In a blog post a few weeks ago we said if you want to see the future of New Jersey take a look at New York not realizing that reality would come so quickly. New York Governor Cuomo acknowledged that raising taxes was not the answer to his state’s budget shortfall saying “tax the rich, tax the rich, tax the rich. The rich leave and now what do you do?” Will Governor Murphy acknowledge that he cannot continue to raise taxes in the state that is already among the highest taxed in the nation and the #1 state that people leave?
The Murphy Administration announced on Monday that tax collections are lower than expected as the state approaches the halfway mark of the fiscal year. Tax revenues for the fiscal year were expected to grow 7.5 percent over last year but slowed to 2.1 percent through December attributed to a slowdown in income tax collections. Income tax collections were budgeted to increase 5.4 percent compared to last year. They have fallen 6.5 percent below last year’s collections. Last year New Jersey collected $15.2 billion in income taxes. This year it is projected that the state will bring in $16 billion but the increase is largely attributed to the new mega-millionaires tax on income over $5 million and the one-time tax amnesty program. The income tax is New Jersey’s largest source of tax revenue.
Murphy also under-projected two other significant areas of the state’s revenue – the sales tax and the corporate business tax.
The Governor is expected to deliver his budget address on Tuesday and has said that more tax increases are still “on the table”. Last year the state’s budget included roughly $1.5 billion in new taxes. Senate President Steve Sweeney and Assembly Speaker Craig Coughlin have both said that will not be repeated this year.
Wall Street sees reason to be concerned. S&P said in a 2/25/19 analysis that the slow growth in New Jersey’s revenue – about half of what the $34.7 billion budget calls for could mean a budget shortfall when the current fiscal year ends on 6/30/19.
Murphy continues to spend and chase businesses, jobs and residents from the state. Rather than making New Jersey affordable and creating jobs and businesses in the state Murphy is focused on increasing taxes, more investment in the state’s pension, expanded Pre-K, community college for all (including illegal immigrants), making New Jersey a sanctuary state (thankfully ICE continues to protect New Jerseyans), funding the legal defense of illegal immigrants facing detention or deportation, driver licenses for illegal immigrants (including Real ID compliant driver licenses allowing the recipient to board an airplane), legalized marijuana, a $15 minimum wage (which we know will kill businesses and jobs in the state), defying the Trump Administration, ineffective gun control measures (that did not save the life John Bertram killed while working an overnight shift at an Edison gas station in December), pushing Obamacare (failed legislation that has been ruled unconstitutional by a Federal Court), a health insurance mandate (because the Governor apparently thinks he’s more powerful than Congress), criminal justice reform, restoring voting rights for those on probation or parole, redistricting, subsidizing the horse racing industry , giving Cory Booker an unobstructed path to the White House and destroying tourism at the Jersey Shore. While chasing residents from the state Murphy ensured that tourism at the Jersey Shore would also take a hit with his excessive short term rental tax and $15 minimum wage.
Meanwhile a recent Monmouth University poll showed that most New Jerseyans believe their quality of life in the state is declining.
With so many businesses, jobs and residents leaving the state Murphy unlike Cuomo seems not to realize that he cannot simply continue to raise taxes on the New Jerseyans who remain to make up the shortfall. New Jersey has now approached he same crisis that New York finds itself in and Murphy appears as oblivious as Cuomo was. We will all be looking forward to Tuesday to hear the Governor’s solution. Somehow I feel like our wallets are about to take another hit.
Are you mad yet New Jersey?
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