NJ Politics Digest: Murphy Threatens Shutdown Over Millionaires’ Tax

The drama continues in Trenton. Gov. Phil Murphy said he'd be willing to veto the state budget, thereby shutting down New Jersey's government, if the budget doesn't contain a new tax on the state's highest earners.

New Jersey Governor Phil Murphy delivering the 2019 New Jersey State of the State address in the Assembly Chambers at the New Jersey State House in Trenton.
New Jersey Governor Phil Murphy delivering the 2019 New Jersey State of the State address in the Assembly Chambers at the New Jersey State House in Trenton. Michael Brochstein/SOPA Images/LightRocket via Getty Images

The drama continued in Trenton Thursday, with Gov. Phil Murphy saying he’d be willing to veto the state budget, shutting down New Jersey’s government, if that budget doesn’t contain a new tax on the state’s highest earners.

Murphy claims the new tax is needed to prevent the state from “stumbling” from one year to the next in fiscal distress. But the governor is seen as opposing a package of 27 bills that Senate President Steve Sweeney has introduced that would address the state’s fiscal problems and lower property taxes by, among other things, reducing the cost of public worker benefits. Murphy is a staunch ally of public workers’ unions.

Sweeney says his plan would save the state $17 billion over 30 years and enable the passage of a budget with no tax increases, according to a report by NJTV News. He argues that a millionaires’ tax, coupled with changes made by the Republican federal tax overhaul, would make New Jersey even more unaffordable for high earners and drive them out of the state, further deepening the state’s fiscal problems. This is a view similar to one presented by New York Gov. Andrew Cuomo, a Democrat who also opposes raising the millionaires’ tax in his state.

Murphy, who has offered taxpayers a one-year injection of funds for property tax relief if the millionaires’ tax is approved, says he’s opposed to “band-aid” fixes. He also said he was also opposed to making changes to the state’s under-funded pension system if it means shifting responsibility away from the state, according to NJTV News. Sweeney has proposed enrolling new and recent hires in a hybrid pension system that would cap the salary a state pension would cover and enroll employees in a 401K-like system similar to those most private workers depend on.

Sweeney has said he will put key elements of his plan before voters in a referendum if Murphy blocks them. In earlier years, the rhetoric by the governor and senate president might have been seen as staking out bargaining positions heading into budget negotiations, but the feud between Murphy and Sweeney appears to be far too antagonistic for mere negotiating tactics.

The state must adopt a budget by July 1 or face a government shutdown.

Quote of the Day: “Running commercials is not gonna change my position,” — Senate President Steve Sweeney, on commercials advocating for Gov. Phil Murphy’s proposal to raise taxes on millionaires.

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