Amid considerable pomp and circumstance, Gov. Phil Murphy on Tuesday signed into law a $32.7 billion, nine-month bill that includes his long-sought millionaire’s tax and rebates of up to $500 for hundreds of thousands of New Jersey families.
“We may have had some differing viewpoints and frank discussions, but our shared vision and common goal of preparing our state for a stronger, fairer and more resilient post-Covid future remain steady,” Murphy said before signing the spending plan during a nearly hourlong ceremony at the Trenton War Memorial. “This budget will be there for the people of New Jersey.”
“As we continue to grapple with the effects of the pandemic, building a stronger New Jersey requires us to continue to bolster the middle-class families who are the backbone of our state,” he said. “This revised budget not only recognizes the realities of the pandemic, offering much-needed tax fairness, including tax relief to the middle class, but also maintains our core principles so that we can emerge from this crisis stronger, fairer and more resilient.”
Top lawmakers as well as labor and education leaders were on hand for the signing.
Background: Murphy presented his original budget to the Democrat-controlled Legislature in late February. Less than two weeks later, the coronavirus took hold in New Jersey, wreaking havoc on the state’s finances.
As a result, New Jersey’s traditional June 30 budget deadline was pushed back to Sept. 30 as officials worked to get a clearer sense of the state’s financial picture. In June, Murphy and the Legislature agreed to a $7.7 billion, three-month stopgap spending plan that covered July 1 to Sept. 30. The revised, nine-month budget, which the Legislature passed last week, covers the period from Oct. 1 to June 30.
What’s in the budget: Under the plan and accompanying bills, the tax rate on income of more than $1 million will increase from 8.97 percent to 10.75 percent. The millionaire’s tax fulfills one of Murphy’s major campaign promises and matches the tax rate paid on income of more than $5 million. Murphy unsuccessfully sought the tax in each of his previous two budgets.
As part of the budget agreement, Assembly Speaker Craig Coughlin brokered a deal that will provide rebates of up to $500 for hundreds of thousands of New Jersey families whose single-parent incomes are less than $75,000, or $150,000 for two-parent households.
The budget also includes another increase on the annual assessment levied on HMO premiums from 3 percent to 5 percent. New Jersey raised that assessment from 2 percent to 3 percent last year.
In addition, it reinstates a 2.5-percent surcharge on corporations that will be phased-out in a few years. Moreover, the budget boosts the state’s surplus to more than $2.5 billion, calls for $4.5 billion in borrowing to help close a multibillion-dollar revenue shortfall and holds school funding flat.
However, the budget does not include some of the smaller revenue-raisers Murphy asked for in his revised proposal, including taxes on cigarettes, an increase in gun fees and a tax on boat purchases and limo rides. Also not included is the governor’s so-called baby bond plan to give tens of thousands of newborns $1,000 bonds.
What they are saying: Senate President Steve Sweeney, who has frequently sparred with Murphy, thanked the governor for the “level of cooperation that you showed us.”
“I think sometimes really bad things, like the pandemic, bring out the best in us,” Sweeney said during Tuesday’s ceremony. “You put your differences aside and you realize that we all need to be in this together.”
Republicans have decried the spending plan for being filled with “pork” at a time when the state should be practicing fiscal restraint, citing the inclusion of money for things like golf programs and town hall renovations.
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