NJ Politics Digest: Minimum Wage Hike’s Impact on Municipal Budgets

Gov. Phil Murphy and state lawmakers.

Gov. Phil Murphy and state lawmakers. Christian Hetrick for Observer

When state Democratic leaders passed a measure to hike the minimum wage to $15 per hour, they were eager to explain how it would help the state’s low-wage workers. What they didn’t talk about was how it would hurt the state’s already overburdened property tax payers.

But, the Asbury Park Press reports, as towns begin preparing their next budgets, officials will have to consider hiking taxes to cover the salary increases or cutting back services. State law raises the minimum wage to $10 in July and then $1 every January for the next five years, when it will reach $15.

That poses problems for towns, where a host of part-time or seasonal workers might now make $8 per hour, according to the report.

The problems are exacerbated by a 2 percent cap on property tax increases that has been in place since 2010, Michael Cerra, assistant executive director of the New Jersey League of Municipalities, told the Press. Towns are already facing problems since Gov. Phil Murphy, who has received strong political support from public worker unions, refused to extend a cap on arbitration awards for police and fire salaries. The cap was implemented under former Gov. Chris Christie and has been widely hailed as helping slow the upward climb in the state property tax burden—among the most onerous in the United States.

New Jersey is among the leaders in the country for outmigration, with more people moving out than moving in as they seek states that are more affordable.

Cerra said the minimum wage increase, along with other state mandates, is a “death by a thousand cuts” that put town budgets under pressure, according to the report.

Quote of the Day: “This is one of a series of cost drivers that have been put on local governments in recent years,” — Michael Cerra, the assistant executive director of the New Jersey League of Municipalities, on the plan to eventually hike the state minimum wage to $15 per hour.

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NJ Politics Digest: Minimum Wage Hike’s Impact on Municipal Budgets