Gov. Phil Murphy’s first three years in office have been a relentless quest to raise taxes, ignore massive debt and increase spending. If some hoped that the pandemic might prod him to be more prudent, that hope is now at the bottom of his Pandora’s Box of fiscal demons.
When Murphy took office New Jersey state government already imposed the nation’s biggest tax burden on its residents and businesses. The state already staggered under the nation’s biggest debt and most lavish promises made to government employees. His response? Increase state spending $2.6 billion his first two years.
Now, even though the state economy is sinking in a recession that is likely to be severe, Murphy proposes spending $1.6 billion more than last year’s bloated budget.
Worse, he plans to borrow $4 billion to “balance” his profligate spending, breaking a long-standing state ban on borrowing to fund general operations, thanks to a ruling by a compliant N.J. Supreme Court.
Murphy’s record $40.1 billion budget would be 16% more than the budget three years ago under predecessor Gov. Chris Christie — while inflation and Social Security payments have gone up less than 6%.
Yet for all that extra spending, the state’s debt and promised pension and retirement health care to its workers still is more than $200 billion.
Borrowing alone, of course, wouldn’t get Murphy all of the money he wants to spend, so there will be another round of new and increased taxes.
His tax on companies that was supposed to be temporary will become permanent. Taxes will go up on cigarettes, certain health policies, firearms and boats. And of course he’ll again seek a higher tax on incomes over $1 million.
The greatest harm from Murphy’s reckless finances won’t be to those paying the new taxes on top of New Jersey’s many other crushing levies. It will fall on those who are children today, who will have to pay off the loans that let politicians and their supporters splurge today — while also paying even more in taxes (at least those who didn’t or couldn’t escape to almost any other state).
The Legislature, which hasn’t even been a rubber stamp to Murphy’s self-imposed emergency rule during the pandemic, must insist on a modicum of money responsibility in this year’s budget. Its realistic projection of state revenue for the year is a good start.
Murphy has tried to justify borrowing to pay current expenses by estimating revenue losses of $5 billion to $10 billion.
But the nonpartisan Office of Legislative Services this week projected the state would extract about $37.8 billion in revenue this fiscal year, mainly from its residents and businesses.
That’s more than enough to cover a budget that sensibly prepares for the winding down of COVID-19, while setting aside a substantial reserve for the downturn just unfolding.
Unless the Legislature assumes the role of the responsible adult overseeing the state’s finances, New Jersey residents and businesses will be stuck with a serious economic illness that lasts far longer than the pandemic.