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Budget uncertainty likely to carry into weekend

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From left, Senate President Stephen Sweeney, Assembly Speaker Craig Coughlin and Gov. Phil Murphy.
From left, Senate President Stephen Sweeney, Assembly Speaker Craig Coughlin and Gov. Phil Murphy. - ()

The Democrat-controlled state Legislature has delivered Gov. Phil Murphy a budget he's vowed to veto, but there was broad uncertainty over when he might do so.

Lawmakers have until June 30 to reach a deal or the government shuts down. A bill aimed at keeping the state parks – whose surrounding communities would be among the hardest hit – hasn’t made it to the floor of the state Senate or Assembly as yet.

Once the Legislature passed its own version of the budget Thursday night, prominent figures and advocacy groups across the state took to social media, having one way or another that they disliked the budget.

New Jersey Working Families tweeted: “Reinstate the millionaires’ tax -- $765M lost, reverse the sales tax gimmick -- $546M lost, adopt combined reporting -- $100M lost, adopt carried interest loophole -- $100M lost.”

The combined reporting, according to New Jersey Policy Perspectives, is a tactic aimed at preventing companies that do business in the state from using loopholes to avoid taxation.

“If there’s no combined reporting then the CBT is toothless and it further incentivizes multinational corporations to move their money around to avoid paying taxes in New Jersey,” said NJPP spokesperson Louis De Paolo.

Murphy has decried the Legislature’s budget as one that’s ridden with short-term “gimmicks,” one and two-shot revenues and one that’s kept together with “toothpicks” and “band aids.” It lacked “sustainable revenues, the Governor added, and the CBT with its two-year sunset, isn’t sustainable.

NJPP President Gordon MacInnes called the Legislature’s spending plan a “patchwork budget.”

“Out of all the options on the table, the budget forgoes long-term, sustainable sources of revenue, and instead depends on a temporary increase in the corporate business tax,” MacInnes said. “There is danger in relying on this tax for the lion’s share of new revenue as, among major taxes, it is the most volatile source of state funding.”

Tom Bracken, CEO of the New Jersey Chamber of Commerce.
Tom Bracken, CEO of the New Jersey Chamber of Commerce. - ()

The New Jersey Chamber of Commerce was flat out opposed to the millionaire's tax and the CBT.

“Despite our objections and the evidence we presented to support our case, it is clear the state Legislature must find new sources of revenue for the 2019 budget,” Chamber President Tom Bracken said. “Unfortunately, that means either a CBT increase or a 'millionaire's tax' will be the funding source.”

New Jersey Business and Industry Association is opposed to any tax increase, including a push by Murphy to increase the sales tax rate up to 7 percent, up from 6.625 percent.

Murphy called the decision to lower the sales tax in the first place a gimmick by Christie, but the NJBIA said they were still opposed.

New Jersey’s current CBT rate is 9 percent, and Sweeney’s proposal raises the rate to 11.5 percent for companies that earn between $1 million and $25 million, and 13 percent for companies that earn over $25 million.

The state’s CBT rate would, if Murphy ends up approving, would be the highest in the nation.

“Any increase in any tax right now is not good for New Jersey,” said NJBIA CEO Michele Siekerka. “We’re at the brink of lack of affordability, and what we need to be doing is gathering a plan to address our structural deficits.”

Michele Siekerka, CEO, NJBIA.
Michele Siekerka, CEO, NJBIA. - ()

Those deficits, Siekerka suggested, include moving the state health care system from a platinum to gold-tier plan, put public workers on a 401K-style retirement plan rather than a defined pension, reworking the school funding formula and reducing property taxes.

Thursday night’s budget votes followed failed backroom budget talks. Murphy said the talks collapsed because Senate President Stephen Sweeney and Assembly Speaker Craig Coughlin, both Democrats, adhered to “alt-facts” for budget projections.

Sweeney responded that Murphy is looking more and more like former Gov. Chris Christie, a Republican.

“Anything and everything they could threaten they did,” Sweeney said. “You’ll never get any legislation done, your appointments are dead. That reminds me of someone else and [Murphy] likes to cite him on a regular basis.”

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Daniel J. Munoz

Daniel J. Munoz

Daniel Munoz covers politics and state government for NJBIZ. You can contact him at dmunoz@njbiz.com.

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Deborah Smarth June 23, 2018 3:12 pm

Small Business is the key to economic growth and stability. The NJ Small Business Development Centers network assists thousands of small businesses and entrepreneurs each year; and small businesses around the state know the power of technical assistance for their businesses to develop and grow. NJ's investment in such assistance should grow incrementally to facilitate new business starts, small businesses expansion/growth, job creation and retention, and access to financing to further promote economic development.
Deborah Smarth, Chief Operating Officer, NJ Small Business Development Centers network