Headed for shutdown? Legislature passes budget Murphy has threatened to veto

Governor, leaders of Senate and Assembly are unable to reach budget deal

By Anjalee Khemlani
Trenton | Jun 22, 2018 at 4:00 am

In what figures to be another chapter in what already has become a long and contentious budget battle, the state Senate and Assembly passed their $36.5 billion budget Thursday.

It is a budget that includes corporate business tax hikes.

And a budget Gov. Phil Murphy has previously said he would veto.

The Senate passed the budget, 21-17, late in the afternoon. The Assembly passed it, 46-28, shortly before 9 p.m.

The votes took place hours after Murphy twice met with Senate President Steve Sweeney (D-West Deptford) and Assembly Speaker Craig Coughlin (D-Woodbridge), but they were unable to come up with a compromise solution.

Murphy, who favors a millionaire’s tax over raising the corporate business tax (to what would be the highest in the nation) said earlier Thursday that he would not go against his principles — or against what he felt was the reason he was elected last fall.

“The people of New Jersey elected me to end business as usual,” Murphy said at a news conference shortly before 5:30 p.m. “They had enough of rosy scenarios that blew up in their faces.”

Legislators fought back in the war of words, especially when it came to defending their increase of the corporate business tax.

“We made the tough decision to tax the corporate businesses,” Assembly Budget Chairwoman Eliana Pintor Marin (D-Newark) said. “This was not an easy one to do; however, this tax would impact multinational corporations and would raise an estimate of $800 million.

“These are truly the corporations that have benefitted from the (President Donald) Trump tax plan. We understand that being innovative, we understand that being business-friendly, has also been a challenge to the state of New Jersey. Therefore, we came up with the plan for it to be two years, and then we would come back and envision something quite different.”

The sides need to reach an agreement by June 30 or the state would face a shutdown.

The Legislature’s budget includes several bills, one of which would increase the corporate business tax to 11.5 percent for companies with revenues from $1 million to $25 million, and 13 percent — making it the highest business tax in the country — for companies earning more than $25 million. The current rate is a blanket 9 percent.

Coughlin said the budget also includes all the Democratic priorities the governor wants.

And it came, Coughlin said, hours after a U.S. Supreme Court ruling, which will allow for the collection of taxes on online sales, figures to bring the state an additional revenue opportunity.

“That provided a critical opportunity,” Coughlin said in a post-vote media conference. “(It) means hundreds of millions of dollars in revenue to the state and offered a real way to bridge the differences between the Legislature and the governor.”

Coughlin said the anticipated extra revenue should have been worked into the budget.

“All it would have taken was a willingness to score that for the budget in a way that would’ve made it possible to use that today,” he said. “Instead, we were met with a statement that said we’re not able to do that now. The problem with that is we’re doing things in real time and, if you want to make progress, you have to work harder and faster. If we had, we might’ve been able to achieve much more success.”

Murphy said it was false that he had rejected the use of the internet sales tax. He said he was waiting for the legal issue to fully settle before the state could realistically determine what its share of the taxes would be.

“I can’t sit here and cut a deal with a number I have no confidence in,” Murphy said. “I was not sent here to keep doing business as usual. I got elected to come here and crack the back of this idiocy of kicking the can, phantom numbers, Band-Aids, toothpicks. Enough.”

Coughlin said the midday discussions broke down as a result of Murphy’s unwillingness to latch onto the online sales tax.

“The governor is, in fact, responsible in many ways for the breakdown,” he said. “He’s taken a very dogmatic approach to resolving this. I think we had the opportunity to make real progress today, and we failed. And we failed in part because of an unwillingness to recognize, I think, the Legislature’s role in this.

“The governor showed, and his staff showed, an unwillingness to recognize those things that we think are rock solid.”

Earlier in the day, Murphy said the legislators were negotiating using the same strategy as the old administration, and that his administration has been vocal all through the campaign about his budget priorities.

“This is not a game,” he said. “These negotiations aren’t about us; who wins and loses here in Trenton is meaningless, next to whether we do the right thing by the people of New Jersey.

“I will not put forward gimmicks and games that I know are ticking time bombs and call it a day.”

Murphy said the state needs a new approach.

“These practices are why we had, in the prior administration, 11 straight credit downgrades,” he said. “They are why our finances are a national joke. They are why the people of New Jersey have continually seen the promises made to them in one year, broken the next.”

Murphy also said that he provided data to defend his budget, and said the Legislature’s budget numbers were, in some cases, “not real.”

Coughlin addressed that comment in his evening address, saying that the Office of Legislative Services, which is a nonpartisan part of the government, was not receiving the respect it deserves.

In addition, Murphy addressed the CBT, saying the previous administration didn’t do much for the business community outside of offer corporations hefty tax incentives.

Murphy said he was stilling willing to find common ground, a sentiment echoed by Coughlin later in the day.

“The only way to achieve an end to this is to set aside our own egos and to make things happen,” Coughlin said. “I remain hopeful that, as we go forward, there will be a real dialogue and a conclusion that is mutually acceptable for everyone. But, for tonight, I think we have done what we can to try to move this process forward and I think we need to do more in the future.”

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Anjalee Khemlani | akhemlani@roi-nj.com | AnjKhem