New Jersey Governor Releases $44.8 Billion Budget Plan With No Tax Increases
|02/23/2021 | 04:52pm|
By Joseph De Avila
New Jersey Gov. Phil Murphy is proposing a $44.8 billion budget that boosts spending on education, economic-development programs and pension payments, as state revenue collections continue to outperform the dire predictions made at the start of the Covid-19 pandemic.
The governor's spending plan calls for about $200 million to help jump-start the economy with grants and loans for small businesses and other initiatives and an increase in education spending of more than $600 million. Mr. Murphy, a Democrat, also has proposed making a $6.4 billion pension payment for the fiscal year beginning in July, which would be the first full payment to the state's underfunded retirement system since 1996.
In a recorded budget address released Tuesday, Mr. Murphy said the state needs to begin planning for its future beyond the pandemic.
"It is the time for us to also lean into the economic policies that will not just get us through the remaining months of the pandemic, but which will supercharge our re-emergence from it and the recovery that awaits on the other side," said Mr. Murphy, who is up for reelection this year.
The Murphy administration will now begin budget talks with leaders in the Democratic-controlled state Legislature. State Sen. Paul Sarlo, the Democratic chairman of the Senate budget and appropriations committee, said Mr. Murphy's budget plan was a "reasonable proposal that makes use of anticipated resources to address the expected needs of the people of New Jersey."
This is the first year of Mr. Murphy's tenure that he hasn't asked for income-tax increases. Last year, the legislature approved raising income taxes on millionaires, a goal sought by the governor since his first year in office in 2018. Using about $319 million generated by the newly enacted millionaires tax, 760,000 families in New Jersey will be eligible for a rebate up to $500 this year under the governor's budget proposal.
Mr. Murphy's budget plan shows how far the state's fiscal health has come since the beginning of the pandemic. Like many other states, New Jersey budget officials projected big declines in tax revenue following the business closures put in place to curb the spread of Covid-19, and estimated a two-year budget shortfall of about $10 billion.
The Murphy administration said those revenue projections didn't become reality in large part because federal stimulus funds. New Jersey poured $2.39 billion in federal funds into small business relief, rental assistance, education spending and other programs. The state also benefited from more than $38 billion in federal stimulus funds used for enhanced unemployment benefits, stimulus checks and Paycheck Protection Program loans in New Jersey.
High-wage earners recovered incomes more quickly than low-wage workers, boosting income-tax revenues, according to the Murphy administration. The stock market boom from the second half of 2020 also helped drive up revenue collections. And while income, sales and corporate tax revenues haven't fully bounced back to pre-pandemic levels, they are much better than the state projected last spring.
Mr. Murphy's budget proposal also relies on incorporating more than $4 billion in borrowed funds from the previous year's budget that the state still needs to repay. Republican lawmakers said it was irresponsible to use these funds because revenue collections were improving.
"It's further proof that there was absolutely no need for the Murphy administration to borrow $4.3 billion last November, debt that we warned was unnecessary months earlier," said state Sen. Steven Oroho, the Senate Republican budget officer, in a statement.
The Murphy administration has defended taking on the debt and has said it made financial sense to take on low interest debt, rather than making deep cuts to spending or making a smaller pension contribution.
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(END) Dow Jones Newswires