Governor Phil Murphy delivered his first budget address to the New Jersey State Legislature on Tuesday, March 13th. The Governor’s proposed Fiscal Year (FY) 2019 Budget totals $37.4 billion, which is a $2.7 billion increase from the $34.7 billion spending plan enacted in Fiscal Year 2018.
The Governor stated that the proposed FY 2019 Budget is “realistic and responsible,” affirms New Jersey’s values, and will begin the process of returning New Jersey to being a “good value for good money.” To accomplish this, Governor Murphy is proposing to:
- Increase public school spending by $341 million in FY 2019 with the goal of reaching full funding in four years;
- Invest an additional $83 million in pre-K this year and start a four-year expansion of a statewide program;
- Make community college tuition free for all in three years by investing an additional $50 million this fiscal year;
- Add 3,500 new Tuition Aid Grant awards;
- Triple funding for New Jersey Transit with an additional $242 million in investment;
- Increase the Earned Income Tax Credit from 35 percent to 40 percent over three years;
- Provide $3.2 billion in payments to the state pension system;
- Increase the minimum wage to $11 per hour for state employees;
- Raise the state property tax deduction to $15,000; and
- Create a new Child and Dependent Care Tax Credit for middle-class and working families.
To fund these initiatives, the Governor’s budget proposal anticipates approximately $2 billion in new revenues. The Governor is primarily proposing to increase the sales tax to 7 percent, increase the annual tax rate on income of over $1 million, close the carried-interest loophole, implement a combined reporting requirement, and increase the tax on tobacco products. These tax increases and changes are estimated to generate roughly $1.7 billion. The remaining $300 million in new revenue comes from anticipated growth and new income sources such as marijuana legalization and taxes on ride-sharing and home-sharing services.
The Governor also spoke on other policy issues that he challenged the Legislature to address in the coming year. These include:
- Creating a clean energy economy;
- Raising the minimum wage on a stable and predictable path to $15 an hour;
- Enacting a paid sick leave law for all workers;
- Legalizing and taxing marijuana for persons over age 21;
- Addressing gun violence through the creation of a Gun Violence Research Center;
- Reforming the State’s tax incentive programs; and
- Appointing a “Shared Services Czar” to encourage municipalities to pursue shared services.
The Legislature will begin the process of evaluating the Governor’s proposal over the coming months. The State Budget must be enacted by June 30th. The full text of the Governor’s Budget Message can be found here and his Budget in Brief can be accessed here.