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Murphy warns boosted school aid plan rests on new revenues

June 20, 2018

TRENTON, N.J. (AP) — New Jersey Gov. Phil Murphy on Wednesday warned that a plan worked out with lawmakers to boost school aid hinges on a budget deal that has “sustainable” revenues, ratcheting up rhetoric just a day before fellow Democrats are set to vote on their own spending plan.

Murphy, a Democrat, spoke at the Department of Education in Trenton on Wednesday alongside Education Commissioner Lamont Repollet, a day before the Democrat-led Legislature is expecting to vote on a $36.5 billion spending plan that includes higher education spending, financed in part by a hike in business taxes.

The freshman governor and former Wall Street executive is navigating his first budget since he took over from Republican Chris Christie this year and so far has encountered resistance from fellow Democrats.

Murphy and Senate President Steve Sweeney and Assembly Speaker Craig Coughlin largely agree on the spending side of the ledger, but they splinter when it comes to revenues.

School funding is also a hot-button issue, with Sweeney having warned earlier he would shut down state government if a plan to boost aid isn’t agreed to.

On the table is a plan that boosts Murphy’s school proposal by about $65 million to $348 million for K-12 education. Murphy had originally called for a roughly $284 million increase, or 3.5 percent above where Christie funded schools.

He said Wednesday that he worked with lawmakers on the new, “modernized” plan, but wouldn’t back it if revenues don’t accompany it to his desk.

“Until we have an agreement on sound and sustainable revenues we cannot have an agreement on school funding,” he said. “It’s school funding. We got the school part reasonably well machined. It’s the funding part (that’s) the ultimate half a loaf.”

Sweeney disputed that the school funding plan was contingent on a revenue deal, saying he was led to believe the governor backed the plan.

“It’s disappointing that the governor has decided to use the school children of New Jersey as a bargaining chip because he’s not getting all the tax increases he wants,” spokesman Richard McGrath said.

Murphy spokesman Dan Bryan said the governor made it clear “every step of the way” that a deal rested on “consistent, sustainable” revenue.

The other sticking point is tax revenue. Murphy wants to increase taxes by roughly $1.6 billion, mostly by raising rates on incomes over $1 million to 10.75 percent from 8.97 percent and increasing the sales tax to 7 percent from 6.625 percent.

Lawmakers instead advanced a budget that finances new spending in part by raising businesses taxes. Their plan calls for increasing business taxes on firms making from $1 million to $25 million to 11.5 percent from 9 percent. The plan would also raise business taxes on companies making more than $25 million to 13 percent from 9 percent. That would make New Jersey the state with the highest business tax, beating out Iowa at 12 percent. Though the provision sunsets in two years.

Coughlin said he disagrees with the governor.

“We are providing him with a stable source of funding and we believe he should sign the bill,” he said.

Murphy says that’s not workable because the revenue growth isn’t “sustainable.” Lawmakers counter that the two-year window gives Murphy time to solve the state’s deeper revenue issues.

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