The state’s 2019 budget spelled an “opportunity lost” because of its lack of long-term, sustainable revenue and its reliance on “one-shot gimmicks,” according to a Monday report by the advocacy group New Jersey Policy Perspective.
NJPP’s Monday report, “Opportunity Lost: Consequences and Shortcomings of the Fiscal Year 2019 Budget,” said that the state’s budget does not have enough long-term sources of revenue needed to sustain “new investments” sought by Gov. Phil Murphy, while meeting existing obligations to pension and debt service.
Those investments, the report says, include tuition-free community college, funding towards New Jersey Transit, expanded Pre-K and the Homestead rebate.
"New Jersey's inability to maintain and invest in its most vital assets hinges on an unfair tax code that favors the wealthy," the report’s author, NJPP Senior Policy Analyst Sheila Reynertson, said in a prepared statement.
Lawmakers and Murphy approved $1.5 billion in next taxes and of that amount, the Monday report points to four sources of sustainable revenue.
That includes $280 million through a 10.75 percent tax rate on earners above $5 million, $188 million on the sales tax for online purchases, $120 million on the sales tax for modern goods and services, and $110 million from combined reporting, which is a measure aimed at preventing businesses from moving their money out of state to avoid the corporate business tax.
Among one-time cash infusions are $200 million from a tax amnesty initiative. The report was critical of the four-year increase to the corporate business tax for businesses earning over $1 million - it will increase by 2.5 percent for two years, then 1.5 percent for another two years, and then sunset.
NJPP’s report called the four-year lifespan of the tax increase a “fatal flaw” that would open “another large hole” in the state budget.
The report also criticized so-called “sin” taxes on e-cigarettes and sports betting, saying the revenue would amount in the millions and hardly make a dent in the state’s budget.
NJPP’s report suggested that lawmakers should restore the estate tax to a $1 million threshold and modernize the sales tax to include high-end services.
The report also suggested the state should reign in on its corporate tax subsidy program and repeal the Chris Christie-era 2011 business tax breaks.
NJPP also proposed two measures back by Murphy during the 2019 budget talks: a “millionaire’s tax” on earners above $1 million, and a bump of the sales tax from 6.625 percent up to 7 percent.