WALL, N.J. – Assemblyman Edward Thompson (R-Monmouth) wrote in an op-ed for The Asbury Park Press Wednesday criticizing Gov. Phil Murphy for not accepting responsibility for the state’s “flagging revenues” and instead has resorted to blaming federal tax changes.
Murphy must take off rose-colored glasses on budget
By Edward H. “Ned” Thomson
There is a term, often used in the financial world, known as the ostrich effect, which uses the idea of an ostrich burying its head in the sand to illustrate the human tendency to avoid bad news. The phrase is frequently employed to describe the behavior of investors who, often to their own detriment, refuse to consider relevant information, leading them to make irresponsible financial decisions.
It seems Gov. Murphy’s administration is intent on committing the same type of blunder when it comes to state revenue, a practice that could have serious repercussions for our state’s already precarious finances. Equally troubling, just days before he offers his proposed budget for the next fiscal year, Murphy refuses to acknowledge the major role his policies have played in creating our revenue shortfalls.
In crafting a state budget, the governor uses revenue forecasts to devise a spending plan that complies with state law requiring spending to be matched by revenue. However, a recent report demonstrates that the Murphy administration relied on unrealistic revenue projections in order to justify the governor’s profligate spending plan, which included costly new initiatives like “free” community college and millions in legal aid for illegal immigrants. These dubious accounting practices have left our state well short of the money needed to fund current programs and could lead to cuts to services or even more tax increases.
According to Murphy’s own treasurer, while the governor built his budget based on assumed revenue growth of 7.5 percent, in reality, growth was just 3 percent. In addition, without the tax amnesty program that brought in more than $280 million in one-time revenue, our growth was actually closer to 1.3 percent. Moreover, income tax collections for the first half of the year are down by more than $500 million over the same period last year — a significant decrease in revenue that was projected to increase by 5.4 percent
One would hope the huge discrepancy between Murphy’s revenue assumptions and actual revenue would lead the governor and his staff to take immediate action to address this looming revenue shortfall and revisit the policies that led to these sagging tax collections. To the contrary, Murphy officials have downplayed multiple reports of slumping revenues and are banking on a bump in tax collections in April.
Additionally, the Murphy administration refuses to accept any responsibility for our flagging revenues and instead has resorted to blaming President Trump and the federal tax reform plan. While changes in the federal tax code may cause some filers to delay making their payments, this excuse fails to consider the many factors that are causing taxpayers to flee our state, not the least of which are the high taxes and overregulation that are making New Jersey unaffordable and uncompetitive.
This buck-passing simply ignores the reality that, under Murphy’s watch, state spending increased by nearly 8 percent last year while taxes were raised by more than $1.5 billion. He can’t just pretend that we don’t have the worst-ranked business climate in the country, the highest property taxes and the second-highest corporate business tax rate, or the fact that we continue to impose job-killing mandates on our business community, including a $15 minimum wage and mandatory paid sick leave.
With the governor refusing to rule out more taxes and our Legislature recently offering support for a “rain tax,” it’s no wonder taxpayers, including high-earners, are bailing on New Jersey and why we rank as the number one state that people are moving from.
Murphy will soon deliver his budget address and will likely ask New Jersey’s taxpayers to once again dig a little deeper. If the recent reports from the Treasurer are any indication, he will dismiss the revenue reports indicating serious financial troubles.
And he will likely blame our state’s fiscal woes on the federal tax plan while neglecting to take responsibility for his policies that have stifled New Jersey’s economic growth and eroded our tax base at a time when the national economy and the economies of our neighboring states are flourishing.
Unfortunately, continuing to bury his head in the sand on our state’s financial crisis will not make our very real and very serious fiscal woes disappear.
Assemblyman Edward H. “Ned” Thomson is a Republican whose 30th District covers parts of Ocean and Monmouth counties.