New Jersey finally has a budget for the next fiscal year, with Governor Murphy signing legislation approved by the legislature this week, after it was rushed through with little time for review.
Democrat leadership touts the budget as providing tax relief, so of course the plan actually fails to cut taxes, exposes businesses to a massive tax increase, and costs a record $50.6 billion.
Senator Paul Sarlo said the bill “provides the largest tax credit, tax cut for property taxpayers in the history of New Jersey,” yet New Jersey’s income tax rate will be unchanged, it will not be indexed for inflation, its corporate income tax will remain the highest top rate in the country.
The so-called tax relief is actually a program of direct payments to property owners and renters to compensate for New Jersey’s high property taxes – the highest burden in the nation. New Jersey property taxes are so high largely because the teachers’ union runs the show.
While property taxpayers are more than deserving of relief. The folks in charge clearly do not want to give them permanent reductions in tax burdens which might necessitate cost reductions in government. New Jersey’s property tax cap has not offered enough relief, and the original plan to keep property taxes low by implementing an income tax has failed.
Temporary payouts are not tax cuts. Democrats completely ignored an alternative tax relief plan proposed by Republicans. Making matters worse, legislators have done nothing to head off a massive tax increase that looms for businesses.
The elephant in the room all budget season was that New Jersey businesses would see a big, $300 million, increase in unemployment insurance payroll taxes if the trust fund was not replenished.
The good news is that the state has a nearly $11 billion budget surplus, with federal relief money lying around. Yet, shockingly, the budget plan does not use these funds to replenish unemployment, which was depleted due to the pandemic. Individual bipartisan legislation that would address the problem also has not been sent to the Governor.
At least 31 states have uses CARES Act or ARPA funds to replenish unemployment (Tax Foundation).
Unless this situation changes, Jersey businesses – who face the worst business climate in the country – will have to pay even more.
Legislators did use the surplus to put aside $6.3 billion in reserves, and run up total spending by another 9% year-to-year. The state budget has now grown by an inconceivable 46% under Governor Murphy (Save Jersey). There remains around $1 billion in federal pandemic relief yet to be appropriated.
Legislators had fun with pet projects as well, reports NJ Spotlight: “Among this year’s add-ons are $3 million in funding for a skating rink and rec center in East Brunswick, $7.5 million for a park in Newark and $10 million for “parks and trails” in Camden County, according to budget documents.”
The rushed process meant legislators, especially Republicans who are in the minority, had little time to process the budget plan before votes. Senator Declan O’Scanlon, a Taxpayer Protection Pledge signer, slammed the closed-door charade, saying, “Nobody voting on it has had a chance to read the thing.”
During his first term, Governor Murphy pushed tax hikes year after year, adding over $1 billion to the burdens paid by beleaguered New Jersey taxpayers. Now, after a reelection scare, the blatant tax hikes have cooled, but taxpayers are still being looted.
New Jersey government was swimming in more money than they knew what to do with, and not only did tax cuts not make the list, avoiding an unnecessary tax hike couldn’t even make the cut. This budget is a slap in the face to the most over-taxed taxpayers and businesses in America. They continue to get tired of the abuse and leave the state in droves, setting up for an ugly scenario when the federal bailouts stop coming, and the economy hits a recession.