New Jersey’s Democratic government creeps toward shutdown

June 28, 2018
New Jersey Gov. Phil Murphy, pointing at center left, meets with members of his Cabinet to review state government shutdown procedures ahead of Saturday's deadline to enact a balanced budget, Thursday, June 28, 2018, in Trenton, N.J. Murphy and the Democrat-led Legislature are clashing over how much to raise taxes to pay for a bigger pension payment, a higher transit subsidy and a boost to school aid. (AP Photo/Mike Catalini)

TRENTON, N.J. (AP) — New Jersey’s Democrat-led state government inched closer to a shutdown Thursday as Gov. Phil Murphy reviewed plans to shutter public offices with his Cabinet, and a standoff with lawmakers over how much to raise taxes continued to smolder.

The budget clash also has begun to capture a broader audience, with former Vice President Al Gore, who campaigned for Murphy in last year’s election, and comedian Chelsea Handler tweeting that legislators should stand with the Democratic governor and support higher taxes on the wealthy.

“Under the strong leadership of @GovMurphy, New Jersey is primed to become one of America’s biggest turnaround stories,” said Gore, a Democrat.

New Jersey is two days — midnight Saturday — from a deadline to enact a balanced state budget, without which state parks, public beaches and government offices would face a shutdown.

Murphy on Thursday convened his Cabinet in Trenton and said he reviewed scenarios, including a shutdown, with them. He also held a news conference at a Trenton school and said he was willing to compromise, though he shot down a recent counterproposal from lawmakers.

Negotiations between Murphy and Democratic Assembly Speaker Craig Coughlin and Senate President Steve Sweeney have continued without any deal since legislators sent the freshman governor, a former Wall Street banker, a $36.5 billion budget proposal.

The issue is taxes.

To pay for more school aid, a higher transit subsidy and a bigger pension payment, Murphy wants a hike on income taxes for people earning more than $1 million, from 8.97 percent to 10.75 percent. He also recently offered phasing in over two years a hike in the sales tax from 6.625 percent to 7 percent, as well as increasing business taxes, as long as the rate stays below the highest-in-the-nation levy of 12 percent.

The budget that lawmakers sent Murphy has a two-year tiered hike in business taxes, from 9 percent to 11.5 percent on firms making from $1 million to $25 million, and to 13 percent on businesses making more than $25 million.

Sweeney on Wednesday said he would extend that to four years to satisfy Murphy’s call for “sustainable” revenue, along with levying the sales tax on rental properties, mostly at the shore, and boosting the real estate transfer tax from 1 percent to 2 percent.

Murphy doused the rental-property tax hike with cold water on Thursday.

“I’m not, for example open to giving millionaires another free pass so we can tax a family’s long-awaited beach vacation at the Jersey shore,” he said. But he quickly added that he wants to work with lawmakers.

“I’m willing to compromise. That’s an important point,” he said.

Despite the standoff, Murphy and lawmakers are talking.

A meeting including Murphy, Sweeney and Coughlin ended after roughly two hours, with Coughlin saying another one is planned for Friday morning.

Murphy, who brought Gore to New Jersey to campaign last year, said he didn’t know that ex-President Bill Clinton’s former No. 2 would be tweeting about New Jersey’s budget.

If New Jersey’s government does shutter this year, it would be the second straight year that lawmakers failed to keep government open. The big difference between last year and this year, though, was Republican Chris Christie sat where Murphy is now. That fight centered in large part on Christie’s insistence that the state’s biggest health insurer help pay for opioid addiction treatment.

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