Murphy threatens Democrats who refuse to send him the millionaires tax he wants

Posted Jun 19, 2019

Democratic Gov. Phil Murphy issued his strongest threat yet Wednesday to New Jersey’s Democratic-controlled state Legislature: Without tax increases, I’m prepared to slash spending items you want.

In a letter to lawmakers, Murphy warned that if they continue with their current plan to send him a state budget that lacks his proposal to increase income taxes on the state’s millionaires, or if they don’t agree to raise any other taxes, then he’ll consider line-item vetoes on the Legislature’s $38.7 billion proposed budget.

“So let me be clear, if this budget contains the revenue for your added spending, I will work with you,” Murphy wrote a day before the Legislature is set to vote on their budget.

“But if not, I will be forced to take corrective action,” the governor continued. “Tax fairness is an issue that will not go away on June 30.”

A state budget must be enacted by that date. Otherwise, Murphy could order a state government shutdown.

The words “tax fairness” have been synonymous with Murphy’s main demand from lawmakers: A tax increase on those who earn more than $1 million a year.

But Murphy appeared to leave the door open Wednesday to discussing other tax increases that could avert slashes to lawmakers’ pet projects.

“The millionaires tax is a very crucial issue but it’s broader than that,” the governor said at an unrelated event in Westfield. “The bigger issue is really on the revenue side. It’s fuzzy math, it’s voodoo math and it’s not sustainable math."

Murphy’s reference to “fuzzy math" refers to his administration differences with the Legislature over how much money the state will collect in business taxes.

“And so whether it’s the millionaires, whether it’s the corporate responsibility fee, whether it’s the gun fee we discussed earlier, (or) whether it’s the opioid surcharge, we’ve not be given something that has sustainable, real, certifiable revenues," Murphy continued.

While he may have signaled he’s willing to talk with lawmakers about revenue besides a millionaires tax, which state Senate President Stephen Sweeney and state Assembly Speaker Craig Coughlin have refused to agree to, it’s clear the amount of revenue the other taxes would bring would pale in comparison to the tax Murphy wants the most.

A millionaires tax — which would hike the income tax on families that earn more than $1 million a year in New Jersey — would add about $535 million to the budget.

An opioid surcharge, meanwhile, which would be a tax on opioid manufacturers, would bring in $25.5 million. A bump in the gun fees would add $1.4 million to the budget. And the corporate responsibility fee, which would charge $150 a head to some businesses that don’t offer health care and as a result their employees receive Medicaid, would amount to $30 million.

The combined total of the other taxes and fees Murphy rattled off amounts to nearly $57 million in additional revenue — which amounts to about $478 million less that he’d get if lawmakers agreed to a millionaires tax.

The Legislature is prepared to send Murphy a budget Thursday. And if Murphy slashes items, lawmakers would need votes from two-thirds of both the state Senate and Assembly to override him.

“If there are things that are important that he line-item vetoes out, we’ll have to talk to the leadership in the Assembly and our members and see what they want to do,” Sweeney, D-Gloucester, told NJ Advance Media on Wednesday.

“Anything’s possible,” Sweeney added.

“I don’t want to predict anything until I see what he does," the Senate president said, adding, “I think we gave him a good, solid budget. ... If he line-item vetoes things out, it’s just out of spite. Because the revenues are there.”

Sweeney was more forceful in his response to the governor in a letter of his own he sent Murphy later Wednesday.

“If you live up to your letter, we will have a budget in place well before the deadline and the Legislature will have time to evaluate any of your line-item vetos, in case we need to override them,” Sweeney wrote to Murphy.

Coughlin, meanwhile, stood by the budget they’re prepared to send the governor, calling it “fiscally responsible and sustainable.”

“It funds our shared Democratic priorities, provides property tax relief for our most vulnerable citizens, fulfills our debt obligations and provides more than $1.4 billion in surplus funding in the event of a downturn,” Coughlin, D-Middlesex, said in a statement. "We believe strongly that this is a fair, responsible budget and believe that the governor will agree once it reaches his desk.”

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