New Jersey Gov. Phil Murphy Proposes Raising Sales Tax Back to 7% in First Budget
14 March 2018 - 05:46AM
Dow Jones News
By Kate King
TRENTON, N.J. -- New Jersey Gov. Phil Murphy will propose
raising the state sales tax back to 7% to help support an increase
in funding for public schools, public-employee pensions and higher
education, administration officials said Tuesday.
In addition to the sales-tax increase, Mr. Murphy, a Democrat
who took office in January, will propose higher income taxes on the
state's millionaires and businesses. He is seeking to pay for a
$37.4 billion spending package, which represents a 4.2% spending
increase over this fiscal year's budget, Acting Treasurer Elizabeth
Muoio said Tuesday ahead of the governor's budget address.
The proposed budget asks the legislature to undo a key component
of the eight-year transportation funding package lawmakers struck
with former Gov. Chris Christie in 2016, which reduced the state
sales-tax rate to 6.625% from 7%. That increase is estimated to
generate $581 million this fiscal year, Ms. Muoio said.
"To many taxpayers, this was not a significantly noticeable
amount," Ms. Muoio said, referring to the lower sales-tax rate.
"But it made a major hit to our general-fund revenues and
prohibited us from being able to make significant investments in
New Jersey's future."
The governor also proposes a 10.75% state tax on income over $1
million, which his administration projected would bring in $765
million in revenue for the state. The current top income-tax rate
in New Jersey is 8.97% for income over $500,000. A series of
proposed changes to the way New Jersey taxes its businesses,
including combined reporting, would bring in an estimated $110
million in revenue, Ms. Muoio said.
In all, Mr. Murphy's budget assumes a 5.7% increase in
revenue.
The proposals are in line with many of the governor's campaign
promises, including implementing a tax on millionaires. Mr. Murphy
also said he would fully meet the state's public-school and
public-pension obligations, and his proposed budget outlines a plan
to fulfill those pledges by 2023.
Mr. Murphy's proposed budget would put the state on track to
fully fund the school funding formula within four years, Ms. Muoio
said.
The state would also make a $3.2 billion public-pension payment
under the proposed spending plan, with the intention of meeting the
actuarially recommended contribution by 2023.
Mr. Murphy's proposed budget also includes a $57 million
increase for prekindergarten programs and $50 million in additional
funding for community colleges, which is expected to provide
tuition assistance to 15,000 students.
The governor will deliver his budget address to state lawmakers
Tuesday afternoon.
New Jersey Assemblyman Jon Bramnick, a Republican, said he was
shocked by the governor's proposal and would try to block tax
increases. Democrats control the state legislature.
"This is going to force more middle-class New Jerseyans to flee
the state," Mr. Bramnick said. "Now it is up to the majority in the
legislature to stop this plan."
Write to Kate King at Kate.King@wsj.com
(END) Dow Jones Newswires
March 13, 2018 14:31 ET (18:31 GMT)
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