NJ Top News 2/24 – Murphy Setting the Table for Massive Tax Hikes Next Year?
Gov. Phil Murphy came into office promising to raise your taxes. He has certainly made good on that promise.
For the last three years, Murphy has enacted a series of tax and fee hikes on individuals and businesses to fund an aggressive progressive agenda. Even prior to the COVID-19 pandemic, tax and businesses groups were ranking New Jersey as one of the most tax unfriendly states.
Murphy has been unapologetic, preaching "tax fairness." Property taxes have also been increasing at a faster pace under Murphy. Since taking office, Murphy has increased spending by more than $9 billion. Former Gov. Chris Christie's final budget was $35.5 billion. The one proposed by Murphy on Tuesday was $44.8 billion.
The budget includes giveaways to some of Murphy's staunchest allies, including the New Jersey Education Association and the CWA. Unions representing teachers and state workers have funneled millions in worker dues to political action committees supporting the promoting Murphy policies. As Murphy seeks re-election in November, the unions are overjoyed with his budget, particularly a $6.4 billion dollar payment into the state's underfunded pension system and an increase in aid to schools.
Despite a budget that increases spending 11%, Murphy is not proposing any new tax and fee hikes. His spending increases are funded, however, by borrowed money. Money that will be spent this year but will not recur the following year. To fund that, added spending in future years, even bigger tax increases would be necessary. The scheme to use borrowing to pay for operating expenses was hatched at the peak of the budget crisis triggered when Murphy's pandemic shutdowns devastated the state's economy. He strong-armed the Legislature into authorizing up to $10 billion in borrowing without voter approval. He did so with dire predictions of massive revenue shortfalls and public warnings of deep spending cuts. Tax collections, while lower in some areas, were much better than Murphy's forecast. The nonpartisan Office of Legislative Services claimed Murphy was at least a billion dollars off in his projections.
Murphy is in a strong position to be reelected in November. Recent polls show him with a commanding lead amidst only token republican opposition. That raises the specter of massive tax hikes for fiscal year 2023. There has already been talk among liberal groups about a hike in the sales tax and increased taxes on businesses. Murphy rejected those ideas this year. It is unlikely that Murphy would reduce spending in his next budget to make up for this year's non-recurring revenues. Without having to worry about another election and democrats likely to retain control of he Legislature, the table would be set for significant tax increases in just over a year.
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