With Gov. Murphy’s proposed budget in the news, Sunlight thought we should provide our brief take on it. We thought columnist Charlie Stile had it about right: Murphy’s budget is “less about New Jersey and more about polishing his White House appeal.” Just so.
- Record state government spending. Again. Murphy’s FY2024 (July 2023 to June 2024) budget is $53.1 billion, and increase of almost 5% over the FY2023 budget. During Murphy’s time in office, he has increased state spending by almost 50%, which is certainly an unsustainable path. Future budgets will not have the benefit of federal pandemic relief and record tax revenues from the post-COVID economic rebound.
- Debt reduction but only after greater debt addition. Murphy touts his $2.35 billion contribution to a debt reduction fund, on top of $1 billion last year. This is all well and good, but that combined $3.35 billion is still less than the $4 billion in bonds he borrowed during the pandemic — which are very expensive debt that cannot be paid down by Murphy’s fund. Any interest savings that Murphy claims are more than offset by the very high rates on his pandemic bonds. All told, during his time in office, Murphy has increased New Jersey’s debt and interest burden.
- Temporary property tax rebates offset by ever-increasing property tax rates. Murphy touted keeping his ANCHOR property tax rebate going for another year. This helps the elderly and lower-income citizens, but over the past year, New Jersey property taxes increased FOR EVERYONE by 2.2%, to a record average of $9,490, the highest in the nation. Also remember that under Murphy, state health insurance premiums shot up over 20%, and thanks to Murphy’s NJEA-friendly healthcare law, in school districts those increases will be borne almost entirely by … property taxpayers.
- Pouring $7.1 billion into a broken, unreformed pension system. Murphy continues to please his biggest political supporter, the NJEA, by making the full required payment into the state’s severely underfunded pension system. Yet, even after the record amounts Murphy has contributed (this would make for a total of $26.5 billion since the pandemic), Sunlight estimates that due to negative investment returns, the largest pension fund (the teachers fund) was less than 35% funded, which is still at a crisis level. Murphy continues to throw good money after bad and refuses to reform the structurally unsound system. Moreover, $7.1 billion is over 13% of a record $53.1 billion budget. Again, we ask what happens when a recession hits state revenues.
- Ending 2.5% Murphy-imposed corporate surtax but still 4th-worst in nation. Murphy is ending the 2.5% corporate surtax he imposed during the pandemic and then extended, which made New Jersey’s 11.5% rate the highest in the nation. The rate is merely returning to where it was when Murphy took office. So this is not a tax cut. Moreover, at 9%, New Jersey still has the 4th-highest rate in the nation.
- Rainy Day fund up but so is spending, so it’s still less than the national average. Murphy proposes to increase the Rainy Day fund to $10 billion, which amounts to about 19% of the budget versus a national average of 25%. Murphy keeps adding more Rainy Day money, but he also keeps spending more. Given the elevated spending levels for various state programs, when a recession hits, it will take more Rainy Day money to mitigate the cuts.
As the chatter from Murphy supporters makes clear, this budget makes for nice talking points if you are thinking of running for president. After years as a tax-and-spend progressive, Murphy wants to tout tax-relief and fiscal responsibility so as to appear more moderate. But, per Stile, when you cut through the rhetoric, there’s not much that benefits most New Jersey residents.
Murphy’s FY2024 budget: nice talking points for Murphy, but not much more than that.