HAZLET — Phil Murphy’s plan to raise taxes by $1.3 billion if elected is too much for New Jersey’s overburdened taxpayers, Lt. Gov. Kim Guadagno said Friday at a campaign stop, even if those tax hikes would be geared at the state’s wealthiest residents and marijuana users.
“Any increase in taxes on the most taxed people in the United States is unacceptable,” Guadagno said at a Friday town hall event, responding to new details about Murphy’s tax plan first reported by Observer.
The Republican gubernatorial nominee has run a campaign almost entirely focused on cutting taxes, namely the state’s property tax for homeowners. Guadagno’s plan would cap the school portion of a resident’s property tax bill at 5 percent of household income, and she would pay for it at an estimated cost of $1.5 billion from the state budget.
Murphy, by contrast, would impose $1.3 billion in new taxes on millionaires, hedge fund and private equity managers, large corporations that move some of their profit out of state, and recreational marijuana users — provided that the Democrat wins the November election and signs legislation to legalize and tax that drug, as he has pledged.
Raising these taxes is the only way to pay for New Jersey’s nearly bankrupt pension plan for public workers and for other expensive policy priorities such as fully funding the state’s school districts, Murphy’s campaign says.
The campaign told Observer that it may take years to get to full pension or school funding levels. Guadagno argued that that admission was tantamount to a “flip flop,” signaling that Murphy is walking back promises he made during the primary to fund pensions, schools and to bring universal preschool to New Jersey.
“We don’t know what he is going to fund and what he’s not going to fund right now,” Guadagno said. “He started out in the beginning in the primary saying he was going to fully fund pre-K, fully fund K through 12, free college education. He was to the left of Bernie Sanders. It sounds like he still is, but who knows?”
Senate Minority Leader Tom Kean Jr. (R-Union), the highest-ranking Republican in the Legislature, also took aim at Murphy’s proposal on Friday.
“Phil Murphy’s rhetoric, even as a candidate, is dangerous for New Jersey’s fragile business climate,” Kean said in a statement. “He is proposing that we drop an anvil on the backs of already burdened middle-class job creators and local entrepreneurs while New York, Pennsylvania and other regional competitors are circling, ready to swoop in and carry away well-paying jobs into their own states.”
Guadagno said promises to fully fund schools and pensions earned Murphy endorsements from the state’s influential public-worker unions, including the New Jersey Education Association and the Fraternal Order of Police, and she argued that Murphy was now pulling a bait-and-switch on them.
Murphy, however, never said definitively that he would ramp up to full pension or school funding during his first year in office if elected. From a financial standpoint, that would not be possible in the state’s strained $34.6 billion budget without much higher tax increases worth around $5 billion.
“Either you are funding the pension or you’re not,” Guadagno said. “Tell the people. Don’t just say what they want to hear to get their vote and get their early endorsement.”
Murphy campaign spokesman Derek Roseman fired back on Friday, noting that under Gov. Chris Christie, the administration has botched revenue projections for years and blown holes into the budget. In 2014, a missed revenue projection caused a budget crisis that forced Christie to cut more than $2 billion from pension payments he had pledged in legislation.
“Kim Guadagno and Chris Christie have mismanaged New Jersey from the day they took office,” Roseman said. “They have consistently been wrong in budget and revenue projections in year after year, and they have done such a poor job managing the state’s finances that New Jersey has had its bond rating lowered a record 11 times.”
Guadagno’s campaign has been arguing for weeks that Murphy’s policies would cost $75 billion, but $68.5 billion of that under her own estimates would come from a single-payer health care system at the state level. Murphy has said the idea is worth considering but has never included it in his plans. He does support universal Medicare coverage at the federal level.
Even if the cost is $1.3 billion instead of $75 billion, the cost is still too high, Guadagno said Friday.
“We obviously hit a raw nerve with him because he felt compelled last night to explain how he is going to pay for some of this and I can’t understand it,” she said, claiming credit for getting Murphy to state the cost of his plans.
“No one should take Kim Guadagno’s figures at face value,” Roseman said. “Kim Guadagno’s attacks on Phil Murphy are false and have no credibility given her failed record with Chris Christie.”
Guadagno said she understands the difficulties of the state’s ailing pension system, which has not been funded at legally required levels since Christie took office or during previous administrations.
A real solution, Guadagno has said, would involve a discussion with labor groups about reforming or scaling back public workers’ pension benefits, because otherwise the costs will keep growing and crowding out other budget priorities.
“Anybody that tells you your pension can be fully funded today is lying to you,” she said. “I have never made a promise I can’t keep. I want to sit down and fully and respectfully talk about it.”
The Murphy campaign told Observer on Thursday that Murphy had put together a responsible plan to right New Jersey’s finances. Under Christie, the state’s credit rating has been downgraded a combined 11 times by the major Wall Street credit rating agencies: Fitch Ratings, Moody’s Investors Service and S&P Global Ratings.
“Phil has put forward a responsible plan to restore New Jersey’s fiscal standing while ensuring we meet our obligations, fund public education, and provide property tax relief,” Roseman said Thursday. “It recognizes that our deep-rooted issues need immediate attention and puts the state on a firm path forward. It is based on realistic accounting and benchmarks, and a means of meeting both.”
Kean said “what we really need in the governor’s office is a leader who is going to address our affordability crisis and help the legislature deliver property tax relief to the people of New Jersey.”
“How can a candidate who is already proposing a tax hike say with any credibility that they will lower the property tax burden during their term?” Kean said.