New Jersey Governor Phil Murphy has hung on to federal pandemic aid as a hedge against potential recession. As he unveils his annual budget on Tuesday, he’s under pressure to use what’s left to help lower the expense of living and doing business in one of the highest-cost states in the US.
(Bloomberg) — New Jersey Governor Phil Murphy has hung on to federal pandemic aid as a hedge against potential recession. As he unveils his annual budget on Tuesday, he’s under pressure to use what’s left to help lower the expense of living and doing business in one of the highest-cost states in the US.
The current fiscal year’s $50.6 billion budget was a record high, more than one-third bigger than Murphy’s first spending plan, in 2018. It included a $6.8 billion pension payment; $2 billion in property-tax rebates and hundreds of millions of dollars for schools, affordable housing and health care.
For the year that begins July 1, the second-term Democrat has promised no new taxes or NJ Transit fare hikes and more funds for low- and middle-income residents’ needs. Republicans, the legislature’s minority party, are pushing for tax cuts and spending restraint.
Since his Jan. 10 annual policy speech, Murphy has announced increased funding for some of his favorite progressive causes, including preschool, monthly food benefits and fighting climate change. Murphy, 65, told reporters in South Brunswick on Feb. 22 that he’ll “suggest a full pension payment” and “a lot more investment in education” in his next budget.
“We are creating life-changing opportunities for underserved residents,” Murphy said on Feb. 7, when he announced a job-training program for the un- and under-employed. “This is what it means to build a stronger, fairer economy for all.”
Republicans say Murphy is raising spending while sitting on rainy-day money that could be used now. They are calling on the governor to use some of the state’s $6.8 billion surplus for structural reforms that they say would provide an immediate economic boost.
Murphy’s priorities are “completely unsustainable,” said Senator Declan O’Scanlon of Little Silver, the Republican Party’s budget officer. “That will become painfully true if we are hit by a recession this year as many economists have warned is possible.”
This year’s budget spending was supported by unexpectedly high revenue and a multiyear cushion of $6.2 billion from the American Rescue Plan. Murphy has through December 2024 to spend or allocate what’s left of the aid, around $1 billion. Murphy, a retired Goldman Sachs Group Inc. senior director, has warned that growth would slow this year and that he would not spend the remaining aid “like a drunken sailor.”
One Republican plan calls for giving school districts $1.2 billion in exchange for a dollar-for-dollar local property-tax cut in a state where the average annual homeowner bill is $9,284, the highest in the US. They also want to stop planned toll and payroll tax increases and protect earners from tax-bracket creep caused by inflation.
Murphy pledged Friday that NJ Transit will keep fares steady for the next fiscal year. He didn’t say how the agency would bridge a projected $550 million budget hole in 2026 as pandemic aid runs out.
Read more: NJ Transit to Keep Fares Steady as Deficit Looms, Murphy Says
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