N.J. Budget Unsustainable Without Millionaire's Tax, Murphy Says

(Bloomberg) -- New Jersey Governor Phil Murphy said a $38.7 billion budget approved by lawmakers is unsustainable without his millionaire’s tax.

Asked if he’d veto their spending plan or risk a government shutdown if a budget isn’t set by the July 1 fiscal-year deadline, Murphy stuck to his line of recent weeks: “All options are on the table.” Last year, New Jersey averted a shutdown when Murphy and legislative leaders agreed to a higher income-tax rate on those making in excess of $5 million rather than $1 million.

“We’re not proposing a tax increase on any one of the almost 9 million New Jerseyans with annual incomes of less than $1 million,” Murphy, a Democrat, said at a Trenton news conference. “Just a couple of cents on the dollar on the 19,000 who make more than $1 million a year and who will continue to make out just fine under President Trump’s tax law.”

The Democratic-led Assembly and Senate, in their June 20 vote, committed to spending $100 million more than Murphy proposed in March. The governor said the legislature’s spending plan is based on a revenue projection he wouldn’t feel confident certifying, as it was rosier than those from his administration and the non-partisan legislative services office.

Lawmakers also omitted the millionaire’s tax, which Murphy estimated would raise more than $500 million, and a $317 million payment to the state’s rainy-day fund.

State Treasurer Elizabeth Muoio said the lack of an emergency cushion would leave the state in a risky position during any economic recession. The account’s decade-plus zero balance was among the factors that led rating companies to downgrade New Jersey 11 times, leaving it with the second-worst credit among U.S. governments, behind Illinois.

“We’re serious about restoring our creditworthiness,” Murphy said.

To contact the reporter on this story: Elise Young in Trenton at eyoung30@bloomberg.net

To contact the editors responsible for this story: Flynn McRoberts at fmcroberts1@bloomberg.net, Michael B. Marois

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