On February 25, Governor Murphy delivered the FY2021 budget address to a joint session of the Legislature. The $40.85 billion state budget consists of three general themes: boosting funding for public schools, stabilizing property taxes and tax fairness.
In the address, Governor Murphy proposed extending the personal income tax rate – otherwise known as the “millionaire’s tax” - on those whose incomes fall between $1 and $5 million annually from 8.97 percent to 10.75 percent. It is anticipated that this tax increase, should it receive legislative approval, would add $494 million in FY2021 revenue.
Similar to last year, the Governor proposed a tiered version of the Corporate Responsibility Fee for private employers receiving state Medicaid benefits. The fee applies to both employees and dependents, and is set at $325 for employers with 50-250 employees covered by Medicaid, $525 for 250-500 covered employees, and $725 for employers with more than 500 covered employees. Additionally, the Governor has called for a tax on opioid manufacturers and distributors generating $20 million in FY2021.
As for savings, the Governor announced this budget includes nearly $400 million in departmental cuts and approximately $174 million in proposed health benefits savings, all of which the CCSNJ was pleased to hear.
Governor Murphy also spent time during the address discussing an additional $336.5 million for the K-12 education formula aid, his dedication to fixing New Jersey Transit’s structural and operational issues, and funding for the Governor’s new Office of Health Care Affordability and Transparency. He also noted that he plans to make a $4.6 billion pension payment – the largest in the state’s history – and announced the creation of the Grants Management Office to help county and local governments bring home more federal grant dollars.
At the end of his remarks, the Governor broached the topic of tax incentives for the state. Calling the previous tax incentive programs – the Grow New Jersey and the Economic Redevelopment and Growth (ERG) Programs – both “failed incentive systems,” Governor Murphy stated that he was committed to identifying new incentive models while not wanting to “relive the mistakes of the past.” The CCSNJ remains optimistic that a solution to the tax incentive debate can be identified – one that drives economic development and job growth to New Jersey while putting additional safeguards in place for abuse and mismanagement.
CCSNJ President & CEO, Christina M. Renna released the following statement regarding Governor Murphy’s proposed FY2021 Budget:
“The FY2021 budget address was more of the same from Governor Phil Murphy: proposed tax increases that will only make New Jersey increasingly less competitive. Regardless of what the Governor stated, the outmigration of wealth is real, as is the outmigration of college students who cannot afford to live here upon graduation. If we want to keep our educated future workforce in New Jersey, this is not the proper path forward. The only solution the Governor offered is a renewed call for a millionaire’s tax, which directly impacts residents and small businesses alike, instead of looking to address the now-defunct tax incentives programs that could bring jobs to and keep businesses in New Jersey.”
The CCSNJ looks forward to weighing in during the State Budget process over the next several months.
To provide us with feedback or questions on the proposed FY2021 state budget, email Hilary Beckett, Manager, Government Affairs, at firstname.lastname@example.org