Massive $ 46.4 billion NJ budget with $ 500 tax breaks, $ 6.9 billion pension payment clears State Senate

As election campaigns loom, the State Senate on Thursday passed a $ 46.4 billion spending plan with income tax cuts for hundreds of thousands of New Jersey families, news tax deductions for college savings, tuition and loans, and a historic $ 6.9 billion contribution to the public pension. funds.

The Senate approved the 25-15 finance bill, depending on party lines. The state assembly is also expected to vote on the budget on Thursday afternoon.

Gov. Phil Murphy is expected to sign the budget bill, which he negotiated with legislative leaders, as is next week. In a matter of days, the state could begin sending rebate checks to some of the more than 760,000 eligible households based on income and dependents.

The massive spending bill, the state’s largest, is balanced by billions of dollars from a projected $ 10.1 billion surplus in New Jersey amassed when tax revenues hit record highs during of the last year.

The Murphy administration had predicted that the pandemic would undermine state revenues and raise taxes for millionaires and corporations and borrowed $ 4 billion to cover a projected deficit. Now that the state was inundated with liquidity, this borrowing proved unnecessary.

Republicans criticized the budget as a missed opportunity to send more money to taxpayers and fix the state’s long-term financial woes, while progressive advocates said the legislature neglected to help workers undocumented migrants excluded from federal stimulus and boost funding for NJ Transit. The two scoffed at an expedited and opaque approval process.

“Are we not nibbling on the edges?” asked Senator Anthony Bucco, R-Morris. “If there was still time to lay the foundations for the future, now is the time. We have had the opportunity to do so much more in this budget. So much more. And I think we missed the boat. I’m afraid we’ll come back here next year, after all this spending, with nothing to show for the money we spent and that’s a shame.

The Legislature is moving swiftly to approve the bill, which was not made public until Tuesday evening – minutes before it was approved by Senate and Assembly budget committees.

This year’s negotiations took place in the spotlight of election year politics as the governor’s office and the 120-seat state legislature are up for election. Murphy and Speaker of the Senate Stephen sweeney put aside the disagreements and grudges of several years to cooperate on this budget.

Governor Sweeney and Speaker of the Assembly Craig-coughlin, D-Middlesex, tapped into the $ 44.8 billion budget presented by Murphy in February, and those negotiations generated $ 1.6 billion in additional spending, including more than $ 500 million in legislative spending additions and new and expanded tax breaks.

State Senator Bob Singer, R-Ocean, has warned the state is expanding too much and setting the stage for major tax cuts or increases.

“The biggest concern we must have is the uncontrollable spending. How can we maintain this in the future? We cannot, ”he said. “There are only two alternatives next year: drastic budget cuts to programs that we have suddenly been told to increase or huge, huge tax increases. Either is unacceptable.

Administration officials and lawmakers have argued that the budget is designed to provide relief to low and middle income residents without committing the state to expensive new programs and policies that it will not be able to afford in the near future. .

Responding after the vote to criticism that the budget does not go far enough to cut taxes, Senator Paul Sarlo, D-Bergen, chairman of the Senate Budget Committee, said: “There are tax cuts in this budget. We also set up the rainy day fund, the (debt) safe, things that prevent future tax increases. “

“Everything else grows,” he said. “The cost of running government is increasing every year. “

In addition to income tax cuts and tax deductions for higher education, the budget cuts taxes on pension distributions and expands a popular program of property tax relief, tax credits on earned income and credits for child care and dependents.

The state’s Democratic leaders also agreed to set aside $ 3.7 billion – an amount equal to the money borrowed in the fall – to remove some existing debt from the state’s balance sheet and pay out of pocket. future infrastructure projects.

They also plan to supplement the state’s first full contribution to the besieged civil servants’ pension fund in a quarter of a century with an additional $ 505 million, making next year’s contribution of $ 6.9 billion. the most important in the state.

New Jersey public schools will receive nearly $ 9.3 billion in direct aid next year, an increase of $ 578 million from this year. Some districts will continue to lose funds as the state redistributes aid from those considered overfunded under the school funding formula to those seen as underfunded.

School districts will receive an additional $ 100 million in extraordinary reimbursements for special education next year. The state is expected to cover 85% of extraordinary expenses for special education and with $ 400 million in the budget, it will meet this obligation next year. Sweeney said he wanted the state to fully cover those costs.

Federal stimulus assistance will fund $ 500 million in rent assistance, $ 250 million in utility assistance, $ 600 million over three years to provide an additional year of eligibility for the special education program of the state to approximately 8,700 students with disabilities, $ 180 million for HVAC improvements in schools and small businesses, $ 100 million for daycares, and $ 450 million to improve emergency preparedness infrastructure in state-level I trauma centers, administration officials say.

State Senator Ron Rice, D-Essex, in the Senate, has called for spending $ 1 billion on after-school programs for children in urban New Jersey communities. There are no more excuses now that New Jersey is on edge, he said.

As part of the budget, the Homestead property tax program will receive a long-awaited facelift that will increase the average credit for seniors and homeowners with disabilities by over $ 130 and the average benefit for low-income homeowners by. $ 145.

The administration estimates that 70,000 New Jersey seniors will be able to receive a partial benefit under the pension exclusion, as the budget increases income thresholds to $ 150,000. The program’s strict threshold of $ 100,000 has exacerbated taxpayers who lose the entire exclusion if their income exceeds even $ 1 that limit.

As part of the deal, 764,000 households with incomes below $ 150,000 and at least one dependent child will receive non-refundable income tax credits of up to $ 500 this summer. The rebates were part of a deal struck last fall to raise taxes on the income of high earners.

According to the Treasury Department, 716,000 couples with incomes of less than $ 150,000 who jointly file an application would receive an average of $ 425, while the nearly 48,000 single couples with incomes of less than $ 75,000 would receive an average of $ 425. average of $ 297.

The budget creates a new tax deduction for households with incomes below $ 200,000, which will be able to deduct their first $ 10,000 in NJBEST 529 savings plan contributions, $ 10,000 in tuition payments and 2 $ 500 in NJCLASS student loan payments. The budget includes $ 50 million to fund two years tuition-free at a four-year college for students from low-income families and $ 10 million to provide $ 750 in matching contributions to a 529 account in order to encourage university savings for families under $ 75,000.

Journalist NJ Advance Media Susan K. Livio contributed to this report.

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Samantha marcus may to be reached at [email protected].


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