Shutdown averted as Murphy and lawmakers reach budget deal
Gov. Phil Murphy and Democratic legislative leaders have reached a deal on the 2019 state budget, with just hours left until the deadline that could have triggered a partial state government shutdown.
"There will be no shutdown," Murphy said. "The parks and beaches are open."
Technically, the state's new fiscal year begins without a spending plan in place. The Senate and Assembly are planning to hold 8 a.m. voting sessions Sunday to get the budget and tax-hike bills back to Murphy, who said he will sign them "as soon as humanly possible."
"And because we have this agreement, under my authority as governor, I will not declare a shutdown in the interim," Murphy said.
The sales tax will not be increased from 6.625 percent to 7 percent, as Murphy had proposed.
Income taxes for the wealthy will be hiked to 10.75 percent – but starting at an income threshold of $5 million, rather than $1 million. Murphy says this tax hike will generate $280 million in revenues for the state.
A corporate tax surcharge will be imposed, though not at the levels lawmakers had approved last week. The surcharge will be 2.5 percent this year and next year, then 1.5 percent for the following two years. It is believed this tax will generate $425 million a year in revenue initially.
Some of the other tax increases proposed by Murphy will be included in the plan, such as higher taxes on Airbnb-style homeshare rentals – but not the last-minute proposal from the Legislature to impose sales taxes on traditional short-term Shore home rentals.
The agreement includes a tax increase on e-cigarettes, but it doesn't include a variety of gun-related fee increases Murphy sought.
Most of the spending proposals in the budget appear to be similar to those in the budget the Legislature passed June 21, except that it adds an additional $20 million for Murphy's proposal to begin making community college tuition-free for students. The budget now includes $25 million of the $50 million Murphy had requested.
The agreement fends off, barely, what could have been an embarrassing situation for Democrats, who control both the executive and legislative branches of the government but were out-of-sync in budget talks and nearly shut the government.
"It's been one hell of a journey," said Senate President Steve Sweeney, D-Gloucester. "As the governor said, it's never been a disagreement over where we wanted to go, it was how to get there. And we got there in a place we all think is fair."