Murphy touts $1.1B in savings to bolster $558M in new tax hikes
TRENTON — Gov. Phil Murphy’s second budget, a $38.6 billion plan for the fiscal year that begins in July, is being received far more warmly by the Legislature’s Democratic majority than his first was a year ago.
But that doesn’t mean smooth sailing for the $558 million in tax increases Murphy has proposed, highlighted by an idea lawmakers wouldn’t advance in 2018: higher taxes on income over $1 million, projected to yield $447 million for the state.
If Murphy is going to get lawmakers to go along, he’s got to convince them he’s put a dent in spending – which is why he is talking up $1.1 billion in savings, primarily from health care changes negotiated with unions.
“Affordability is about being good stewards of every taxpayer dollar and working together to find savings that no one had thought possible,” Murphy said.
Details remain scarce because the contract hasn’t yet been ratified, but the budget is buoyed by big savings on health benefits negotiated with the Communications Workers of America public employees union.
Senate President Steve Sweeney, D-Gloucester, said it’s a good first step but shows even more can be saved.
“They talked about a billion dollars in savings, and the governor should be commended for that. But what we’re saying is there’s a lot more. You know, I’m not satisfied with just getting some,” Sweeney said.
“There’s no discussion on pension reform in this,” Sweeney said. “There’s a lot of other public sectors that would probably quadruple the savings if they were included in this.”
The $800 million in health-care savings includes $385 million already identified in negotiations with unions and $415 million through audits, improved pricing from vendors and other ideas still to be finalized in ongoing labor talks.
Murphy said it’s the result of cooperation, rather than confrontation, with public employee unions.
“Our public workers are not the enemy. They are our neighbors. They are also taxpayers. They are the heart of our middle class. It is not pandering to stand with them. It is doing our jobs,” Murphy said.
State Sen. Steve Oroho, R-Sussex, said the savings – if they prove to be accurate – show significant amounts of money can be saved for taxpayers and employees.
“I expected to hear a lot less discipline today. But the issue is: How much of it was real? Let’s dig into and find out,” Oroho said.
After Murphy’s budget speech Tuesday, Assembly Speaker Craig Coughlin, D-Middlesex, reiterated his opposition to broad-based tax hikes.
"I remain convinced that we can achieve additional, substantial savings through reforms and other government efficiencies and not rely on a broad-based tax," Coughlin said.
In the address, Murphy sought to head off the idea that a tax on income over $1 million, which would affect 18,000 state residents and 19,000 out-of-state residents, is broad based.
“Let’s be absolutely clear: This is not a tax that would be paid by anyone in the middle class. Period, full stop,” Murphy said.
There are also new taxes sought for legalized marijuana, opioid manufacturers and distributors, large employers whose workers rely on Medicaid for health coverage and guns and ammunition.