Flush with cash, NJ budget eyes property tax relief

March 8, 2022 GMT
New Jersey Gov. Phil Murphy, wearing a mask with the Ukraine coat of arms, arrives for his budget address in Trenton, N.J., Tuesday, March 8, 2022. New Jersey Democratic Gov. Phil Murphy has proposed a $48.9 billion budget that boosts K-12 funding, makes a full public pension payment for the second straight year, redistributes nearly $1 billion in property tax relief and raises overall spending by about 5% over last year's plan. Murphy unveiled the proposal during a speech Tuesday in the Assembly chamber, the first time since 2020 and the COVID-19 outbreak. (AP Photo/Seth Wenig)
New Jersey Gov. Phil Murphy, wearing a mask with the Ukraine coat of arms, arrives for his budget address in Trenton, N.J., Tuesday, March 8, 2022. New Jersey Democratic Gov. Phil Murphy has proposed a $48.9 billion budget that boosts K-12 funding, makes a full public pension payment for the second straight year, redistributes nearly $1 billion in property tax relief and raises overall spending by about 5% over last year's plan. Murphy unveiled the proposal during a speech Tuesday in the Assembly chamber, the first time since 2020 and the COVID-19 outbreak. (AP Photo/Seth Wenig)
New Jersey Gov. Phil Murphy, wearing a mask with the Ukraine coat of arms, arrives for his budget address in Trenton, N.J., Tuesday, March 8, 2022. New Jersey Democratic Gov. Phil Murphy has proposed a $48.9 billion budget that boosts K-12 funding, makes a full public pension payment for the second straight year, redistributes nearly $1 billion in property tax relief and raises overall spending by about 5% over last year's plan. Murphy unveiled the proposal during a speech Tuesday in the Assembly chamber, the first time since 2020 and the COVID-19 outbreak. (AP Photo/Seth Wenig)
1 of 5
New Jersey Gov. Phil Murphy, wearing a mask with the Ukraine coat of arms, arrives for his budget address in Trenton, N.J., Tuesday, March 8, 2022. New Jersey Democratic Gov. Phil Murphy has proposed a $48.9 billion budget that boosts K-12 funding, makes a full public pension payment for the second straight year, redistributes nearly $1 billion in property tax relief and raises overall spending by about 5% over last year's plan. Murphy unveiled the proposal during a speech Tuesday in the Assembly chamber, the first time since 2020 and the COVID-19 outbreak. (AP Photo/Seth Wenig)
1 of 5
New Jersey Gov. Phil Murphy, wearing a mask with the Ukraine coat of arms, arrives for his budget address in Trenton, N.J., Tuesday, March 8, 2022. New Jersey Democratic Gov. Phil Murphy has proposed a $48.9 billion budget that boosts K-12 funding, makes a full public pension payment for the second straight year, redistributes nearly $1 billion in property tax relief and raises overall spending by about 5% over last year's plan. Murphy unveiled the proposal during a speech Tuesday in the Assembly chamber, the first time since 2020 and the COVID-19 outbreak. (AP Photo/Seth Wenig)

TRENTON, N.J. (AP) — New Jersey Democratic Gov. Phil Murphy proposed a $48.9 billion budget on Tuesday. The plan boosts K-12 funding by $650 million, makes a full public pension payment for the second straight year, redistributes nearly $1 billion in property tax relief and raises overall spending by about 5% over last year’s plan.

Murphy unveiled the proposal in a speech in the Assembly chamber — the first time since 2020 and the COVID-19 pandemic. An emotional high point during the speech came when Murphy, acknowledging Russia’s invasion of Ukraine, asked that a prayer be delivered by Metropolitan Antony, the leader of the New Jersey-based Ukrainian Orthodox Church of the United States.

Antony made a brief impromptu speech following the prayer, becoming emotional at times.

ADVERTISEMENT

“The world is rallying. The world sees the horror,” he said.

