What to know before N.J. coronavirus budget hearings begin Tuesday

New Jersey Gov. Phil Murphy

New Jersey Gov. Phil Murphy speaks to the press. (AP Photo/Noah K. Murray, File)

Legislative hearings begin Tuesday where lawmakers will dive into the details of Gov. Phil Murphy’s proposed $32 billion budget, which would cover the nine months left in a difficult fiscal year marked by the COVID-19 pandemic.

Here’s what to watch for as the virtual hearings kick off:

1. The millionaire’s tax (and other revenue raisers)

Murphy, a Democrat, has again proposed raising the income tax rate on people earning more than $1 million from 8.97% to 10.75%, which the state estimates will generate $390 million.

It’s part of a package of tax hikes the administration projects could raise over $1 billion, including a tax increase on cigarettes and making a corporate business tax surcharge permanent.

Murphy and progressive groups have long called on wealthier New Jerseyans — like the governor himself — to pay their “fair share” so the state can afford programs to help residents hit hardest by the pandemic.

But many Republican lawmakers and business groups have said the tax hikes will ultimately hurt the very residents and small businesses the Murphy administration says it wants to help.

“Most of these taxes will make New Jersey less competitive,” said Chris Emigholz, vice president of government affairs for the New Jersey Business and Industry Association. “We need to move away from the talk of ‘fair share’ or whether somebody can afford a tax and we need to think about the collateral damage that happens from taxes on the competitiveness of our economy.”

Top lawmakers in the Democrat-controlled Legislature have previously balked at Murphy’s effort to hike taxes on millionaires, but so far it’s unclear how they will come down on the proposed “revenue raisers” in the pandemic-era budget.

2. Borrowing $4 billion

The other way Murphy wants to raise money to pay for the state’s needs during the pandemic is to borrow $4 billion for state coffers.

Murphy previously said the state would need to borrow a large sum to avoid major cuts to state programs in the absence of significant financial assistance from the federal government. He has suggested that borrowing will allow New Jersey to maintain many current state services, while also spending on programs to help those impacted by COVID-19.

“I just want to urge that we resist knee-jerk austerity,” said Hetty Rosenstein, state director of Communication Workers of America, a union that represents many state workers and supports the borrowing plan. “Instead, we should be increasing funding.”

Republicans sued Murphy over a law he signed this summer that allowed him to borrow up to $9.9 billion without voter approval for expenses brought on by the pandemic. The state Supreme Court ruled that the administration could in fact borrow such sums in a financial emergency — but only as much as revenue projections fell short.

3. Transparency

The state Senate and Assembly will hold hearings on the budget, but members of the public will not testify in person, as they have in past years. Although the Legislature has held in-person hearings during the pandemic, the capitol is still operating with some restrictions.

Instead, Democratic lawmakers in charge of both budget committees have asked the public to submit written testimony on the proposal, drawing the ire of critics who say it is a crucial time to allow for input.

“We can help make the best of a bad situation by giving folks at least one opportunity to testify in a public setting — even if by Zoom,” said Sen. Steve Oroho, R-Sussex. “Not everyone agrees on what everyone has to say, but we can all agree that we should hear each other out, and that the public and press should be able to bear witness that the public has been heard.

Left-leaning activists have also raised the alarm on the lack of public testimony. A coalition of progressive groups in New Jersey called For The Many held its own alternative budget hearings over Zoom last week, giving a platform to both advocates and members of the public.

4. Cuts to state programs

Recognizing the need for belt-tightening during the financial crisis caused by the pandemic, Murphy’s budget also includes $1.25 in billion cuts to state departments.

The governor said the administration tried to avoid cuts that would affect the state’s efforts to recover from the COVID-19 pandemic, but critics slammed some of the reductions, including a cut to school-based mental health services.

“Students in school have been suffering through this pandemic. They are cut off,” said Francine Pfeffer, associate director of the New Jersey Education Association. “Mental health services in schools are even more essential now than they ever were before.”

Other cuts include a $20 million horse-racing subsidy and a reduction in charity care funding to hospitals.

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