TRENTON, N.J. – The unprecedented two-week delay Gov. Phil Murphy requested to deliver his budget message won’t change the result much according to Assemblyman Hal Wirths, the Assembly Republican budget officer.
“Murphy will possibly announce three or four billion dollars in unexpected revenue because he and the Democrats have over taxed us for the last five years even while inflation socks low-income families and the middle-class,” said Wirths (R-Sussex). “But expect him to spin reality to be more rosy. And tax cuts won’t reduce revenue this year.”
State revenue was up by over $4 billion in January, and experts expect it will continue to climb due to factors such as inflation that drive up revenue without actually increasing tax rates. About half of January’s year-to-date increase is from the business alternative income tax, which is revenue neutral.
With five months of revenue still to be reported in the fiscal year, another $2 billion could be on the horizon, as collections tend to be strong in the spring with income, corporate business and sales tax collections.
“Where will that revenue go?” asked Wirths. “Don’t be surprised to see Governor Murphy tout his education spending. Because of inflation and federal requirements, there will have to be a record payment far above what we have seen historically. Murphy doesn’t deserve any credit for doing what he is obligated to do for schools.”
The S2 phase-in will ramp-up again this year, and districts are facing cost increases due to inflation.
In November, the federal government told the state that it had to return funding to districts that would otherwise face cuts under what is called the maintenance of equity requirement. That could cost over $170 million, according to the Education Law Center. That money would not be redistributed either, possibly doubling the actual cost of the federal maintenance of equity requirement to the state.
“Murphy might also brag about pension funding being less of a burden and enabling more property tax relief, even though he hasn’t publicly supported any bill that would actually lower property taxes,” continued Wirths. “That won’t stop him from boasting about no new tax increases while ignoring all the tax increases that are about to happen anyway.”
The state pension payment is scheduled to increase to by about $557 billion because of last year’s full payment, instead of over $1.2 billion had Murphy kept to the schedule. It is possible the Murphy’s proposed property tax relief program, ANCHOR, could receive the balance. There are possibly three tax increases scheduled in the upcoming 2023 fiscal year, including payroll taxes in July, the gas tax in October, and a $600 million tax increase on the semi-public health insurance company Blue Cross Blue Shield, not to mention toll hikes and the effects of inflation.
“Get your nose plugs ready for the budget address. There is going to be a lot of you-know-what,” Wirths laughed.