State lawmakers prepare to send Gov. Phil Murphy a budget that will take spending to an all-time high by adding more funds for tax breaks and public service pensions on top of what the governor requested ago months.
This spending boom comes after the state’s fiscal outlook has improved significantly in recent months, thanks to an unexpected windfall in tax payments and the arrival of another large tranche of COVID-19 relief from the federal government.
After several days of largely behind-the-scenes negotiations, the first committee vote on a spending bill for the fiscal year starting July 1 is now scheduled for Tuesday.
While full details and wording of the bill were not published on the Legislative Assembly’s website Monday evening, legislative leaders issued press releases earlier in the day touting their efforts to insert in a budget proposal that Murphy unveiled several months ago for additional funding for things like Homestead property. tax breaks and tuition assistance grants.
The windfall also allowed the state to add more funds for civil servants’ pensions and launch debt relief efforts, increasing total spending by at least several hundred million from what was already a record-breaking Murphy’s budget proposal.
“Backed by strong state revenue collections, this budget allows us to develop and expand our state’s funding priorities in a fiscally sound manner,” said Assembly of Presidents Craig Coughlin (D-Middlesex).
“It relieves those in need, makes strategic investments to stimulate our economic recovery and sets aside billions of dollars to pay off higher cost debt and avoid future borrowing,” said Senate Speaker Steve Sweeney (D-Gloucester).
For his part, Murphy, a first-term Democrat who faces re-election in November, did not publicly approve the entire spending bill when asked about the budget during a meeting. coronavirus press Monday afternoon.
But he praised an agreement to fund tax relief programs like Homestead announced earlier today. This will increase the size of the average Homestead Benefit by at least $ 130, legislative leaders said.
âStay tuned,â Murphy told reporters at the briefing. âThere are a lot of moving parts. “
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Plan meets Murphy’s ‘top budget priorities’
Later Monday, a senior administration official told NJ Spotlight News that the governor’s top budget priorities “have all been met” in the legislative spending bill, along with “a lot of good investment.”
However, Republicans blamed the work of their Democratic counterparts, including in the area of ââproposed tax breaks. The unexpected tax payments helped the state rack up a massive $ 10 billion budget surplus, and GOP lawmakers have suggested that too little will go to taxpayers under the Democrats’ budget plan.
“Although the state has received a $ 5 billion tax windfall in recent weeks, Democrats are not offering any significant new tax relief for New Jersey residents,” said Sen. Steve Oroho (R-Sussex) .
As part of a budget deal made last year and funded this year, Murphy and lawmakers are implementing a new tax rebate program that is provided to more than 750,000 New Jersey families. Households earning up to $ 150,000 with at least one dependent child and single parents with at least one dependent child will be able to receive discounts of up to $ 500 this summer, according to details already provided. public.
Increase Homestead Benefits
But the new budget will also increase the amount of Homestead benefits for thousands of low- and middle-income elderly, disabled homeowners in New Jersey by ending a long-standing practice of using outdated bills to calculate Homestead tax breaks. , according to Murphy and legislative leaders. . The use of outdated bills had eroded the effectiveness of the Homestead program as average New Jersey property tax bills have increased by over 40% over the past 15 years.
Their tax break deal also calls on the legislature to approve a further extension of the earned income tax credit for low-wage workers that Murphy called for in his original budget proposal, including allowing some seniors to benefit from refundable tax credits. The agreement also provides for people between the ages of 18 and 21 to be eligible for the EITC and would further expand the state’s tax credit for child and dependent care.
According to lawmakers’ own descriptions of their broader spending bill, the new budget will also increase the state’s pension payment amount to nearly $ 7 billion. To do so, they said they plan to add $ 505 million to a $ 6.4 billion contribution that Murphy had already budgeted for in his original spending plan for fiscal year 2022.
A separate fund for “debt cancellation” would also be created as part of the new budget, lawmakers said. It comes after the Murphy administration issued nearly $ 4 billion in debt last year with the approval of lawmakers to help support the annual budget. The loan issuance was intended to offset the significant revenue losses that the administration predicted would be triggered by the pandemic which did not materialize.
Among other items disclosed by lawmakers on Monday, the new budget would increase funding for Tuition Assistance Grants and the Education Fund, which provides both personal support and financial assistance to thousands of people. low-income students entering college across New Jersey.
Meanwhile, legislative leaders also said they would also have a say in how the state appropriates the more than $ 6 billion in COVID-19 aid New Jersey has received under US federal bailout law, including funding investments in child care, health infrastructure, and school water and heating and air conditioning systems.
But lawmakers did not disclose Monday how much spending was added to Murphy’s budget proposal at the last minute for their own legislative additions, which are often referred to as “Christmas tree items” in Trenton.
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