Murphy administration pleads for $1.5 billion in tax hikes
TRENTON — New Jersey is one of two states in which tax collections haven’t yet reached their peak from before the recession nearly a decade ago, and Gov. Phil Murphy’s treasurer told lawmakers tax hikes are needed to set state finances in a better direction.
Acting Treasurer Elizabeth Maher Muoio told the Senate budget committee Tuesday that if you wiped away the net $1.5 billion in tax increases and around $600 million in new spending, next year’s budget would have a $161 million deficit.
“This is not only unsustainable, it is unacceptable, and the governor is proposing a series of new revenue and budget initiatives to get our fiscal house in order,” Muoio said.
The tax hikes include $765 million from raising taxes on income over $1 million; nearly $610 million from raising sales taxes, including restoring the rate to 7 percent; $110 million from changes to the corporate business tax; $80 million from legalizing marijuana; and $65 million from e-cigarettes.
Sen. Paul Sarlo, D-Bergen, said it’s possible the state will see a helpful windfall of income tax collections on April 15, although nonpartisan legislative analysts told lawmakers Tuesday that a drop in revenues is just as likely as an increase.
“Before this Legislature could even consider any new tax increases, we really need to see what those revenue projections, those April revenue projections, are going to be,” Sarlo said.
Results of April tax collections should be known by the first half of May, then get updated publicly at a May 21 legislative hearing.
Muoio said the 10.75 percent marginal tax rate on income over $1 million would ensure the state’s tax burden doesn’t fall on the middle class. Sen. Declan O’Scanlon, R-Monmouth, said it risks pushing out the very people whose taxes support so much state spending already.
“You can squeeze the golden goose to get it to lay more golden eggs faster, but at some point you either crush the goose or it gets pissed off enough that it flies to Florida,” O’Scanlon said. “Either way, you have no more golden eggs.”
Muoio said Murphy’s plans for $283 million in additional spending on school aid and $50 million to provide some students tuition-free community college are part of a multi-year plan to ramp up spending – “not a final stop, but a first step.”
Some Republicans wonder how it would be paid for without even more tax increases.
“If these are down-payments, and these are promises – promises are easy here in Trenton. The payments are difficult to do,” said Sen. Steve Oroho, R-Sussex.
Muoio said the budget will be evaluated each year and that plans to spend on education, transportation and job training are designed to boost the economy, increasing tax revenues.
“Not investing has not worked. We have not grown as a state,” Muoio said. “We are not bringing in the more robust states that other states, our neighboring states, are bringing in.”