NJ Politics Digest: Here’s Why Municipal Taxes Will Likely Rise Under Murphy’s Budget

Lt. Gov. Sheila Oliver told lawmakers this week the state can't increase aid to municipalities.

Sheila Oliver.
Lt. Gov. Sheila Oliver. Kevin B. Sanders for Observer

Gov. Phil Murphy’s proposed budget includes plans to expand state pre-k programs and provide free community college tuition, all while raising more than $1.5 billion in new taxes.

But Lt. Gov. Sheila Oliver told lawmakers this week the state can’t increase aid to municipalities, which would help reduce the state’s notoriously high property taxes, according to a report by NJSpotlight.

Murphy’s $37.4 billion budget calls for $1.4 billion to fund municipal aid programs, continuing a seven-year stretch of flat aid for municipalities at a time when inflation has increased 15 percent, according to the report.

Oliver told the Assembly Budget Committee budget problems prevent Murphy from devoting more money to aid the state’s municipalities. She also used budget problems to defend the administration’s plans to use nearly $80 million that’s supposed to be dedicated to build affordable housing to plug budget holes, despite Murphy campaign promises not to divert affordable housing funds, according to the report.

Murphy’s budget does call for increasing school aid, which could help reduce the property tax burden in some towns.

But it also calls for increasing the state sales tax, adding new taxes on millionaires, ride- and rental-sharing services and the legalization and taxing of recreational marijuana.

The budget difficulties cited by Oliver also haven’t prevented Murphy from proposing new programs in the budget, including $50 million to provide free community college tuition to low-income students. He also wants to raise the earned income tax credit for the working poor and create a child- and dependent-care tax credit.

Murphy, however, is facing pushback from legislative leaders in his own party who are opposed to his plan to raise the sales tax and impose a millionaires tax and are calling on the governor to contract, not expand, state programs.

“We can’t raise enough taxes to fix the structural problem that we have,” Democratic Senate President Steve Sweeney told the Fox Business Network Tuesday. “That’s why you keep hearing me saying it’s a last resort. We got to start fixing things instead of taxing things.”

Murphy, who campaigned on promises to help the state’s struggling middle class, contends residents won’t mind paying even more in taxes, if they feel they are getting their money’s worth returned in state services.

Quote of the Day: “A millionaires’ tax may prevent a fiscal heart attack, but it may also cause long-term economic cancer.” — Tom Byrne, former chairman of the  New Jersey State Investment Council.

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NJ Politics Digest: Here’s Why Municipal Taxes Will Likely Rise Under Murphy’s Budget