Murphy’s first budget shows how much can change, post-Christie

New Jersey officially put Chris Christie in the rearview mirror when he left office this year, but Gov. Phil Murphy’s new budget puts the change in administration in starker focus.

Gone is an inherent opposition to higher taxes, public-sector unions and increased spending. Murphy, a Democrat, unveiled his $37.4 billion budget Tuesday, offering a contrast with his Republican predecessor.

“It represents a sharp break from the direction we had been taken over the past eight years and turns our state’s trajectory to one of opportunity and fairness for all,” Murphy said.

Republicans say the state can’t afford the spending or the tax hikes and are predicting a retrospective rise in Christie’s approval rating

“Let’s see whether Chris Christie is a little more popular a year from now than he is at this moment,” Assembly Minority Leader Jon Bramnick said.

A closer look at the changes Murphy’s first budget presents compared with Christie:

Taxes

Murphy: Murphy’s proposal includes a higher rate on millionaires, the fulfillment of a campaign promise. Murphy’s change would boost the rate from 8.97 percent to 10.75 percent on incomes over $1 million. The current top rate applies to incomes over $500,000. Murphy also wants to raise the sales tax from 6.625 percent to 7 percent. That undoes a deal Christie cut in 2016 to lower the rate in exchange for a higher gas tax. Murphy said the lower rate was hardly felt by the public but blew a more than $500 million hole in the state budget. He’s also calling for the closure of a corporate tax loophole and what he says are technical revisions to businesses taxes.

Christie: Christie vetoed a millionaire tax five times over his eight years, arguing that it would stifle economic growth. The sales tax cut of 2016 was a key achievement of the governor’s because it accompanied a 23.5-cent per gallon hike in the gas tax, which now finances a $2 billion a year transportation trust fund. Christie said the deal achieved “tax fairness” because the revenues from lower sales tax were larger than the gas tax hike.

Marijuana

Murphy: The governor campaigned on legalizing recreational cannabis for adults and proposes enacting a program by Jan. 1, 2019. Murphy says the top reason for legalization is “social justice,” remedying years of unfairly jailing mostly minority residents on minor drug violations. But he’s also banking on $60 million in tax revenue from the program. Murphy’s campaign estimated cannabis would bring in $300 million.

Christie: He adamantly opposed legalization, calling prospective tax revenues “blood money.”

Property taxes

Murphy: His budget includes about $1 billion more in property tax relief over the current fiscal year that he inherited from Christie. The biggest increase comes from more funding to schools. That’s made up of higher direct aid to schools, known as formula aid, as well as pension money for retired teachers. Officials consider school aid property tax relief because schools are funded primarily by property taxes at the local level, but there’s no firm guarantee the increased aid will lead to lower property taxes. The aid does take pressure off to increase rates.

Christie: One of his signature reforms was the enactment of a 2 percent cap on property taxes, as well as a 2 percent cap on what police and fire labor officials could get if negotiations went to arbitration. The so-called arbitration cap expired last year, and unlike Christie, Murphy has so far declined to re-up the cap.

Education

Murphy: Murphy swept to victory on the promise that he would fully fund a school-aid formula that goes back to 2008. Despite Supreme Court approval for the formula, Christie underfunded it by about $1 billion a year. Murphy’s budget puts aside about $300 million for the formula and says he plans to reach full funding in four years, he said.

Christie: Christie pushed in his final years for what he called the “fairness formula.” His plan called for doling out state aid equally per pupil. The plan would have on balance helped suburban districts and hurt urban schools. The Democrat-led Legislature failed to enact Christie’s plan.

Pensions

Murphy: He’s calling for a $3.2 billion pension in the fiscal year that starts July 1. That represents 60 percent of what actuaries determine to be the full rate. It’s not the “full payment” that he called for during the campaign but he says it puts the state on path toward a full payment by 2023. The payment is about $700 million higher than Christie’s final installment. Unlike Christie, Murphy is not calling for slashing public retiree health benefits.

Christie: Christie closed out his two terms having paid more into the pension than recent previous governors combined, culminating in a $2.5 million payment. And yet he feuded bitterly with Democrats and labor leaders over a law he signed to prop up the pension. He agreed to fund the pension in return for cost-of-living-payment freezes from pensioners. But Christie reneged on the deal when state revenues dipped unexpectedly, lowering the amount he promised to pay.