Updated: 4:56 p.m.
New Jersey Gov. Phil Murphy signed a $38.7 billion budget Sunday afternoon, averting a government shutdown, but likely prolonging a fight with Democratic leaders in the state Legislature.
Murphy ultimately agreed to the budget lawmakers sent him, even though it excluded his sought-after tax hike on millionaires.
“As fundamental as that disagreement is, it is not reason enough to walk away from this budget,” he said. “It is not a reason to shut down state government.”
The governor had sought to cast Democratic leaders as out of touch with average New Jerseyans for their refusal to include the so-called millionaire’s tax, an increase in gun permit fees, and added funding for community colleges in their final spending plan.
Murphy also nodded to an ongoing disagreement with State Senate President Steve Sweeney, D-Gloucester, who has urged the governor to deal with the state’s underfunded public worker pension system before raising taxes.
“The simple question that should drive all of our actions is this: Whose side are you on?” Murphy said Sunday at an event filled with union workers and other supporters. “Everyone here knows their answer to that question. And, I know mine.”
Democratic members of the state Legislature including Sweeney applauded the signing but criticized Murphy’s barbs aimed at lawmakers.
“Look at the total budget, we did well. We did well,” said Sweeney, a political foil who has locked horns with Murphy. “When the governor says, ‘Whose side are you on?’ I’m on the side of all 9 million people in this state — not just some.”
Murphy admonishes Democratic leaders
In signing the budget, Murphy also line-item vetoed some legislative spending that will likely raise the hackles of some of the same lawmakers who resisted his push for the millionaire’s tax.
Murphy cut a total of $48.5 million in spending, including $38 million for studying shared services and school consolidation, $5 million for a Cooper University Hospital project, and $500,000 for a Rutgers-Camden workforce study.
Sweeney, who has ties to Camden, viewed some of the line-item vetoes as political payback for rejecting the tax on the wealthiest New Jerseyans.
“The attack on Camden is disappointing, but not unexpected,” Sweeney said. “It’s been punitive, and we see how [Murphy] goes with this stuff.”
But Murphy denied that any of his budget cuts were political.
“I promise you we’re calling these things balls and strikes. We don’t care about geography, individuals, or companies,” he said.
The administration will also place as much as $235 million in spending in reserves, which officials say will be locked down until the state hits its projected $1.276 billion surplus.
The surplus will include a $401 million deposit into the rainy day fund, which guards against financial downturns.
Murphy said the budget still includes a majority of his spending priorities, including funding for New Jersey Transit and education, though the Legislature’s budget cut funding for community college grants the governor proposed.
The governor also alluded to the ongoing fight over a controversial tax incentive program that has pitted the administration against Sweeney ally and South Jersey power broker George Norcross.
Several companies with ties to Norcross have received state tax breaks, and a task force Murphy convened found special interests — including a law firm led by Norcross’ brother, Philip — played an outsized role in writing the 2013 law expanding these tax incentives. The task force also uncovered allegations of potential abuse by companies that may have lied on their applications or failed to live up to the requirements of their agreements.
“I am on the side of putting the needs of New Jersey’s families ahead of the wealthy, ahead of privileged insiders, and ahead of powerful special interests,” Murphy said Sunday, with Sweeney standing at the back of the room.
“But, the forces of business-as-usual are stubborn and strong. They are forces that dictate and demand rather than listen and negotiate. And, the people are left out.”
A prime example of that, Murphy said, was the Legislature’s failure to pass the millionaire’s tax — a tax it had voted to pass five times under former Republican Gov. Chris Christie.
“The legislative leaders refused to give it a fair hearing and refused to put it up for a vote just to deny the people of New Jersey a clear tally of who stands with them and who stands against them,” he said. “And so, I ask again: Whose side are you on?”