000,000 more,” Webber said in a social media post.
The additional tax burden will hurt businesses, who are still struggling from the effects of the pandemic, Republican Sen. Declan O’Scanlon said.
“The same people who are trying to figure out how to keep their doors open and their staff on payroll are being told by Democrats that they’re not doing enough to help New Jersey,” O’Scanlon said in a statement. “It’s ludicrous.”
Murphy said he thinks the budget “will do tremendous good.”
“New Jersey will have a budget that will help us grow stronger, fairer, and more resilient even as we continue to combat the ongoing pandemic and guide our restart and recovery,” Murphy said.
The budget is expected to pass the Democratic-controlled Assembly and Senate on Thursday. Murphy can veto the budget as a whole or in parts but must do so by Sept. 30. The state’s fiscal year was shortened to Oct. 1 to June 30, 2021, because of the pandemic.
