Investing in New Jersey’s Future Will Require New Budget Revenues

Budget Must Address Critical Public Investments Needed to Protect State’s Assets

In anticipation of the New Jersey Governor Phil Murphy’s budget address on Tuesday, March 13, 2018, New Jersey Policy Perspective (NJPP) has released a new report, “Investing in NJ’s Future Will Require New Revenues.”

NJPP President Gordon MacInnes makes the case that New Jersey needs a bold, robust plan to raise new revenues to get the state back on track.

“To begin rebuilding a strong state economy, New Jersey’s governor and legislators must stabilize the state’s finances and put the Garden State back on track to invest in its competitive assets, which have been largely neglected during a 25-year slide into financial peril. New investments require new revenue that should be tied to much-needed public services and essential investments.”

MacInnes reminds us, “A quarter century of tax cutting, false promises and high-risk financial shenanigans have degraded New Jersey’s economic assets and imperiled its future.”

MacInnes outlines the “Crucial public investments that have deteriorated”:

  • School, municipal and county aid has been sharply reduced after adjusting for inflation, resulting in a steady increase in property taxes
  • Direct property tax relief was slashed during the recession and has not been restored
  • Residential property taxes continue to be the highest in the nation
  • New Jersey has shifted the cost of public higher education to students and their families
  • NJ Transit – once the national public transit model – is now the nation’s under-performer
  • The state’s budget is unbalanced and its reserve fund is depleted
  • Lawmakers have put New Jersey on the hook for billions in future tax breaks
  • The state is currently unable to fund promised public employee pensions – This problem poses the biggest question and “elephant in the room.”

Writes MacInnes, “Tax Reforms Can Bolster New Jersey’s Economic Future.” “By cleaning up the state tax code, reversing some of the most ill-advised tax cuts of recent years and asking the state’s wealthiest households to pitch in a bit more, New Jersey could raise over $2.5 billion in new revenues that could be invested in the state’s long-neglected assets, putting the state back on the right track.”

MacInnes proposes the following tax reforms:

  • Return the sales tax to 7 percent and modernize its application ($700 million+)
  • Restore the estate tax at a threshold of $1 million ($400-600 million)
  • Make the income tax more equitable by increasing rates on the wealthiest 5 percent of households ($1 billion+)
  • Close corporate tax loopholes used by multi-state corporations ($110m to $290m)
  • Consider recouping a piece of the windfall corporations will receive from the federal tax changes ($500m)

MacInnes calls on Governor Murphy and his administration’s budget to invest in New Jersey’s future for the good of all New Jerseyans. “If it does not call for significant new revenues, then New Jersey is fated to continue on its downward slide of a quarter century without the means to invest in the state’s neglected assets.”

NJPP Report Overview

NJPP Full Report

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