Gov. Phil Murphy Signs Revised NJ Budget: Here's What It Will Do

NEW JERSEY – Gov. Phil Murphy signed a newly revised $32.7 billion state budget on Tuesday that will seek to rescue the state's depleted finances as the Garden State continues to struggle through the coronavirus crisis (you can watch it here, below).

Murphy signed a budget that includes rebates to homeowners, revised school funding, money designed to help businesses reopen and a millionaire's tax. Murphy has said that the tax hike is necessary because economic shutdowns have depleted the state's revenues amid the coronavirus crisis (see the list of budget items below).

Lawmakers, facing a strong public outcry, also planned to restore a New Jersey school mental health program that was initially cut despite many children suffering from the effects of the coronavirus crisis. Read more: Gov. Murphy Looks To Restore NJ School Health Program Amid COVID

Murphy agreed with lawmakers about the need to restore the School Based Youth Services Program, which has been operating as a grant-funded program in schools across the state since 1987.

Murphy said lawmakers crafted a budget as it fought the pandemic, calling it the "ultimate walk-and-chew-gum moment."

"A budget is a reflection of the values of our state, and looking out as best I can, I see the values reflected in your faces and I hear them in your voices," he said.

The update comes as the number of cases has risen to 204,563, and 14,326 confirmed deaths have been reported. Murphy announced 505 new coronavirus cases and 10 more deaths on Tuesday.

After a long stretch indicating that the virus was under control, New Jersey recently has had some of its highest daily case totals in months. Read more: NJ Coronavirus, School Reopen Updates: Here's What You Need To Know

Republicans continued to balk at the budget, saying that Murphy signed a fiscal plan that had too many taxes and too much spending.

Assemblyman Hal Wirths, the Assembly Republican budget officer, claimed Murphy signed a budget with $703 million of more taxes, $1.7 billion of more spending and $4.5 billion of more borrowing to give the appearance of a surplus.

“Everything debated on the floor comes down to doing what is in the best interest of the people government is supposed to represent. Businesses that survive the economic shutdown will face at least two business tax hikes, a nation-worst business tax or another income tax hike on top of a nearly $1 billion hike in unemployment taxes," he said. "That raises the cost of living for everybody."

Here's a list of items that were part of Murphy's plan:

Rebates

Rebates will be available to single filers making up to $75,000 and families earning up to $150,000, but each must have at least one dependent, according to state officials.

The rebates will be worth up to $500. State officials and lawmakers said the rebates will essentially only be available to parents with children.

When taxpayers will receive those checks depends on the language in the legislation. But state officials anticipate them for early in FY 2022, after July 1.

Millionaire's tax

Murphy and lawmakers reached a deal on passing a millionaire's tax. A 10.75 percent marginal tax rate currently imposed on income over $5 million would apply for taxable income starting at $1 million.

Pension payment

Murphy said the budget includes a third consecutive all-time record pension payment "each bigger than the year before."

"It's the right thing to do," Murphy said. "We have to regain our trust as a state whether its employees or retirees in the system, whether it's our rating agencies."

Preschool aid

The governor’s revised budget proposal was supposed to include an additional $67.8 million in preschool education aid, for a total preschool allocation of $874.2 million.

Of that increase, $10 million was to go to expanding high-quality preschool programs into new school districts, with the remainder of the increase in preschool aid helping districts with existing preschool programs to expand to enroll additional students.

School aid

Overall, the governor’s spending plan ensures school districts receive the same levels of funding that were announced in July. Read more: Gov. Murphy Releases New NJ State Aid Figures For Schools

The budget proposal would continue the phase-in to full funding of the state’s public school system required by a recent law designed to address inequities, all resulting from years of overfunding some districts while failing to adequately meet the needs of others, Murphy said.

$100 million for school reopening

Murphy allocated $100 million in federal funding to support school reopening. A district may use the funding to meet the health and safety standards that the Department of Education established in its school-reopening guidance, The Road Back.

In addition, districts that already meet the health and safety protocols can use the funds to ensure continued satisfaction of those standards.

Earned income tax credit

The Murphy administration extended a lifeline to an additional 60,000 New Jersey residents by expanding the minimum age of eligibility for the New Jersey Earned Income Tax Credit (NJEITC) from 25 years of age to 21.

The EITC is considered one of the most effective tools for supporting working families and lifting people out of poverty, Murphy said. Additionally, the FY 2021 budget also boosts the amount of the NJEITC to 40 percent of the federal credit, completing the third of three phased-in increases under a 2018 law signed by Murphy.

This latest increase is supposed to put an average of $882 back into taxpayers’ pockets.

Corporate business tax

Murphy and lawmakers agreed to restore a 2.5 percent surtax on the Corporation Business Tax for corporations with taxable net income in excess of $1 million.

The tax was supposed to drop to 1.5 percent this year, and then it was scheduled to be eliminated by the end of 2021. Now it's extended through 2023.

The tax is expected to yield an estimated $210 million during the 2020-21 fiscal year, Murphy said.

Additional budget highlights

• $400,000 in funding to continue support for STEM Dual Enrollment and Early College High School funding, which led to the launch of P-TECH schools across New Jersey.
• $800,000 for the Computer Science for All initiative to support the goal of increasing student access to cutting-edge computer science instruction.
• $750,000 to continue the Minority Teacher Development Grants designed to diversify the teacher pipeline.

Here are items that were on Murphy's wish list that were not included:

Increase the cigarette tax to $4.35 per pack

This tax would have yielded an estimated $143.1 million for eight months of FY 2021.

New Jersey's tax rate would have matched that of neighboring New York and Connecticut, but would have been below the combined state and municipal rate in New York City, officials said.

Firearms and ammunition taxes and fees

The governor proposed raising firearm fees, many of which have not been updated since 1966, and implementing excise taxes on firearms and ammunition. The hikes were estimated to raise $6.3 million over eight months in FY 2021, officials said.

Opioid assessment

This proposal would have raised an estimated $15 million in FY 2021 by increasing registration fees and penalties and levying new assessments on opioid drug manufacturers and wholesalers, officials said.

Restore sales and use tax on limousine services

Currently, these services are not subject to New Jersey sales tax. This proposal would have raised an estimated $13 million over eight months of FY 2021.

Undo the exemption and cap on sales and use tax for new and used boats

Currently, boat sales are provided a 50 percent sales tax exemption, and the total tax is capped at $20,000 per sale.

The restoration of the full sales tax and elimination of the cap would have yielded an estimated $7 million over eight months of FY 2021.

Watch Murphy here:

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