Listening to Gov. Phil Murphy’s budget address last Tuesday, I was reminded of Yogi Berra’s most immortal Yogi-ism because it truly felt like “déjà vu all over again.”
For the third year in a row, the governor was unveiling a budget that proposed more spending and more taxes – and made no hard choices to address what truly ails our great state.
State tax revenue is up 6% from last year, which means New Jersey is likely to carry an even larger surplus than expected into the new fiscal year that starts July 1. Despite this, the Murphy administration is proposing a record $41 billion state budget that increases spending by 5.7% and relies on more tax increases to pay for it all.
It’s a tax-and-spend pattern that gets worse every year. The governor’s third budget proposal is 17.9% higher than the FY 2018 budget signed by his predecessor. Once again see a misplaced and unnecessary focus on raising taxes to raise more revenue.
All this begs the question: If the state needs to keep raising taxes during good economic times, how does it intend to sustain this level of spending when the inevitable economic downturn occurs?
The answer is: Continue to prey on New Jersey’s overburdened businesses and middle-class residents.
New Jersey businesses are being strangled by one of the nation’s highest tax burdens and a seemingly endless stream of costly workplace mandates and regulations. We have the region’s highest corporate tax, state sales tax, property taxes and top income tax rate. Recent overly burdensome mandates include a rising $15 minimum wage for entry-level workers, paid sick leave, expanded family leave and severance pay — all of which have added to the cost of doing business.
And, as if this wasn’t enough, we are facing pending legislative proposals that would affect employers’ flexibility in workweek scheduling and the hiring of independent contractors.
Now the Murphy administration’s budget proposal seeks to raise more tax revenue by extending New Jersey’s 10.75% top income tax rate to all income over $1 million, instead of the current threshold of $5 million. This would not only penalize more individual taxpayers, it would also hurt owners who pay taxes on their small businesses through their personal returns.
Federal data shows New Jersey has experienced a net loss of $30.1 billion in adjusted gross income over a 14-year period. Broadening the base for New Jersey’s top gross income tax rate — the second highest in the nation and highest in our region — will do nothing to reverse this trend. And it will not bring about meaningful property tax relief to the middle class, as has been suggested.
To his credit, Gov. Murphy did find some health benefits savings in his budget, and he stayed away from a proposal by Senate President Steve Sweeney to keep New Jersey’s corporate business tax as the highest in the nation. But New Jersey needs more fiscal discipline and comprehensive structural reforms to fix our affordability crisis and make the state regionally competitive once again.
This means our policymakers must shift from their “tax-first” approach to a “fix it first” approach and embark on a comprehensive reform agenda, which includes reducing the overall cost of the state’s public pension and benefits system. Our message this budget season is #FixItFirst, as we continue to bring data to the forefront on how and why this is where New Jersey’s priority must be today.
We hope that during this budget season, Gov. Murphy and the Legislature can work together on a comprehensive strategy that addresses our unsustainable obligations and gives our state the opportunity to grow our economy through responsible, sound investment. We stand ready to assist.
Michele N. Siekerka, of Robbinsville, is president and CEO of the New Jersey Business & Industry Association.