Murphy delivers FY21 Budget Address; NJ Turnpike considers new Capital Program

NorthStar Strategies TrueNorth Insights

Governor presents fiscal blueprint to Legislature

New Jersey Governor Phil Murphy delivered his third annual budget address yesterday afternoon to a packed Assembly Chamber in rainy Trenton.

The $40.85 billion FY2021 spending plan represents a 5% increase over current year spending. Murphy’s budget would generate $1 billion in new revenue from a variety of added taxes. These revenues would be used to make significant investments in education, NJ TRANSIT, public-worker pensions and other priorities. Specific highlights include:

  • Education:  Murphy increases formula funding for K-12 school districts by $336.5 million; he provides an $83 million increase for preschool education, $50 million in “stabilization aid” to support districts facing shortfalls, and $50 million for tuition for community colleges.
  • NJ TRANSIT:  The Governor’s budget includes a $589.5 million general fund operating subsidy, an increase of over $100 million. However it continues the capital to operating transfer in the amount of $460 million and also relies on $129 million contribution from New Jersey Turnpike Authority and $82.1 million from New Jersey’s Clean Energy Fund.
  • Fiscal Stewardship:  The FY21 budget makes a contribution to “rainy day” fund, bringing it to $1.63 billion, or 4% of total spending.  Governor Murphy proposes a $4.6 billion contribution to the public worker pension system.

To help pay for these priorities, Murphy renewed his call to enact a millionaire tax, which would apply to the State’s top 10.75% income tax rate on incomes over $1 million and is projected to generate $500 million in new revenue. The millionaire tax has been a signature priority for Murphy since he was a candidate for Governor and he was equally passionate about it yesterday, calling it “a matter of fairness to our middle-class homeowners and renter, our seniors, and the countless working families reaching to pull themselves up and into the middle class.”

Murphy also proposed a steep tax increase on cigarettes that would generate $220 million in new revenue. The proposal would raise the tax per pack from $2.70 to $4.35.

The budget would also establish a “corporate responsibility fee” on private businesses with more than 50 employees enrolled in Medicaid; this proposal would bring in an additional $180 million.

Senate President Steve Sweeney, speaking to reporters after the budget address, rejected many of Murphy’s proposed revenue raisers. He did echo statements he made over the weekend and reiterated a willingness to support a millionaire tax in exchange for an additional $1 billion payment to the State’s public pension system. Assembly Speaker Craig Coughlin called the budget blueprint an “encouraging first step,” even as he expressed concern about proposed tax increases.

Read the Governor’s Budget Address as prepared here.

New Jersey Turnpike Authority Capital Program

The New Jersey Turnpike Authority has recently concluded its 10-year, $7 billion capital program.  This highly productive program allowed the Authority to maintain the condition of its roads, repair and upgrade bridges, completely overhaul many of its vertical facilities, and widen both the New Jersey Turnpike and Garden State Parkway.

Without action to authorize a new capital program, the Authority will be out of money and unable to repair, rehabilitate and maintain its numerous assets.  A vibrant and efficient transportation network is directly proportional to New Jersey’s economic health.  It is equally critical to the safety and quality of life of New Jersey’s nine million residents. 

Yesterday, the Authority’s Board took important action to initiate the process to consider a new proposed capital program and supporting revenue enhancements.  This will include a series of public hearings to consider the near and long-term needs of these roadways.  It comes at the same time that New Jersey is discussing the need for a long-term, dedicated source of funding for NJ TRANSIT.

NorthStar CEO Joe Fiordaliso, who is also President of the American Council of Engineering Companies of New Jersey (ACECNJ), offered public comments at yesterday’s Authority Board meeting.  Fiordaliso encouraged the Board to act and praised Governor Phil Murphy for his commitment to a long-term funding solution to make needed investments in New Jersey’s transportation network. ACECNJ issued a statement that read in part, “ACECNJ applauds this action as the first step in making sure the New Jersey Turnpike Authority has the funds it needs to rebuild roads and bridges and keep its system in good working order.”