Murphy wants $1.6 billion in new taxes, this is what you voted for NJ
Published on Mar 18, 2018
Gov. Phil Murphy unveiled the price tag for his ambitious first-year agenda of pumping money into schools, college tuition aid and mass transit: $1.6 billion in new taxes that will hit the paychecks of the wealthy and retail purchases of everyone in the state.
In his first budget proposal as governor, the 60-year-old Democrat outlined how he intends to make good on campaign promises such as raising the minimum wage to $15 an hour, legalizing marijuana, providing free community college tuition and restoring troubled NJ Transit.
The cost would fall on every taxpayer in the form of a 7 percent levy on retail sales, tied for the second-highest rate among states and up from the current 6.625 percent. High-income earners would see their state income tax rate increase to 10.75 percent, the third-highest in the country, from the current 8.97 percent. And Murphy is proposing new taxes on ride-sharing services like Uber and Lyft, home-sharing sites like Airbnb, legal marijuana sales and investment profits.
"Here is our inescapable reality — we need this revenue to get things right," Murphy told lawmakers at the State House. "We cannot afford to remain stuck, uncompetitive and unfair. This is the time for us to make our state stronger while we forge ahead with long-term solutions and investments that ensure fairness."
Murphy's first budget represents a sharp break from the fiscal priorities of his Republican predecessor Chris Christie. Murphy's so-called millionaires tax, which aides said would apply to about 20,000 residents and 19,000 non-residents, comes after Christie vetoed several bills throughout his tenure that would have raised the rate on the wealthiest earners. Murphy's budget proposal includes a 25 percent excise tax on legal marijuana sales on top of the sales tax, an idea Christie strenuously resisted throughout his eight years in office.
And Murphy proposed putting $3.2 billion toward the state's troubled pension fund, up from the $2.51 billion that Christie included in his final budget. Even Murphy's proposed increase fails to keep up with the trend in expected pension payouts, meaning that New Jersey continues to slip behind in its long-term obligations.
All in all, Murphy is proposing an 8 percent increase in expenditures over Christie's final budget, an unprecedented amount for a period of below-average growth. Acting Treasurer Elizabeth Maher Muoio noted that state revenue remains 6 percent below the pre-2008 recession peak, whereas most other states have reached record highs.
The budget anticipates a surplus of $743 million, which could give Murphy cover if parts of his agenda – for example legal marijuana sales, which Murphy anticipates in January 2019 – don't pass the Legislature this year.
Murphy's plan now goes to a Democratic-controlled Legislature whose leaders have not embraced all components of his agenda.