‘No appetite’ for more tax hikes, say NJ lawmakers
In the face of decades high inflation and the prospect of a U.S. recession already squeezing New Jersey families, will those pressures be intensified by higher taxes in 2023?
Gov. Phil Murphy will not present his budget plan until February of next year, but legislative leaders said Tuesday that preliminary talks are already underway.
The current state budget is the largest in state history, coming in at $50.6 billion. It spends $15.9 billion more than Gov. Christie's last budget just five years ago.
On Tuesday, I co-moderated a legislative leadership panel at the NJBIA Public Policy Forum in Woodbridge. While much of the discussion focused on business taxes and affordability, I did press Democratic leaders about the coming budget and the prospect of tax increases.
The issue is the sustainability of record spending during an economic downturn that could result in less tax revenue flowing into the state treasury. Coupled with the lack of federal COVID relief money that was used to prop up the current budget, worries are increasing about how much more New Jersey residents will be asked to give to the state.
Assembly Speaker Craig Coughlin said, "We are constantly mindful of spending. It is one of the challenges we face year in and year out."
Pressed further on the prospect of avoiding tax hikes, Coughlin offered, "If history is any indication, the answer is yes."
Murphy, who famously said during his first run for governor, "If taxes are your issue, we are probably not the state for you," did not propose any tax hikes in his last budget as he ran a tight race for re-election. With rumors of a possible White House run circulating, he may seek to avoid them for a second straight year.
Senate Budget Committee Chairman Paul Sarlo was more direct in his response to the "no new taxes" question.
"Last year there was no appetite for tax increases or fee increases," Sarlo said, "I'm 100-percent confident there is no appetite in the legislature for any fee increase or tax increases (in the next budget.) I want to put people at ease on that piece (of the budget talks.)"
The responses, however, do not paint the full picture.
New Jersey businesses are facing the prospect of what amounts to a huge tax hike because the legislature and governor have failed to act on measures to replenish the state's Unemployment Insurance Fund. As it stands, businesses are being forced to contribute a collective $1 billion.
State residents are also facing the prospect of huge property tax increases as a result of dramatic increases in the cost of health benefits county and local public employees.
The Murphy administration reached a compromise with state employees to defray many of those costs but has not done the same for local governments.
Assembly Minority Leader John DiMaio continued to call for hearings to find out why the health benefit costs are up so dramatically. Republicans and Democrats have been highly critical of the Murphy administration for not being fully transparent about the increases.
The latest revenue projections for New Jersey will come in December, giving lawmakers and the governor a better picture of what the state could be facing as the next budget is put together.
At this point, it appears, lawmakers are at least mindful of the economic pressures facing New Jersey's 9.2 million residents.