NJ Politics Digest: Analysis Finds Murphy’s Agenda Needs New Taxes to Move Forward

Phil Murphy

New Jersey Gov. Phil Murphy. Flickr/Phil Murphy for Governor

Gov. Phil Murphy has long touted his progressive agenda by saying he wants New Jersey to be an East Coast version of California.

But the problem is, some say, that New Jersey’s finances are nothing like those in the Golden State.

Without a strong economy like California, the state can’t afford Murphy’s agenda without asking residents to pay more, experts say in a story in the Record.

An analysis by the USA Network finds that Murphy’s plan to finance his dream projects, as well as correct the state’s long-standing financial problems, by fostering economic growth in the struggling state will not work. State funding will fall “at least $300 million short—and potentially much more—of what he needs next year to cover pledged funding for schools, public employee pensions and other priorities,” the story in the Record notes.

That leaves Murphy facing a choice—either scale back his plans or raise taxes, the report said. This comes as legislative leaders in his own party have said the state needs to look at reducing, not increasing, state spending and have vowed to resist further tax increases.

Murphy has shown no inclination to bring his plans into line with the financial realities of a state that already bears one of the highest tax burdens in the nation. He’s already signaled his desire to undo a small cut in the state sales tax passed when the legislature approved a massive 23-cent per gallon 2016 increase in the state gas tax.

The governor claims residents really won’t notice or mind seeing the sales tax increase back to seven percent from 6.25 percent. Murphy, last month, also approved raising the gas tax an additional 4.3 cents, bringing New Jersey’s gas tax among the highest in the nation. The governor said the hike “is what it is” and was necessary under a state law he said was ignored by his predecessor, Republican Gov. Chris Christie, who resisted further raising the gas tax.

As the Record report notes, while Murphy claims the state can achieve $2 to $3 billion in revenue from economic growth, the state has never managed to add $2 billion in revenue at any point in the past decade.

Based on historical evidence, the best Murphy can expect is growth of little over $1 billion, the report said. Even with new taxes from sports betting and legalizing marijuana, the state will have no choice but to raise taxes, scale back Murphy’s plans, or look for other cost savings, such as those proposed by a panel convened by Senate President Steve Sweeney to recommend a way out of the state’s fiscal problems. Those fixes include revising the pension and benefit systems for the state’s unionized employees. Murphy, however, is a strong supporter of the unions and unlikely to go along with efforts to bring those benefits into line with those of private-sector employees.

Murphy, who campaigned on a pledge to help the state’s struggling middle class, has contended residents won’t mind paying additional taxes if they feel they are getting their money’s worth. Sweeney, however, has said the governor, needs to understand that New Jersey’s middle class comprises more than the 20 percent of state residents who belong to public workers’ unions.

 

Quote of the Day: “Phil Murphy wants to spend like he’s got a California economy… you can’t spend like California unless you earn like California.” — Seton Hall political science professor Matthew Hale, on the fiscal realities confronting Gov. Phil Murphy’s ambitious progressive agenda.

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NJ Politics Digest: Analysis Finds Murphy’s Agenda Needs New Taxes to Move Forward