Governor Murphy presented his proposed Fiscal Year (FY) 2020 Budget to a joint session of the New Jersey Legislature on March 5, 2019. His spending plan for the upcoming fiscal year totals $38.6 billion, which is a $1.3 billion increase from last year’s appropriations bill.
The Governor’s budget message continued his theme of a “fairer and stronger economy” to make the middle class more secure. He highlighted the recent enactment of a $15 minimum wage, expansion of paid family leave, and the implementation of the state’s paid sick leave law. The Governor also continued his call for greater K-12 education funding and making community college tuition free.
The Governor’s proposal for FY 2020, which he described as a “blueprint for the middle class,” is built upon four pillars:
- Realizing sustainable savings;
- Stabilizing revenues and increasing creditworthiness;
- Maintaining and growing investment in education, infrastructure, and innovation; and
- Addressing affordability.
To accomplish these goals, the Governor proposed:
- Achieving $1.1 billion in savings from public employee health benefit reforms and other departmental savings identified by the Treasury;
- Increasing the State’s surplus to $1.2 billion;
- Funding the State’s pension system at $3.8 billion;
- Reducing the diversion of funds from dedicated sources like the Affordable Housing Trust Fund and the Clean Energy Program;
- Increasing funding for K-12 education, increasing the eligibility threshold for free community college tuition, and providing a new funding formula and $20 million in additional aid for the State’s colleges and universities;
- Rebuilding capacity and staffing at NJ Transit with no fare hikes for FY 2020; and
- Increasing the thresholds for the Earned Income Tax Credit and the Homestead Property Tax Rebate Program.
The Murphy Administration’s spending plan does call for two new taxes. The first is a tax rate of 10.75 percent on all income above $1 million. Currently, only income above $5 million is taxed at the 10.75 percent rate. The second new tax is a corporate responsibility tax on businesses that do not provide health insurance to their employees and have 50 or more employees on Medicaid. These businesses would be assessed a tax of $150 for each employee that receives Medicaid assistance.
Lastly, the Governor spoke on two reoccurring topics; economic incentives and marijuana legalization. Governor Murphy asked the Legislature to work with him on a new suite of economic incentives that are strategically deployed to drive the innovation economy. He also echoed his call for marijuana legalization and noted this was an outstanding issue from last year he wants to get accomplished. The Governor’s proposed budget includes $60 million in tax revenues from the sale of recreational marijuana.
Now that the Legislature has received the Governor’s budget, it will begin the months-long process of crafting an appropriations bill. The Senate and Assembly Budget Committees will hold public hearings and take testimony from each department and major state agency between now and June. A budget must be signed into law by June 30, 2019, or else the state government will shut down until a budget is enacted.