The budget deal that Gov. Phil Murphy and legislative leaders agreed to late Saturday came with about $900 million in more spending, increasing the FY 2019 budget from the $36.5 billion passed by the Legislature a week earlier to $37.4 billion for the coming fiscal year.
Murphy signed the spending plan into law around midnight along with an income tax increase bill, corporate tax increase and combined reporting bill, and other tax measures.
NJBIA remained opposed to the tax increases. Following months of strong advocacy, the staff was at the Statehouse all weekend, having mitigated the ultimate outcome. The association is still studying the details on all of the tax changes and will report them as soon as possible.
“Unfortunately, these tax increases do not address the fundamental problems facing New Jersey’s finances. This year’s budget represents an 8 percent increase in spending,” said President and CEO Michele Siekerka. “Until the governor and legislators get serious about addressing the state’s unsustainable spending levels, the state budget will need ever increasing revenue from its taxpayers, and as we have seen, that burden will likely fall on the backs of our job creators.”
The budget includes:
- A $3.2 billion contribution to the state pension system.
- A supplemental appropriation of $788 million to the property tax relief fund from an off-budget energy fund.
- A budget surplus of $765 million
On the revenue side:
- The Corporation Business Tax (CBT) will increase to 11.5 percent for companies making more than $1 million, the second highest rate in the nation (Iowa’s is 12 percent).
- The CBT bill also includes provisions on combined reporting.
- A new top income tax rate of 10.75 percent on those with income over $5 million went into effect.
Final action came after a week of negotiations between the governor and legislative leaders. The talks broke down several times during the week, and legislative sessions scheduled for last Thursday and Friday were canceled, raising the expectations of a government shutdown.
The budget deal was announced at a press conference on Saturday night, and legislators began the voting session early Sunday morning. Because of the complexity of all of the legislative changes, it took all day to draft the legislation so the vote could be held. The bills received final passage around 7 p.m. last night.