A Look at the Nine-Month State Budget Proposed By Governor Murphy
Governor Murphy presented a nine-month budget on August 25, 2020, for the abbreviated State Fiscal Year starting October 1, 2020. Relying on a mix of borrowing, tax increase, and budget cuts, the Governor’s proposal for the nine-month fiscal year proposes $32.4 billion in spending, with a proposed budget surplus of $2.2 billion. Coupled with the temporary three-month budget effective July 1 to September 30, 2020, total spending over the twelve-month period would total slightly more than $40 billion. The Governor’s Budget Proposal estimates that roughly $6.2 billion of funding is required to offset anticipated lost revenues from COVID-19. To make up for that shortfall, the Governor is proposing to borrow $4.0 billion as authorized by the “COVID-19 Emergency Bond Act.” The New Jersey Supreme Court recently upheld the Act as constitutionally permissible under the Emergency Exception of the Debt Limitation Clause. An additional $1.0 billion in tax increases and $1.2 billion in programmatic cuts are also proposed. The two main tax increases proposed include a tax of 10.75 percent on income over $1.0 million and an extension of the Corporate Business Tax surcharge of 2.5 percent. The Budget Proposal does maintain some programmatic spending at levels equal to that of the prior fiscal year and proposes new spending. For example, there are no cuts to...