Gov. Phil Murphy unveiled a proposed $38.6 billion budget for fiscal year 2020 earlier this week that would increase state spending by more than $1 billion. CIANJ reviewed the budget and highlighted points of interest for the business community.
In terms of new taxes, Murphy proposed hiking the tax rate for residents earning $1 million or more annually to 10.75 percent. Another new tax, the Corporate Responsibility Fee, would be levied against companies with 50 or more employees receiving Medicaid benefits. This fee would shift the cost to employers.
Murphy plans to spend more than $15 billion in municipal and school aid, $262 million for hospital charity care and wants to make a $3.8 billion pension payment. The governor intends to divert $164 million from the Corporate Business Tax to fund open space preservation. Tuition Aid Grants will also receive a boost with an increase of $5 million for a total of $438 million total to be distributed.
The Murphy administration intends to create a local assistance bureau within the Department of Community Affairs to help municipalities share services and cut costs. Murphy intends to place a cap on economic tax incentives for the state’s businesses at $400 million.
The New Jersey Department of Environmental Protection will see its budget reduced by $69 million down to $319 million while the Department of Education will see an increase of $345 million to $12 billion total. NJ Transit will see a $100 million increase, bringing the agency’s total budget to $407 million. Murphy has allocated $2.7 billion for state employee health benefits saying that he has achieved $1 billion in savings through a new contract negotiated with state employee unions.
Now that Murphy’s budget has been presented to the Legislature, there will be further discussion and many changes made from now until July 1 when a balanced budget must be adopted by both houses.