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Governor of New Jersey Phil Murphy
and state legislators have reached a budget agreement hours before their midnight deadline, avoiding a government shutdown with an agreement that will increase taxes on multimillionaires and state-owned businesses.
Saturday's case marks the end of a stalemate took office in January, and its own party's legislators on how to fund the state budget for the next fiscal year budget, which starts on Sunday. The legislature must vote on the $ 37.4 billion budget Sunday morning, but the governor said he would not close the state government since an agreement was reached. The budget represents an increase in expenses of 4.2% during the fiscal year that ended Saturday.
"Let's be clear: there will be no closure," Murphy said at a joint press conference Saturday night. "Parks and beaches are open."
Under the agreement, New Jersey's highest tax rate will rise to 10.75% on taxfilers earning $ 5 million and up, up 8.97%. Mr. Murphy said the tax is expected to generate additional revenue of $ 280 million annually
The governor and legislators also agreed to impose a four-year surtax on businesses that earn more than $ 1 million annually. dollars. These companies would see their income tax rate go from 9% to 11.5% for the next two years, before dropping to 10.5% in the next two years, Murphy said. The surtax is expected to raise $ 425 million for the fiscal year that begins Sunday.
The agreement does not include an increase in sales tax, which Mr. Murphy said was necessary – as well as a millionaire tax – to establish "sustainable". , "recurring" revenue streams for the state budget. On Saturday, Murphy said the increase in sales tax was no longer necessary due to a June Supreme Court ruling allowing states to tax online sales. , with the recent repatriation of money from abroad.
The agreement marks the end of months of disagreement between the new governor of New Jersey, a former Goldman Sachs executive who had not held a previously elected office, and the more seasoned legislators who run the Democratic Senate. Mr. Murphy met the harsh reality of Trenton's policy shortly after taking office when the Senate Speaker
Steve Sweeney,
a democrat who has already voted in favor of the tax of a millionaire, then declared that he opposed it.
million. Sweeney said that he changed his mind about the millionaire tax because of the recently passed federal-tax law, which caps previously-unlimited annual and local tax deductions at $ 10,000 for individual and married depositors. According to Mr. Sweeney, the increase in income tax imposed on millionaires would take the rich out of the state, and he wanted to increase corporate taxes instead.
The opposition of the Senate Speaker left Mr. Murphy in a difficult position. on a tax of a millionaire and needed to raise about $ 774 million to help pay for public schools, staff pensions, NJ Transit and other priorities.
After weeks of negotiations, Mr. Sweeney at 9.95% for tax filers who earn more than $ 5 million. Mr. Murphy called the offer "symbolic thinking" that would raise "far from what is needed to put us in balance this year, let alone position for the future".
On Saturday, however, Mr. Murphy stated that the 10.75% income tax rate for people earning more than $ 5 million represented a "significant increase" in what Mr. Sweeney had offered the day before.
"This is not a win for all of us individually, it's a win for families of middle-class workers," said Murphy.
Sweeney also got the governor's support for a bill that would reorganize the way the state distributes funds to public schools.
"I appreciate the compromise," said Mr. Sweeney at the press conference Saturday. "In the end, we have a budget that will repair our schools and advance our state."
Michele Siekerka, President of the New Jersey Business & Industry Association, said she feared that Saturday's "Balance" Agreement
"Increasing the already high cost of doing business in New Jersey will jeopardize efforts to create jobs and grow the economy," she added. . Siekerka said in a statement.
million. Murphy said the four-year surtax would allow the state to fend for itself until economic growth generates more revenue.
"This economy was flat like a pancake," he said. "We need time to get there, we can not do it overnight."
Write to Kate King at [email protected]
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