Murphy: If other Dems ‘force our hand,’ I’ll just cut spending
There’s still no agreement on a state budget for the fiscal year that starts Sunday, but the key figures involved in the negotiations met for an hour Monday and are at least talking about the contours of a deal.
That’s the good news. On the other hand, the Senate and Assembly each added three more voting sessions to their calendar – on Friday, Saturday and Monday. The new fiscal year starts Sunday – and with it, the prospect for a state government shutdown if a budget hasn’t been enacted.
Gov. Phil Murphy announced his administration estimates that the budget passed last Thursday by the Legislature comes in around $855 million out-of-balance, and he said he would reluctantly cut spending using his line-item veto if there’s not an agreement on a budget.
“If need be, and their lack of presenting sustainable revenues, that’s unfortunately the option that you’d be left with,” Murphy said. “Which is a shame, given that the investments that of all us want so desperately in this budget are embedded in it.”
Asked if people don’t believe that a liberal Democrat would do it, the first-year governor and former Goldman Sachs executive said he would.
“They don’t know me. It’s not something I’m looking forward to. We’re all going to suffer from it,” said Murphy. “But we’re not going to do the same-old, same-old anymore in this state.”
Murphy wouldn’t speculate on what line items he would reduce or delete.
“You’d have to make cuts,” he said. “You hope you get out of this in a way that these folks don’t force our hand to do some tough things.”
Assembly Minority Leader Jon Bramnick, R-Union, said he’s good with spending cuts.
“You’ve got to think that, in order to threaten another Democrat, the threat is, ‘We’re going to limit spending. You don’t stop it, we’re going to cut spending.’ I don’t think that’s a threat to Republicans,” Bramnick said.
Though Murphy talked about the line-item veto, in response to questions at an afternoon news conference, he also sounded more conciliatory, in advance of the late-day meeting to which he invited around a dozen Democratic lawmakers.
“I have said from the get-go, or at least over the last number of weeks, that there’s a framework of available alternatives that I think could add up in some combination to a deal,” Murphy said.
He said that framework could include a “re-characterized” corporate business tax, which is a cornerstone of the Legislature’s budget, and maybe accepting a tax amnesty proposal, first pitched by Assembly Speaker Craig Coughlin and included in the budget as a $150 million source of revenue.
Senate President Stephen Sweeney, D-Gloucester, supports a two-year surcharge on corporate taxes applicable to businesses with at least $1 million in New Jersey-based profits. The Democratic majority says it would generate around $805 million a year, and that the Office of Legislative Services backs up that forecast, but the Murphy administration contends it would bring in $233 million less.
Sweeney said he was surprised by the numbers but that “we don’t feel we’re that far away.” He indicated he’d be willing to extend the surcharge longer than two years, though not make it permanent.
“I’ve always said as part of a negotiation, I’ve said this publicly: I’m willing to extend that, as part of a settlement at the end,” Sweeney said.
“I’ve always said I’m open to extending it as part of a deal,” he said. “But we got to get to what the deal is at that point. Right now, we don’t have a deal.”
The Murphy administration says the corporate business tax revenues are also overestimated by $114 million in how it projects the impact of the federal tax cuts and that the budget includes $69 million in marijuana taxes that shouldn’t be listed because the Senate and Assembly haven’t missed the bill legalizing the drug for adult use.
Coughlin defended the revenue estimates before Murphy’s news conference.
“Our numbers are supported by the nonpartisan Office of Legislative Services, which has an unparalleled level of accuracy over the years,” Coughlin said.
Murphy said the Treasury Department is now able to estimate the fiscal impact of last Thursday’s Supreme Court expanding states’ ability to require sales taxes to be collected for online sales to residents by out-of-state retailers.
Murphy said it is estimated at $200 million a year, though only around $125 million for fiscal 2019.
It wouldn’t start being collected until Oct. 1, which would reduce the impact in the first fiscal year to $150 million. And he said the Treasury Department was already expecting to collect around $25 million of that through an enforcement effort independent of the Supreme Court ruling.
“If it’s more than that, I’ll be the happiest guy in the state. I hope it is,” Murphy said. “But again, we got to make a responsible guess on that.”
Murphy and Sweeney indicated there’s no need to worry yet about a government shutdown.
“I remain committed to enacting a balanced budget on time,” Murphy said. “And we still have five-plus days to go. There is plenty of time to get this done, and there is no logical reason, no logical reason, it can’t be done.”
“I’m not concerned,” Sweeney said. “It’s Monday. We have all week.”