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New Jersey Reaches Budget Deal, Avoids Shutdown

Was it only a year ago that then-Gov. Chris Christie drew the world’s attention to a standoff that shut down New Jersey?

Indeed it was.  Yet last week a new governor almost presided over yet another state shutdown.

This year, it was an intraparty squabble that threatened Jersey’s parks and beaches.  But hours before the state budget deadline, Gov. Phil Murphy and legislative leaders — all Democrats this time — struck a deal and resolved a dispute that began in March with the release of the new governor’s first budget.  Senate President Steve Sweeney had supported raising taxes on wealthy taxpayers, but changed his mind once Congress rewrote the federal tax code in a way that limited state income and property tax deductions.  Murphy, however, had campaigned extensively on raising taxes on the well-to-do.  His decision to push forward immediately for a so-called “millionaire’s tax” led to a stalemate with a legislature controlled by his own party.

After intense negotiations, Sweeney and Assembly Speaker Craig Coughlin settled with Gov. Murphy on a $37.4 billion budget that will raise taxes for persons earning $5 million or more.  The measure hikes their rate from 8.97% to 10.75%, while adding a temporary tax surcharge of 2% for corporations earning over $1 million annually.  Murphy, however, agreed to drop another proposal that would have returned the state sales tax rate to 7% (it is now 6.625%).

The new budget includes financing for nearly all of Murphy’s proposed investments, including a $242 million increase for New Jersey Transit, an additional $83 million for prekindergarten, and an extra $25 million for community colleges.  It also pours $3.2 billion into the state’s struggling pension system.

The mere threat of a shutdown worried residents of the state, who were decamping to state parks and beaches for extended 4th of July vacations. When the state shut down last year, the state park system closed, forcing campers to pack up early and leaving a 10-mile stretch of beach vacant, except for a now-infamous gathering that Gov. Christie hosted for his family.

This year the new governor drew high-profile support from such party luminaries as former Vice President Al Gore, New York City Mayor Bill de Blasio, and former Vermont Gov. Howard Dean.