State Senate President Stephen Sweeney is convinced there won’t be a need for a millionaire’s tax if more savings are sought in the governor’s budget proposal for this year — indicating the direction that negotiations could be headed this year.
“These are real savings,” he said during an interview with members of the media Thursday in Trenton.
“We appreciate that they adopted a lot of the recommendations that we made last year, because it was frustrating for us last year, because we were saying, ‘These are real savings’ and they would get up and say, ‘They aren’t real,’ and they disputed almost every one of those things.”
This year, things are different. The Governor’s Office appears to have looked at the Path to Progress report Sweeney (D-West Deptford) has touted — and is focusing a series of town halls around the state on — to find some ideas on savings, including a recent request for proposals for asset monetization to help fund the pension system, as well as taking a hard look at health care benefits and how the state contracts for public employees’ health benefits.
“We’re glad that they took the time to look at it, but, to be perfectly honest, everyone thought, because of the way this was being presented, that it was all coming out of the collective bargaining agreement (with the state workers union, the Communications Workers of America),” Sweeney said.
“There’s a lot more savings to be had, and going from a platinum to gold (health care plan) will save hundreds of millions of dollars. And we don’t have to have a tax at this point.”
As a union man himself, Sweeney understands the need to shop around for the lowest cost.
“If I don’t keep my costs under control, I’m out of business,” he said. “What’s happening here is, taxpayers are the ones going out of business because they can’t afford their property taxes.”
Sweeney said he knows people are leaving the state and a millionaire’s tax could exacerbate that problem.
The cost of platinum level health benefits, which are richer than the private-sector standard of gold-level benefits — based on the Affordable Care Act metrics that determine the percentage of costs shouldered by the enrollee versus the insurer or employer — is one of the state’s large costs.
Murphy’s proposal looked at several ideas that could save the state $800 million in health care costs.
Sweeney said there are even more savings to be had, in the hundreds of millions of dollars, if the state reduces the benefit level.
Traditionally, public sector employees have been given richer benefits overall, compensation for lower pay and long hours of work.
“That discussion that the public (sector) is paid less is not as relevant as it used to be,” Sweeney said. “The public side, in a lot of places, makes more than the private sector.”
Recent news has highlighted the raises seen in the new state workers union contract and the move to a $15 minimum wage in the state.
The Path to Progress report, a collaboration of several experts in the state as well as a bipartisan group of legislators, estimates changing the benefit level could save the state $587 million on employee and retiree health care premiums, and $69 million on the premium payments for employees for FY 2020.
“We have to get our fiscal house in order,” Sweeney said. “There is plenty of money there. We don’t need to raise taxes. I don’t intend to raise taxes.”
Talking corporate business tax
Last year, Sweeney was at the forefront of calling for the increase to the corporate business tax with a four-year phaseout.
“When we did the CBT last year … we went after C-corporations who were the main — the one — group that was getting a windfall form the Trump tax cut,” he said. “But, I didn’t want this to last forever. The intent of the corporate business tax was to give the governor time, two years, to fix what’s wrong here and then start getting our tax profile down. We’ve got the fifth-highest tax burden in the nation. We need incentives for one reason: Who wants to come here?”
Sweeney used the Amazon HQ2 race as an example. Though Newark made the Top 20 list for the e-commerce giant’s second headquarters project, the state offered the company $7 billion in tax breaks and Amazon still chose New York instead, along with Virginia, whose combined tax incentives didn’t come near the New Jersey offer.
“The state of New Jersey is in a financial death spiral,” Sweeney said, adding that there is still room to reverse it.