Republican lawmakers believe New Jersey should return some of the state’s unexpected $5.2 billion tax revenue windfall to taxpayers by increasing the public pension payment, replenishing the depleted unemployment insurance trust fund or giving some other tax cut.
Their call for tax relief comes after State Treasurer Elizabeth Muoio’s June 9 report that New Jersey is on track for record revenue, a development she attributed to a quicker than expected recovery in economic activity from the coronavirus pandemic.
In a June 10 statement, State Senate Republican Budget Officer Steven Oroho (R-24), Sen. Declan O’Scanlon (R-13), Sen. Sam Thompson (R-12) and Sen. Michael Testa (R-1) said, “We believe that money should be returned directly to taxpayers, which has proven to be the most effective way to support our economic recovery.”
‘Money In People’s Pockets’
The State Senators—all of whom serve on the Budget & Appropriations Committee—said expanded Homestead and Senior Freeze property tax relief, property tax credits and tax rebates should each be considered.
Assemblyman Hal Wirths (R-24), the Republican Budget Officer, said, “The surplus should be given back to taxpayers because it is theirs to keep and the state is already flush with cash.”
“The surplus should be used to cut taxes, whether by increasing school aid, decreasing payroll taxes, increasing the earned income tax credit, cutting taxes for small businesses struggling to recover or any other way that puts money in people’s pockets,” Wirths said in a statement.
Budget Deadline Looms
The new surplus revenue, along with over $6.2 billion from the American Rescue Plan, leaves New Jersey with far more cash than initially expected by the state as legislators begin talks on Gov. Phil Murphy’s $45 billion spending plan and look to approve a balanced budget by June 30.
The surplus comes day after a recent report showed that New Jersey residents will pay more in lifetime taxes than residents of any other state, according to a report from financial technology company Self. The study found that the average New Jerseyan will pay $931,698 in taxes over the course of their lifetime, including $508,045 from taxes on earnings and $378,087 in property tax payments.
This total is 77% higher than the $525,037 that the average American will spend on taxes throughout their lifetime and over $100,000 to the next closest state.
Murphy has not disclosed his proposed plans for the billions of dollars in unexpected revenue.
Although revenue updates are typically delivered in person and give lawmakers a chance to ask questions of Treasury officials, last week’s Assembly and Senate hearings were both cancelled without an explanation that satisfied Republicans.
Budget Meetings Postponed
Oroho called it “unconscionable” that the Senate and Assembly budget committees did not meet, considering the windfall has raised numerous questions and require decisions on what to do with it.
New Jersey is one of several states that has unexpected revenue due to strong retail sales and income taxes from high earners, according to Bloomberg News .
At least 28 other states have collected revenue equal to—or in excess—of pre-pandemic figures. States are also receiving a total of $350 billion in aid through the American Rescue Plan Act.