Republicans serving on the Senate Budget & Appropriations Committee proposed $8 billion of new tax relief Thursday — including a plan to increase the state surplus and to replenish the unemployment insurance fund — in a detailed plan to amend Gov. Phil Murphy’s proposed Fiscal Year 2023 State Budget.
To be sure, the proposal has little chance of going anywhere. It’s the fate of nearly all big-picture plans by Republicans in the Democratic-led Legislature. But it does offer specifics of how the Republicans would spend the surplus — perhaps serving a precursor to election battles.
State Sen. Declan O’Scanlon (R-Holmdel), the Republican budget officer, said the plan makes responsible use of the unprecedented $11 billion windfall of state and federal taxpayer funds.
“We’re leading the way in showing Gov. Murphy and the Democrat legislative majorities how to give back billions to taxpayers while building a responsible surplus and paying down substantial additional debt,” he said.
He then added a kicker, saying the Democrats are doing their best to follow the Republican lead.
“It’s no surprise that everyone else is suddenly rushing to find ways to ‘Give It Back,’ as Senate Republicans have advocated for months,” he said.
The Senate Republican budget plan provides a comprehensive framework for utilizing $8 billion of previously unexpected revenues that recently have been forecast for the current and upcoming fiscal years and $3 billion that remains unallocated from the $6.2 billion block grant New Jersey received last year through the American Rescue Plan Act.
Additionally, it imposes spending restraints and addresses important needs ignored by the governor’s budget proposal in a balanced manner.
Senate Republicans have proposed $8 billion of increased tax relief for New Jersey families and businesses, including:
- $4.5 billion through a pair of “Give It Back” tax rebates (S2243 and S2290) totaling $1,500 for millions of families;
- $1 billion of property tax relief by reversing Murphy’s proposed cuts to municipal aid and school aid, fully funding extraordinary special education, increasing the veterans property tax deduction and more;
- $790 million in structural tax reductions, including raising the retiree income exclusion to $250,000, creating a deduction for charitable contributions and eliminating the CBT surcharge early;
- $2 billion to halt planned tax and toll increases by indexing state income tax brackets for inflation, replenishing the Unemployment Insurance Fund to prevent upcoming employer/employee payroll tax increases, stopping automatic toll increases on Jan. 1 and rescinding a major tax increase on the state’s largest health insurer and its customers.
State Sen. Steve Oroho (R-Sparta), the Republican Senate Leader, said the plan will help families.
“We have this unprecedented situation where families are struggling to pay their bills amid the highest inflation in a generation while the state is simultaneously bringing in record tax collections that are billions beyond expectations,” he said.
“Our ‘Give It Back’ rebates would help address this imbalance by returning $1,500 in direct tax relief to most New Jersey families immediately. We’ve also proposed substantial increases in property tax relief, tax cuts for families, seniors and veterans, stopping pending toll hikes on drivers, and ending an unnecessary tax surcharge on businesses early. We’ve proposed a comprehensive and responsible plan that includes structural reforms to provide New Jerseyans with substantial tax and toll relief at a time when it’s desperately needed.”
The Republican proposal would prepare New Jersey for the next recession through a balanced approach that includes:
- Growing the budget surplus to more than $5 billion, which is approximately 10% of the budget;
- Focusing one-time revenues on funding nonrecurring needs such as pay-as-you-go capital infrastructure investments (including Motor Vehicle Commission and unemployment computer system upgrades), restoring the health of the Unemployment Insurance Fund and more than doubling proposed debt repayments, to $3.1 billion;
- Advancing longer-term reforms that make the economy stronger, including repatriating income taxes unfairly collected by New York and pension and benefit reforms that end abuses and give employees more choices; and
- Establishing additional restraints in recurring spending in amounts that far outstrip proposed increases to address unfunded priorities.
State Sen. Sam Thompson (R-Old Bridge) said the plan makes the best use of a one-time situation.
“We recognize that much of the windfall at our disposal is likely nonrecurring, which would make it irresponsible for anyone to propose substantial permanent spending increases that we won’t be able to support when the next recession comes, which may be sooner rather than later,” he said.