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New Jersey Gov. Phil Murphy proposed a record $40.9 billion budget supported by a millionaire’s tax that would help underpin record spending on New Jersey Transit, pensions and schools.
The spending plan for the year that starts July 1 strikes a balance of fiscal responsibility and progressive spending, Murphy, 62, said Feb. 25 in a speech to lawmakers in Trenton.
Murphy, a Democrat and retired Goldman Sachs Group Inc. senior director, seeks a record $589.5 million for NJ Transit, the ailing commuter bus and rail operator that he has pledged to rebuild. His budget also include a historic $4.6 billion pension payment and would build the state surplus, a step that Murphy calls key to rebuilding New Jersey’s credit rating.
“A stronger surplus, and another payment into the rainy day fund, are important signs to New Jerseyans that we, like them, understand that we can’t rush out and spend everything we have, without regard to future risks,” Murphy said. “It sends an unmistakable signal to the credit-rating agencies that we will not follow the irresponsible ways of the past that led to 11 consecutive downgrades.”
Since Murphy came to office in January 2018, many lawmakers have called his progressive agenda too costly, and twice blocked his proposal to raise taxes on those who earn at least $1 million a year. His odds are slightly better this year, with the Senate president saying he’d consider the levy if the governor would consider an even bigger pension payment.
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Murphy wants to increase the marginal tax rate on every earned dollar over $1 million to 10.75% from 8.97%, for $494 million in annual revenue. That rate currently is on $5 million or more. The change would apply to about 42,000 taxpayers, more than half who live out of state but earn income in New Jersey, according to the governor’s office.
The budget would add $50 million to fund tuition-free college at four-year institutions, an expansion of a plan in community colleges. It would give $20 million to support apprenticeships, paid internships and career training.
It proposes $1.26 billion in property-tax relief, an increase and eligibility expansion for the earned income tax credit, and the elimination of income tax on combat pay.
“Since taking office, we’ve sought to build a stronger and fairer economy for every New Jersey family, not just the wealthy or well-connected,” Murphy said.
Murphy’s NJ Transit subsidy proposal is a 29% boost, partly coming from funds for highway tolls and fees on energy ratepayers, as well as shifts from capital-improvement accounts to fund day-to-day needs. That subsidy had dipped to $33.2 million in 2016 under Republican Gov. Chris Christie, while breakdowns, safety violations and service delays soared.
Senate President Steve Sweeney, a fellow Democrat and New Jersey’s highest-ranking lawmaker, wants to maintain the corporate tax rate as an ongoing revenue source for NJ Transit. He also would ban the practice of capital-to-operating fund transfers, for about $460 million for this year.
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