Antony’s speech led to a standing ovation.

The governor defended the progressive policies of his first term, including increasing government spending to raise educational aid and raising taxes on the wealthy. Anticipating Republican criticism that he’s grown state government too much, too quickly, he said making New Jersey affordable entails spending to help lower-income residents.

“To some, affordability means cutting the budget just so they can say they cut the budget — even if the end result is simply doing nothing at all to actually make life more affordable for our middle class, those working hard to get there, or our seniors,” Murphy said.

But he also indicated he’s heard complaints about the state’s high costs, particularly revolving around property taxes, which led him to announce an overhaul of the state’s property tax rebate program.

The budget hinges on New Jersey’s rosy finances.

Sales and income tax collections are up for the year and from climbing economic output, with the state’s gross domestic product rate outpacing the nation’s and neighboring states, according to the state treasurer’s office and federal data.

Murphy, a former Goldman Sachs executive, has pitched himself to voters as the person to get the state’s financial house in order after two terms of Republican Chris Christie. Murphy has prioritized making good on the state’s public pension payments, which for the second straight year would amount to a roughly $6.9 billion payment. He’s also nearly all the way to fully funding K-12 education according to the state formula that Christie did not abide by. His office estimates that full funding could be achieved in two years.

He’s also grown the size of the state budget, which is up more than $14 billion from the plan enacted by Christie during his final year in office.

ADVERTISEMENT

While the latest proposal hikes no new taxes, Murphy and the Democrat-led Legislature increased income taxes on people making over $1 million year as well as on businesses earlier in his first term.

Republicans, who are in the minority, called on the governor to use the more than $4 billion in surplus revenue collections to give $1,000 tax credits to 4 million residents.

“It’s black and white that people are overtaxed,” said GOP Assembly member Hal Wirths after the speech.

Despite those concerns, Murphy’s stewardship has appealed in part to one credit rating agency, Moody’s, which upgraded the state’s rating and cited “continuing trends of strong revenue and liquidity and its steps to more aggressively address liability burdens.”

Democratic Assembly Speaker Craig Coughlin and Senate President Nicholas Scutari praised the speech and the governor’s proposals, but budgets are not typically adopted as written and are typically subject to negotiation.

Murphy touched briefly on COVID-19, saying New Jersey is “getting back to normal.”

The state has allocated about half of the $6.2 billion in federal aid it’s received. It’s still unclear how the rest of the funding will be allocated, details that are expected in the coming months.

Murphy promised no new taxes in his second term, which began in January. He’s also spotlighted affordability as a top issue — augmenting his longtime slogan about making New Jersey stronger and fairer to say he wants to make it “stronger, fairer, more affordable.”

Part of that, Murphy said, is tackling the state’s sky-high property taxes, which average about $9,300 a year.

He proposed overhauling a property tax rebate program to allow for homeowners making up to $250,000 to get a credit toward their property taxes of up to $700 in the fiscal year beginning July 1.

For the first time, he also wants to include renters. Those making up to $100,000 would get rebate checks — since they don’t pay property taxes directly — of up to $250.

Overall, the governor’s proposal could benefit 1.8 million residents, up from the 470,000 who currently get the property tax assistance.

His budget also proposes a one-year fee waiver for marriage licenses and for renewals of certain health care licenses. Residents could get into state parks fee-free under his plan.

The budget sets aside some $9.92 billion for K-12 aid, up from $9.27 billion and about $2 billion more than where funding stood shortly before Murphy took over as governor.

The spending plan would keep New Jersey Transit fares flat, meaning no hike for a fifth straight year.

The state constitution requires a balanced budget to be enacted annually, with a deadline of June 30. Lawmakers will have a say over the next few months as they conduct hearings and decide what they’ll keep and what they’ll jettison from the governor’s proposal.

Murphy’s proposal also calls for maintaining a $4.2 billion surplus and putting $1.3 billion into a fund for the current fiscal year to pay down debt.