Murphy meets with Cabinet to review state shutdown scenarios
TRENTON — Gov. Phil Murphy met Thursday morning with his Cabinet to review plans for a state government shutdown that could start Sunday, though he said he remains optimistic a budget deal will be reached with Democratic legislative leaders.
“We’ve reviewed a bunch of different scenarios today,” Murphy told reporters during a break in the Cabinet meeting. “I won’t get into any details now. But we’re going through that painful process of contingency plans, how the next few days are going to work out.”
Murphy might provide more details at a scheduled 1 p.m. news conference at a Trenton elementary school.
“I’m still optimistic. I believe if logic prevails, there are the makings of a very good compromise and resolution that’s reasonable,” Murphy said.
“But I would be abrogating my responsibilities if we did not plan for the whole range of possible outcomes if logic doesn’t prevail, including the shutdown of the state,” he said. “All the issues that get tied into that – casinos, parks and everything else. So that unfortunately is part of our deliberations as well.”
Murphy proposed a budget in March that included returning the sales tax to 7 percent, up from its current level of 6.625 percent, and hiking the tax on income over $1 million from 8.97 percent to 10.75 percent. He now says he’s willing to hike the sales tax slowly over two years and scale back the hike in what’s referred to as a millionaires’ tax – but he’s not backing off his push for the taxes.
“Doing so now would prevent us from having to go through this chaos and craziness again next year and God willing the years after,” Murphy said.
The Legislature has resisted those tax hikes and instead passed a budget that includes a two-year surcharge in the corporate business tax. Murphy says he’s open to a surcharge but wants to change the details. Lawmakers are willing to make it last four years but so far have not been willing to trim the rates – which for corporations with profits over $25 million would be the nation’s highest at 13 percent.
Senate President Stephen Sweeney, D-Gloucester, on Wednesday proposed a few new tax hikes to balance the budget, including the possibility of applying the sales tax to short-term rentals, such as Shore houses, of less than 90 days. That would cost vacationers around $250 million a year.
“I never thought of it before, about the shore rentals,” Murphy said at the Cabinet meeting. “That’s taking it out on the middle class. That’s the opposite of why we were brought here, why we’ve either gotten elected or brought here and convened here to work together.”
As of midday, no budget negotiations were planned for Thursday. The Senate and Assembly had canceled their planned voting sessions.