Republican state lawmakers are seeking broad changes to Gov. Phil Murphy’s $44.83 billion proposed budget for fiscal year 2022, contending that the governor’s budget blueprint overspends, overtaxes, usurps the Legislature’s authority to make spending decisions, and relies on spending from debt that Murphy unnecessarily issued last fall.
“We’re concerned that Gov. Murphy’s budget plan misses important opportunities to provide tax relief to workers and businesses that are struggling to recover from the pandemic,” State Sen. Steve Oroho (R-24), the Republican budget officer, said in a press statement. “We offered detailed solutions to lower income taxes for telecommuters and prevent an avoidable payroll tax increase on small businesses, all while increasing state revenues. It’s a win-win that the Murphy administration would be wise to accept.”
Oroho and fellow Republican Budget Committee members sent a 27-page letter to Senate President Stephen Sweeney (D-3) and Senate Budget Committee Chairman Paul Sarlo (D-36) on June 7. The letter described Murphy’s budget proposal as “grossly unbalanced in a way that sets taxpayers up for massive future tax increases.”
Additionally, the letter expressed concern that Murphy’s proposal “unconstitutionally” would give the governor “unilateral authority” to spend almost $6.5 billion in new federal block grant funding from the most recent federal COVID relief package “without transparency or public input.”
‘Massive and Unsustainable Election Year Budget’
“The changes we propose are sweeping and far more than tinkering around the margins. They have to be, because the Governor’s proposed budget is fundamentally broken due to his obviously unnecessary issuance of $4.3 billion of debt last November for a claimed revenue loss that never materialized. And instead of repaying the unnecessary debt as the Governor promised, he is proposing to spend it on a massive and unsustainable election year budget,” the Senate Republicans wrote.
Murphy, a first-term governor, is up for re-election this Fall where he will square off against Jack Ciattarelli, an accountant and former assemblyman.
Oroho and his Republican budget panel colleagues charged in their letter that Murphy’s budget “cynically hikes election year spending by 11 %—to record levels that he knows can’t be sustained.” They allowed that some of Murphy’s proposed budget increases were “appropriate”—including boosts for pension funding, meeting capital needs—“and limited (though inadequate) increases in funding to address the needs of people with disabilities. But it is impossible to argue that the Governor’s proposed 11% spending increase is even close to responsible or sustainable.”
Wirths Cites ‘Solemn Hope’ for Bipartisanship
Assemblyman Hal Wirths (R-24), the chamber’s Republican budget officer, sent an eight-page letter to Assembly Speaker Craig Coughlin (D-19) and Assembly Budget Committee Chairwoman Eliana Pintor Marin (D-29), seeking changes to Murphy’s proposed budget as well.
Wirths said that the changes he proposed would “shrink the multibillion-dollar deficit by cutting approximately $500 million in spending and increasing revenue by approximately $1.12 billion.” Wirths said that in the changes he proposed, “For every proposed funding increase, there is $3.20 in spending cuts.”
Like his Senate GOP colleagues, Wirths sought changes to include the Legislature in decisions on how to spend $6.5 billion in federal aid to New Jersey under the federal American Rescue Act. Both Wirths and Senate Republicans contended in their letters that Murphy’s use of $2.4 billion in federal funds allotted to New Jersey under the Coronavirus Aid, Relief, and Economic Security (CARES) Act demonstrates that he will make poor decisions in allocating the $6.5 billion.
“The $2.4 billion in CARES Act funds was demonstrably used without urgency nor attention to the needs of the people we represent,” Wirths wrote.
“I am sending this letter to you in solemn hope of bipartisanship,” Wirths wrote. “Our mutual goal is the greatest possible financial stability for the state and residents. The current budget proposal represents a failure to meet that goal, spending multi-billion dollars more than is expected in natural revenue growth, and a surplus that is comprised of more than fifty percent debt from mistakenly borrowing $3.7 billion last year.”
Wirths’ letter urged $500 million in cuts to Murphy’s budget. Among those proposed cuts were education cuts that Wirths said were balanced out by federal dollars provided to education in COVID-relief aid.
Wirths proposed the following additional cuts in Murphy’s budget:
- $50 million by passing legislation to prevent end-of-career pension boosts, a practice by which state employees’ salaries are increased for three years at the tail end of their careers after a career of low pay commensurate to work, and ending full-time pension credits for part-time work;
- $25 million from expanding the New Jersey Health Savings Plan;
- $19 million by eliminating funding for Planned Parenthood locations “because a charity with $1.6 billion in revenue is not in need of taxpayers’ money”;
- $60 million by eliminating a bailout to financial institutions holding 2004 deficit bonds and renegotiating debt service; and
- $40 million from undefined New Jersey Economic Development Authority programs “announced by the Murphy administration that reduce revenue without substantial knowledge of their benefit.
Wirths: ‘Stand Up to New York on Taxation’
The letters Republicans in both Trenton houses note New Jersey could pull in more than $1 billion in additional revenue by directing New Jersey’s Division of Taxation to amend work-from-home guidance to reflect the time a New Jersey resident works in each state during a tax year, similar to the “snow bird rule.”
Wirths wrote that, “we need to be New Jersey tough and stand up to New York for our residents who are unjustly being taxed at higher rates even though they are not working outside of the Garden State.”
“New Jersey is willingly allowing New York to steal billions of our revenue without justification,” he added in calling for the budget to include legal aid funds for New Jersey residents seeking to challenge unjust taxation by New York and funding for New Jersey’s Economic Development Authority to encourage New York businesses to set up satellite offices in New Jersey.
GOP Senators Urge New Revenue Forecasts
Oroho and the other Republican budget panel members said that their proposed changes to Murphy’s budget would “fix the revenue forecasts that lack credibility and are clearly too pessimistic.”
Like Wirths, they said they would adjust the latest 2021 revenue projections that Murphy assumed in February by at least $1 billion to reflect actual and likely collections through June 30, “which is $4 billion higher than the Governor’s manipulated estimates last fall to justify massive and avoidable debt.”
Likewise, Wirths faulted Murphy’s budget proposal for including $5 billion of nonrecurring revenue “and an illusory $6.3 billion surplus that is $3.7 billion debt.”
The Republican senators led by Oroho urged their Democratic colleagues to use federal funds to stabilize the Unemployment Insurance Fund “and head off a massive employer tax increase schedule over the July 4th holiday weekend.”
Murphy’s budget plan, which he outlined in a February address, garnered praise from organized labor groups, New Jersey AARP, and Democratic lawmakers, among others. The governor said that the state’s priorities as detailed in the budget “build a New Jersey that emerges from the pandemic healthier and more resilient.”