NJ Gov. Murphy Loses On Millionaire Tax, Widens Rift With N.J. Democrats

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New Jersey Gov. Phil Murphy has backing from liberal voters, public unions and a national Democratic party agitating for progressive values in the age of Donald Trump. Foes within his own party may have higher-octane fuel: residents’ disgust with some of the highest taxes in the U.S.

Murphy signed a $38.7 billion budget on Sunday, avoiding a government shutdown that could have cost him politically. The plan increases spending to make a record $3.8 billion pension payment and boosts funding for property-tax relief, public schools and the cash-strapped New Jersey Transit agency. Still, the governor lost his fight for a millionaire’s tax with the more-moderate Democrats who control New Jersey’s Senate and Assembly.

Though Murphy hailed the budget as a “victory for the middle class,” he lamented what it lacked: his tax on the rich, higher fees for gun permits and charges on opioid manufacturers to fund addiction services. As he vows to push even harder for such initiatives in the next year, he risks alienating state party leaders further and falling behind a nationally strengthening progressive wave.

“While progressive change is taking hold all across our country, Trenton largely remains a holdout,” Murphy, 61, said on Sunday.

Murphy, a retired Goldman Sachs Group Inc. senior director, became governor in January 2018 as a newcomer to public office. He agreed more often than not with veteran Democratic leaders whose progressive bona fides included gay marriage and medical marijuana.

Together Murphy and lawmakers restored Republican predecessor Chris Christie’s cuts to women’s health funding, required paid sick leave, raised the minimum wage, tightened gun laws, expanded the statute of limitations for sex-abuse victims’ lawsuits and established a state-based health care-coverage exchange.

“I defy you to find, in a year or 14 months’ time, more progressive legislation that came out of this legislature and was signed by this governor,” said Senate Majority Leader Loretta Weinberg, a Democrat from Teaneck.

Still, early progress toward recreational marijuana came to a halt in the legislature, endangering New Jersey’s bid to be the first New York City-area state to legalize the drug. And last week, as 20 Democrats used presidential debates to touch on free college tuition and corporate culpability for opioid addiction — policies that Murphy has been pushing — New Jersey legislative leaders were saying no.

Democratic leader Steve Sweeney, who has been in the Senate since 2002 and its president since 2010, was a sponsor of the millionaire’s tax Christie vetoed five times. In recent years he has changed his mind on the levy, saying New Jerseyans can’t afford it.

“The Legislature and I strongly agree on many essential investments in New Jersey families, and this budget will make those investments,” Murphy said on Sunday. “But we also strongly disagree on who should fund them.”

Murphy has lost his millionaire’s-tax battle for two-straight years. In 2018, at least, he got lawmakers to bend a little, settling for higher rates on earnings of $5 million or more.

This year, Sweeney and other legislative leaders refused to budge. Instead of meeting with lawmakers to negotiate a deal, Murphy mostly held press conferences to push his proposals.

“I’ve noticed with this governor, he really doesn’t want to make deals, doesn’t want to be transactional,” said Assembly Minority Leader Jon Bramnick, a Republican from Westfield. “He has his agenda, and it’s really his way or the highway.”

Though the governor has power to veto items from the budget, he cannot add spending. Murphy said the lawmakers’ budget didn’t include “much-needed reliable and recurring revenue sources” while it added spending and relied on “questionable revenue and savings projections.”

He vetoed $48.5 million and signed an executive order to deposit $400 million into the state’s rainy day fund. “The need for us to save for tomorrow is more important than ever,” he said.

The governor said he has “deep concerns” about lawmakers’ revenue projections, and is holding $235 million of appropriations in reserve “until savings assumed in this budget materialize, current revenues reliably overperform, or the Legislature authorizes new revenues.”

The Communications Workers of America union, whose state-employee members helped get Murphy elected, made more than 12,000 calls to members of the New Jersey legislature to support the governor’s budget, including a millionaire’s tax, according to Hetty Rosenstein, the union’s state director. It also rallied outside the Statehouse.

The union, Rosenstein said, would continue to support Murphy and stand against “unending and vile attacks” from Sweeney, who is advocating for cost savings in new hires’ pensions and benefits.

“Governor Murphy has decided that he will take a difficult path, a path that he believes in,” Rosenstein said by telephone. “He is a person with conviction, and he’s operating from conviction as opposed to jaded or crass politics.”

Nationally, 51% of Democrats identified as liberal in 2018 — the first time a majority of the party’s members chose the term and more than double the percentage that did so in 1994, according to Gallup polling. At the two Democratic presidential candidates’ debates last week, contenders tried to score with the base on topics including the economy, pay equity, health insurance, abortion, transgender rights and pharmaceutical-company accountability.

Murphy, who campaigned on such issues, will become chairman of the Democratic Governors Association in January.

Weinberg, the Democratic majority leader, called the relationship between the governor and the Senate leader a “work in progress which has already resulted in some very good legislation which I’m very proud of.”

“We don’t live in a bubble,” Weinberg said. “And the governor can’t sign anything we don’t put on his desk, and we can’t get a law passed that he doesn’t sign. We need each other.”

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  1. I love it. Democracy at work. Murphy is going to bankrupt the State. This is what you wanted when you voted for him. He is keeping his word. Finally a politician who is doing what he promised to do. Enjoy!


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