Senate Republicans Propose Balanced Budget Without Murphy’s Billions in Borrowing & Tax Increases

Evidence Mounting State Revenues Performing Better than Administration Will Admit

The four Republican members of the Senate Budget & Appropriations Committee offered a path to a balanced State Budget for 2021 that does not rely on the billions of dollars of borrowing and tax increases proposed by Governor Phil Murphy.

The Republican plan was proposed in a letter (click here for PDF) to the majority Senate Democrats from Senate Republican Budget Officer Steven Oroho (R-24), Senator Sam Thompson (R-12), Senator Declan O’Scanlon (R-13), and Senator Michael Testa (R-1).

“The Murphy Administration has done everything possible to avoid being transparent with legislators and the public about the true state of the State’s finances,” said Oroho. “Despite the doomsday picture that’s being painted to engender support for the governor’s plan to tax and borrow billions, we have mounting evidence that State revenues are performing much better than the administration will admit. Based on the improving trends reported by nonpartisan budget analysts, we have put forward a fiscally responsible plan to balance the State budget without the harmful and expensive gimmicks proposed by the governor.”

A revenue estimate for FY 2021 released yesterday by the nonpartisan Office of Legislative Services (OLS) estimates nearly $37.8 billion of State revenues next year. That is nearly $1.4 billion more that the approximately $36.4 billion of revenues estimated by the Murphy Administration in August when the governor released his revised budget proposal for 2021.

“The very conservative fiscal analysts at OLS say the governor is off by $1.4 billion in his revenue estimates,” said Thompson. “Our internal analysis, which was advised by former State Treasurers and revenue professionals from both parties, suggests the Murphy Administration is low-balling revenues for next year by around $2 billion. It’s clear the governor is severely understating State revenues to convince people that he needs to borrow to massively increase spending on new non-COVID programs, and to pass an income tax increase that’s more about liberal politics than good public policy or necessity. Our balanced budget plan demonstrates a responsible alternative to the harmful borrowing, unnecessary taxing, and wasteful spending proposed by the governor.”

In August, Governor Murphy proposed a spending plan for next year that relies on $4 billion of borrowing and more than $1 billion of tax increases, including higher taxes on income, cigarettes, and health insurance, along with millions in new vehicle registration fees that will be charged to drivers.

The governor also proposed building a massive and fake budget “surplus” of $2.2 billion using the borrowed funds and increasing spending on unnecessary programs such as his “baby bonds” initiative to set aside $1,000 into a savings account for every child born in New Jersey — which they wouldn’t receive until age 18.

“It’s insane for the governor to propose jacking up taxes on businesses that are struggling to survive closures, on families that have lost income or jobs due to lockdown orders, and on drivers that have been failed by the MVC’s inadequate planning,” said O’Scanlon. “He hasn’t been transparent on how billions in federal CARES Act funds are being spent to help New Jersey through this crisis, and he’s proposing a repeat of the Whitman pension bond fiasco on an even bigger scale. What the Murphy Administration has proposed might be the biggest budget scam ever perpetuated on New Jersey.”

The Senate Republican budget proposal achieves a balanced budget by: correcting the governor’s discredited revenue forecast; recapturing New York taxes on New Jersey residents; eliminating new taxes and fees; eliminating deficit bonds; eliminating most new/increases non-COVID spending; adjusting pension prefunding; restoring certain reductions to provide additional assistance to businesses, nonprofits, and government agencies impacted by COVID; and building the State surplus to a responsible level.

“Despite the Murphy Administration missing multiple opportunities to achieve savings while much of the state was locked down this spring, New Jerseyans have been resilient and innovative and driven an economic rebound that provides lawmakers the opportunity to responsibly balance our State Budget,” added Testa. “The sad truth is that Governor Murphy doesn’t want us to do that. He wants to borrow and tax billions to build a massive fake ‘surplus’ that he can spend on a progressive wish list as he heads into reelection next year. That’s just wrong. Senate Republican are going to fight for New Jerseyans to give them the honest and affordable budget they deserve.”