Budget talks disintegrated on Friday among New Jersey’s all-Democratic leadership, stalling on disagreements over how much to raise taxes to pay for nearly $37 billion in spending and threatening the state’s second straight shutdown.
Gov. Phil Murphy, Senate President Steve Sweeney and Assembly Speaker Craig Coughlin held dueling news conferences after hours of meetings late Friday to announce their inability to come to a deal, capping more than a week of disagreements over how much taxes should rise to finance higher school aid, increased transit spending and a bigger pension payment.
The officials have until midnight Saturday to enact a balanced budget or face a state government shutdown. State parks, beaches and the Motor Vehicle Commission would close. Casinos and tollbooths would remain open, and police and emergency workers would stay on the job.
The attorney general’s office said in a letter that racetracks would close in the event of a shutdown because they failed to apply for a permit required under law to remain open.
The leaders and Murphy say they’re open to continuing talks, but had nothing immediately planned.
It was unclear how Murphy would act on the budget that sits on his desk. He said “all options” are on the table, and he has previously said he would veto the spending plan because it doesn’t contain enough tax revenue to support spending.
The disagreements have centered on taxes.
Murphy wants income taxes hiked on residents making more than $1 million from 8.97 percent to 10.75 percent, amounting to the fulfillment of a campaign promise. He also wants to raise the sales tax from 6.625 percent to 7 percent.
Sweeney and Coughlin instead sent him a budget that hiked the business tax, including a new tier that would have given the state the highest corporate rate in the country at 13 percent, but only for two years.
On Friday, lawmakers offered a 9.95 percent rate on income over $5 million, as well as a phase-down of the business rate over four years, in line with Murphy’s request to keep the state from having the highest rate in the country.
But Murphy, a wealthy former Goldman Sachs executive, called the tax on those making more than $5 million “symbolic.” He pointed out that even he wouldn’t be subject to the new higher rate.
“I still hope we’ll figure something out here,” he said. “But it has to be something that is consistent with who we are and what we’re standing for and why folks elected us.”
Sweeney said Murphy didn’t counter lawmakers’ proposal on the income tax and compared Murphy to his predecessor, suggesting he was stubbornly refusing to deal.
“You know Chris Christie wanted it my way or the highway, too,” Sweeney said. “We wanted compromise. There’s none been offered.”
Sweeney also argued that he wanted Murphy to address the state’s public worker health benefits, with the goal of cutting costs.
Christie shuttered state government last year over three days after he and lawmakers failed to enact a budget. The stalemate ended after photos of Christie on a closed public beach where the state maintains a residence for the governor were published by NJ.com, creating a national stir.