Biggest spending plan in NJ history headed to budget committees


NJ Spotlight News

Gov. Phil Murphy at daily COVID-19 briefing June 22, 2021


State lawmakers are getting ready to send to Gov. Phil Murphy a budget that will hike spending to a historic high by adding more funding for tax relief and public-worker pensions on top of what the governor requested months ago.

That spending boom comes after the state’s fiscal outlook dramatically improved in recent months, thanks to an unexpected windfall of tax payments and the landing of another significant tranche of COVID-19 relief from the federal government.

After several days of largely behind-the-scenes negotiations, the first committee votes on a spending bill for the fiscal year that begins on July 1 are now scheduled to be held Tuesday.

While the full details and bill language had not been posted on the Legislature’s website Monday night, legislative leaders issued news releases earlier in the day that touted their efforts to insert into a budget proposal Murphy unveiled several months ago more funding for things like Homestead property-tax relief payments and tuition assistance grants.

The windfall has also put the state in a position to add more funding for public-worker pensions and to launch debt-relief efforts, pushing total spending up by at least several hundred million over what was already a record-high budget proposal from Murphy.

“Supported by strong state revenue collections, this budget enables us to build on and expand our state’s funding priorities in a fiscally sound manner,” said Speaker Assembly Speaker Craig Coughlin (D-Middlesex).

“It provides relief to those who need it, makes strategic investments to boost our economic recovery and sets aside billions of dollars to pay down higher-cost debt and avert future borrowing,” said Senate President Steve Sweeney (D-Gloucester).

For his part, Murphy, a first-term Democrat who faces reelection in November, stopped short of publicly endorsing the full spending bill when asked about the budget during a coronavirus media briefing on Monday afternoon.

But he did praise an agreement on funding tax-relief programs like Homestead announced earlier in the day. That will boost the size of the average Homestead benefit by at least $130, the legislative leaders said.

“Stay tuned,” Murphy told reporters during the briefing. “There are lots of moving parts.”

Plan meets Murphy’s ‘top budget priorities’

Later Monday, a senior administration official told NJ Spotlight News that the governor’s top budget priorities “were all met” in the legislative spending bill, as well as “a lot of good investments.”

However, Republicans faulted the work of their Democratic counterparts, including in the area of proposed tax relief. The unexpected tax payments have helped the state build up a massive, $10 billion budget surplus, and GOP lawmakers suggested too little will be going back to taxpayers under the Democrats’ budget plan.

“Despite the state receiving a $5 billion tax windfall in recent weeks, Democrats are proposing no significant new tax relief for New Jerseyans,” said Sen. Steve Oroho (R-Sussex).

As part of a budget agreement reached last year that is being funded this year, Murphy and lawmakers are establishing a new tax-rebate program that is being provided to more than New Jersey 750,000 families. Households earning up to $150,000 with at least one dependent child, and single parents with at least one dependent child, will be eligible to receive rebates this summer worth up to $500, according to details that have already been made public.

Boosting Homestead benefits

But the new budget will also increase the size of Homestead benefits for thousands of senior, disabled low and middle-income New Jersey homeowners by ending a longstanding practice of using outdated bills to calculate Homestead tax-relief benefits, according to Murphy and the legislative leaders. Using the outdated bills had eroded the effectiveness of the Homestead program since New Jersey’s average property tax bills have risen by more than 40% over the past 15 years.

Their agreement on tax relief also calls for the Legislature to endorse a further expansion of the Earned Income Tax Credit for low-wage workers that Murphy called for in his original budget proposal, including by allowing some seniors to qualify for refundable tax credits. The deal also calls for those between the ages of 18 and 21 to be eligible for the EITC and would further expand a tax credit the state offers for child and dependent care.

According to lawmakers’ own descriptions of their broader spending bill, the new budget will also increase the size of the state pension payment to near $7 billion. To do so, they said they are planning to add $505 million to a $6.4 billion contribution that Murphy had already budgeted for in his original fiscal year 2022 spending plan.

A separate fund for “debt defeasement” would also be established as part of the new budget, lawmakers said. That comes after the Murphy administration issued nearly $4 billion in debt last year with a signoff from lawmakers to help prop up the annual budget. The borrowing issue was intended to offset significant revenue losses the administration predicted would be triggered by the pandemic that have not materialized.

Among other items disclosed by lawmakers on Monday, the new budget would increase funding for tuition-assistance grants and for the Educational Opportunity Fund, which provides both personal support and financial aid to thousands of low-income students entering college throughout New Jersey.

Meanwhile, the legislative leaders also said they will also have some say in determining how the state will appropriate the more than $6 billion in COVID-19 relief New Jersey has received under the federal American Rescue Plan Act, including by funding investments in childcare, public-health infrastructure and school water and heating and air conditioning systems.

But lawmakers did not disclose on Monday how much spending was added to Murphy’s budget proposal at the last minute for their own legislative add-ons, which are often referred to a “Christmas-tree items” in Trenton.

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published this page in News and Politics 2021-06-22 03:34:34 -0700