Months after a combative election that rattled his fellow Democrats and emboldened Republicans, Gov. Phil Murphy and his administration entered the next state budget cycle in New Jersey flush with cash, bolstered by a surge in tax revenue and a raft of federal aid in the wake of the coronavirus pandemic.
Murphy responded by unveiling a new state budget proposal Tuesday that features record spending but also programs he vowed would help make New Jersey both fairer and more affordable without hiking taxes. Democrats cheered repeatedly as the governor detailed the fiscal year 2023 spending blueprint during his sixth budget address.
“This is a fiscal plan we can build upon,” new state Senate President Nicholas Scutari, D-Union, said in a statement after Murphy’s speech.
Republicans, however, scoffed. They stayed largely silent as Democrats applauded during the address and said Murphy’s proposal represents many “missed opportunities” to deliver more direct tax relief and pay down debt without increasing spending.
Assembly Minority Leader John DiMaio, R-Warren, called the plan “less bad” than Murphy’s five previous budgets. But that, he noted, isn’t saying much.
The entire event was reflective of the recent mood in Trenton. It wasn’t just Murphy’s first speech at the Statehouse since the COVID-19 crisis began two years ago. It was also his first speech — and first budget plan — since a November election in which he won a second term by a closer-than-expected margin and Democrats kept control of the state Legislature, though Republicans gained seven seats.
In the four months since, Democrats have repeatedly promised to listen more closely to residents who are hurting and focus on pocket-book issues, while Republicans have become even more vocal in their criticism of the ruling party as another big election looms. Though Murphy can’t run for a third consecutive term, all 120 seats in the Legislature are on the ballot again in 2023.
Murphy, a progressive Democrat, has routinely said the last four years his policies are driven by a goal to make New Jersey “fairer and stronger.“ On Tuesday, he elongated that catchphrase, saying the new $48.9 billion budget proposal aims to make New Jersey “stronger, fairer, and, yes, more affordable for our families and seniors.”
“For whom are we making New Jersey more affordable?” Murphy asked in his speech. “To me, and in this budget, the answer is clear. It’s everyone looking for their opportunity.”
In all, Murphy’s proposal increases spending 5% — or $2.5 billion — over the current state budget.
A linchpin is a new program to expand property tax relief to nearly 1.8 million households. Homeowners making up to $250,000 would be eligible to receive an average $700 rebate in the first year, and renters making up to $100,000 would be eligible for a rebate up to $250 to help offset the cost of rent increases due to property taxes.
Murphy’s budget plan also proposes cutting a wide range of fees by a combined $60 million under a one-year fee holiday. In addition, it includes $305 million in federal aid to create a fund for affordable housing in New Jersey, a $662 million increase in school aid, and a full payment to the state’s troubled public-worker pension system for the second straight year.
The governor’s speech, meanwhile, was light on references to some of the progressive hallmarks he has previously championed, including gun control, the environment, and legal marijuana.
It’s now up to Murphy and the Democratic-controlled Legislature to negotiate a final budget before June 30. Top Democratic lawmakers praised the governor’s plans in a series of press releases.
Scutari, the new Senate president who will preside over his first budget negotiations, said the proposal “puts the focus on our shared priorities of making New Jersey more affordable, addressing the financial needs of working people, and expanding the state’s economy.”
Assembly Speaker Craig Coughlin, D-Middlesex, said he was “pleased” the plan aims to address affordability.
“Continuing commitments to sound fiscal policy and prudent financial management ensures we are putting people and families first,” Coughlin said.
Republicans, who have long criticized Murphy for being too tax-happy and not fiscally responsible, had a different take on how the state should use the mountain of cash it has amassed.
Assemblyman Hal Wirths, R-Sussex, said with $4.6 billion in extra revenue and $6 billion in federal pandemic relief, it’s “outrageous and almost a crime” some of those funds are not being used to replenish the state’s Unemployment Insurance fund. Employers have had to pay to restore the money that was depleted during the pandemic, when many New Jerseyans were out of work.
“This was a time to have fiscal reform, but we are still spending more money than we are taking in,” Wirths said at a Republican press conference after Murphy’s speech. “How many households do that? How many businesses do that? Not too many for too long.”
Republicans legislators have also introduced legislation they’ve named “Give it Back,” a tax credit plan would return $3 billion in unspent money to 4 million taxpayers. People would receive refundable credits of $1,000 when they file their tax returns this spring.
On Tuesday, they contrasted their plan to Murphy’s new tax relief program, which would serve 1.8 million people a year from now.
Senate Minority Leader Steven Oroho, R-Sussex, said it’s “great” for Democrats to talk about affordability.
“We want to give back the money, right now, immediately, so it can’t be pick-pocketed again,” Oroho said. “We are hoping the Democrats will listen to us.”
Sen. Declan O’Scanlon, R-Monmouth, agreed.
“It’s wonderful we are flush with cash, but the real question is: What are we going to do with it?” O’Scanlon said. “How can we make it sustainable? I would argue that the Republican plan, and the Republican projections, have been much closer to reality and more fiscally sustainable.”
DiMaio, the Assembly minority leader, noted how the average property tax bill of $9,200 consumes 10% of the median household income in New Jersey.
Murphy nodded to his critics in his speech.
“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.
He then quoted a famed 19th century Irish writer.
“To the playwright Oscar Wilde, these are the people who ‘know the price of everything and the value of nothing,’” Murphy said.
NJ Advance Media staff writers Derek Hall and Suzette Parmley contributed to this report.
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Brent Johnson may be reached at bjohnson@njadvancemedia.com. Follow him at @johnsb01.
Matt Arco may be reached at marco@njadvancemedia.com. Follow him on Twitter at @MatthewArco.
Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio.
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