Gov. Phil Murphy fell short of achieving his promised millionaire's tax once again this weekend — approving a budget without the tax, and slashing $48.5 million fellow Democrats in the state Legislature would have spent.

It's a big loss for Murphy, and not an out-and-out win for any of the state's leading Democrats. But it got at least one major figure happy:

"Congratulations to legislators in New Jersey for not passing taxes that would have driven large numbers of high end taxpayers out of the state," President Donald Trump tweeted Monday. "Many were planning to leave, & will now be staying. New York & others should start changing their thought process on taxes, fast!"

Murphy, in guest column to the Star-Ledger Sunday, called the budget "a victory for the values and vision we share."

"I am on the side of putting the needs of New Jersey’s families ahead of the wealthy, ahead of privileged insiders, and ahead of powerful special interests. And, the budget I signed clearly has this in its focus," he wrote.

But he also argued a millionaire's tax "would have generated more than $500 million in recurring and reliable revenues to invest in property tax relief, public-school funding, and municipal aid — not one penny of it from the pockets of the middle class and those striving to get there."

And he addressed Trump's comments on Twitter:

"We all know @realDonaldTrump is fighting for millionaires like himself. I'm fighting for New Jersey's middle class and all those working to get there," Murphy wrote.

Murphy lobbied hard for a new millionaire's tax, even promising a $125 refundable credit to most taxpayers if it passed. Murphy has used the phrase “tax fairness” to describe his push to increase the tax rate on income over $1 million from 8.97 percent to 10.75 percent, which is the rate applied since last year to income over $5 million — after another failed battle to increase taxes on everyone making $1 million or more.

The tax had been opposed by both Senate President Steve Sweeney and Assembly Speaker Craig Coughlin.

During an appearance on New Jersey 101.5, Sweeney did not voice support for a single Murphy tax hike, including the millionaires’ tax — though he'd previously supported one when Chris Christie was governor. He said he was concerned about taxing wealthy people and businesses too heavily and pushing them out of the state.

"The people that can't leave — they're the ones in the middle class and the working poor, and they wind up paying more," Sweeney told New Jersey 101.5's Eric Scott about a tax atmosphere he said has gotten too extreme.

The Murphy administration says the Legislature added $390 million in spending to the budget he initially proposed – some of it for laudable purposes, some of it in targeted grants for favored recipients. Some of that was line-item vetoed, while other parts are likely to be put in reserve.

The line-item vetoes of spending that had been added by the Legislature include:

  • $38 million from an appropriation for shared services and school district consolidation study and implementation grants, lowering that line item to $10 million
  • $5 million from Cooper University Hospital for a "vulnerable communities access to care" grant
  • $4 million from school choice aid
  • $1 million from East Orange General Hospital, which is receiving funding through a supplemental appropriation
  • $500,000 from Rutgers University-Camden for a Camden workforce study with the Cooper's Ferry Partnership

The New Jersey Chamber of Commerce in a statement Sunday called the budget " a promising step toward the fiscal responsibility New Jersey needs to revitalize its economy," praising Sweeney and Assembly Speaker Craig Coughlin for resisting the millionaire's tax Murphy unsuccessfully proposed for the second year in a row.

It praised Murphy along with the legislative leaders for passing the budget before the end of June — as going without it could have forced a state government shutdown. And it said the the budget makes "appropriate investments in education, job training and infrastructure. It also funds the public employee and retiree benefit program and provides property tax relief."

The New Jersey Business & Industry Association, however, criticized the budget as being 11 percent higher than its 2018 counterpart.

"Our policymakers should understand that New Jersey simply cannot sustain such large increases in expenditures every year when our pension liability and post-employment benefit obligation has grown to more than $151 billion," it wrote."

 

— With previous reporting by Michael Symons and the Associated Press

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