What to Know
- New Jersey Gov. Phil Murphy unveiled his second budget Tuesday, calling for about $1 billion in increased spending
- The increased spending would be financed by higher income tax rates on wealthy residents and savings in public worker benefits
- Murphy presented the fiscal year 2020 budget during speech Tuesday before joint meeting of Democratic-led Assembly and Senate
New Jersey Gov. Phil Murphy unveiled his second budget Tuesday, calling for about $1 billion in increased spending that would be financed by higher income tax rates on wealthy residents and savings in public worker benefits.
The first-term Democrat presented the fiscal year 2020 budget in a roughly hour-long speech Tuesday before a joint meeting of the Democratic-led Assembly and Senate, casting the spending plan as fiscally responsible and fair.
His fellow Democrats have pre-emptively said they won't support higher taxes, and it's unclear how Murphy will navigate such a hurdle. He seemed to acknowledge the tension during his speech.
"I understand the budget I am proposing today will not be identical to the one I will ultimately sign. We will talk, we will negotiate, and we will compromise. That is as it should be. That is how our system works best," Murphy said.
Murphy's $38.6 billion proposal is roughly 3 percent higher than the current $37.4 billion budget, which expires July 1 and must be succeeded by a balanced plan under the state constitution.
Among the changes Murphy proposes are boosting income tax rates for those who make more than $1 million a year to 10.75 percent, up from 8.97 percent. If approved by lawmakers, that move would capture high-income earners left out of the tax hike on people making $5 million and above that Murphy and leaders agreed to last year.
The governor says the hike would generate about $450 million and would apply to about 18,000 residents with incomes from $1 million to $5 million.
He's also seeking what he calls a "corporate responsibility fee" of $150 per worker for large employers with more than 50 employees who use Medicaid for health care. He says the fee would incentivize employers to provide benefits.
Murphy's budget has about $1.1 billion in savings, mostly from lower public worker health benefit costs that have been agreed to by labor unions.
The savings are expected to come from shifting workers into cheaper health care plans, lowering costs related to out-of-network providers. It would also boot ineligible dependents from state plans, such as divorced spouses.
Murphy says the $1.1 billion in savings is a 16 percent reduction in costs year-over-year. About $200 million of the savings will come from state government staff reductions and other "departmental savings."
On the spending side, Murphy proposed increasing general fund support for New Jersey Transit from roughly $307 million to $407 million.
Murphy proposed increasing aid for education by $206 million, or roughly 3 percent. The former Goldman Sachs executive and Obama administration ambassador has said increased education aid takes pressure off local governments that levy the state's sky-high property taxes.
He's also proposing $201 million for a property tax relief program that benefits seniors and disabled residents by freezing their rates.
Murphy is also seeking to increase the state's surplus, which began the fiscal year at about $1 billion, to about $1.2 billion.