NJ Politics Digest: In the Budget Battle, It’s Also About Tax Breaks

Phil Murphy (left) and Steve Sweeney

Phil Murphy (left) and Steve Sweeney. Christian Hetrick for Observer

Democratic legislative leaders on Wednesday turned down Gov. Phil Murphy’s offer to strike a budget deal and instead offered a budget compromise of their own.

Senate President Steve Sweeney and Assembly Speaker Craig Coughlin are proposing a tax on short-term rentals that’s expected to raise $250 million and $110 million in higher taxes on sales of homes worth at least $1 million. The plan also keeps in place a proposed hike in corporate taxes, but extends that plan for four years instead of the two originally proposed.

Murphy, however, has indicated he doesn’t support the rental tax, which would affect vacationers along the New Jersey shore, according to a report by NJ 101.5

But both sides said they remained confident a budget deal can be reached before Sunday morning. Failure to reach a deal is likely to trigger a state government shutdown.

While most of the attention around the budget has been focused on competing tax plans, a report in NJSpotlight details how failure to reach a compromise could impact tax breaks that both sides in the fight say they support.

These include a three-year expansion of the Earned Income Tax Credit for low-wage workers in New Jersey, establishment of a new state income-tax credit for child and dependent-care expenses, a hike in the state income tax write-off for property taxes and restoration of funding for the Homestead Property Tax relief program.

Quote of the Day: “If people come with goodwill on all sides, and I have no reason to believe there isn’t, I think we can solve this in 30 minutes.” — Gov. Phil Murphy, on adopting a state budget.

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NJ Politics Digest: In the Budget Battle, It’s Also About Tax Breaks