TRENTON, N.J. — New Jersey Gov. Phil Murphy’s administration on Tuesday made the case to skeptical legislators that nearly $1.6 billion in new taxes is necessary to take the state’s economy off “life support.”
Acting Treasurer Elizabeth Muoio testified before the Democratic-led Senate Budget Committee as part of the administration’s annual briefing as lawmakers approach the June 30 deadline to enact a new fiscal year spending plan.
She’s expected to brief the Democratic-led Assembly budget panel on Wednesday.
Murphy is proposing a $37.4 billion budget that includes raising income taxes on millionaires, a sales tax hike and business tax changes aimed at generating nearly $1.6 billion to fund pension obligations, school aid and other priorities.
She argued in favor of the Democratic governor’s promised tax revenues considering a $160 million budget deficit that she says the administration inherited from Republican Gov. Chris Christie in January.
“Once we had the chance to really open the books, it became readily apparent that decisions made over the past eight years … have had a devastating impact on our state’s finances,” she said. “Our economic engine is on life support.”
Lawmakers from both parties questioned the need for higher taxes.
Budget Committee chairman Paul Sarlo echoed Senate President Steve Sweeney’s call to reserve tax hikes as a final option to close budget gaps.
“I think I’ve made it clear taxes are your last resort. Nobody wants to stand up here and say we’re raising taxes,” he said.
Republicans generally oppose tax hikes and on Tuesday said they were concerned that Murphy might have to raise taxes every year to fulfill his list of campaign promises, including free community college and other education aid.
Republican Sen. Declan O’Scanlon warned against taxing millionaires for fear they might move to states with friendlier tax climates.
“You can squeeze the golden goose to get it to lay more golden eggs faster but at some point you either crush the goose or it gets pissed off enough and it flies to Florida, and either way you have no more golden eggs,” O’Scanlon said.
Muoio, a former Democratic member of the Assembly, responded that the fiscal year 2019 budget was a “first step” and suggested that economic growth might buoy future spending plans.
“We’re going to have to continue to evaluate each year,” she said. “Part of the reason the governor is making investments is to spur the economic growth.”
The hearing was part of an annual budget season rite that also included testimony on revenue projections. Muoio and the nonpartisan Office of Legislative Services predicted a combined $180 million difference in revenues over the current and next fiscal years. That’s a fraction of the $37.4 billion budget.