Governor Phil Murphy’s proposed $53 billion spending plan for New Jersey’s next fiscal year, which includes a record $10 billion rainy day fund, has drawn criticism from progressives who argue that businesses should shoulder more of the tax burden.
While the plan sets aside 19% for emergencies, it includes no new taxes and would end a corporate business-tax surcharge.
Progressive groups have argued that the state’s business tax rates are too low and that corporations should be paying more to help fund services like education and public transportation.
“The Governor’s proposal prioritizes a record surplus over the pressing needs of our communities, including schools, transit, and affordable housing,” said Brandon McKoy, president of the progressive advocacy group New Jersey Policy Perspective. “Our state’s wealthiest residents and corporations are not paying their fair share, and as a result, our state budget fails to provide the necessary resources to support all New Jerseyans.”
Murphy, a Democrat and former Goldman Sachs executive, has defended his proposal, saying that the rainy day fund is necessary to prepare for a potential economic downturn. He has also touted the plan’s $2 billion in cash rebates for homeowners, who face the highest property-tax bills in the country.
Republicans, meanwhile, have criticized the plan for not doing enough to address property-tax relief or infrastructure needs. The legislature’s minority party has suggested using the surplus to help local schools, replenish the state unemployment fund, and pay for major infrastructure projects.
Senate Republicans said Murphy’s FY 2024 budget proposal is a massive increase in spending, doesn’t provide inflation relief or transparency, and continues harmful cuts to hundreds of school districts.
“Gov. Murphy’s budget proposal for next year is 5% larger than this year’s budget, and it’s 50% bigger than the prior administration’s final budget,” said Senate Republican Leader Steven Oroho. “That’s a huge and unsustainable spending increase in just six years. We know that billions of that will likely be pork spending that should be redirected to tax relief.”
“The Murphy administration continues to hoard tax overcollections while people are suffering,” said Senate Republican Budget Officer Declan O’Scanlon. “Instead of providing real tax relief to New Jerseyans, the governor is building a massive $10 billion surplus that will get devalued by inflation. We should focus on addressing tax bracket creep and providing inflation relief to New Jerseyans.”
The budget cuts support to many school districts despite Murphy’s adding more than $834 million in K-12 education aid statewide.
Critics of the budget have also argued that the state should do more to increase funding for education by raising taxes on businesses and wealthy individuals.
They believe that the burden of funding public education should not fall solely on the shoulders of middle-class families and low-income communities.
They also argue that the budget cuts will disproportionately impact low-income students and communities of color, who already face significant barriers to educational opportunities in the state, which has some of the worst racial segregation in the US.
While the addition of $834 million in education aid is certainly a positive step, it may not be enough to offset the impact of the budget cuts on some school districts.
The cuts could lead to reductions in services and staff, larger class sizes, and fewer resources for students, who could face long-term consequences, particularly those who are already struggling to succeed.
Despite the criticisms, Murphy has maintained that the rainy day fund is necessary to prevent the state from having to make drastic spending cuts in the event of an economic downturn. He has also emphasized the need for a third straight full pension payment and a record surplus to secure further credit rating improvements for the state.