Careening Towards The Brink: Insider NJ’s Budget Showdown Play-By-Play

In case you want to relive the budget showdown, take a look at Insider NJ’s budget play-by-play.  If you feel like going back a little further, to last year, take a look at our play-by-play of shutdown ’17.

When Governor Murphy introduced his budget back in March (see the PDF briefing books here), the initial response from legislative leadership was tepid, foreshadowing a looming showdown, specifically over the millionaire’s tax.  Assembly Budget Chair Pintor Marin said ‘we have a lot of work to do‘ during the hearings.

On Friday June 15th, running up against a July 1st budget deadline and the looming specter of a potential government shutdown, Governor Murphy and Senate President Sweeney came out of two rounds of budget meetings on that morning with no movement towards an agreement, with sources saying that legislative leadership would likely drop their own budget proposal on the Governor’s desk the next week.  As one source put it, ‘Sweeney’s in the driver’s seat‘.  With his caucus allies, Sweeney held an afternoon press conference and listed their budget priorities – cut from the Governor’s proposal – while Murphy released a statement digging in, saying that his predecessor Chris Christie ‘kicked the can down the road’ and that ‘New Jersey didn’t elect me to paper over problems with the same failed policies of the past.’

On Monday June 18th, as a dysfunctional mood permeated the Statehouse, the chasm between the Governor and legislative leaders widened as negotiations continued to break down.  Sweeney and Coughlin counterattacked with their own alternative budget proposal. Their budget, among other changes, swapped out the Governor’s millionaire’s tax and swapped in Sweeney’s corporate business tax hike while replacing the free community college program with a scaled-down pilot program. Murphy, earlier in the day, had said ‘should the Legislature send me this budget proposal, let me be perfectly clear: I will veto it.’ Senate Budget Chairman Sarlo called the Legislature’s alternative a ‘responsible budget‘, and Assembly Budget Chair Pintor Marin said it provides ‘90 to 95 percent of what he [Murphy] wants‘.  A Murphy ally noted that it would cost more money than the Governor’s budget. After the press conference, Sweeney said no Governor had ever told him to take a budget as is, and claimed that’s what Murphy had done in their Friday meetings. Sweeney also pushed back against Statehouse buzz that former Governor Christie was coordinating with him on the budget.  As the Assembly caucus huddled mid-afternoon, apparently intent on calling the Governor’s bluff, a source said ‘we are absolutely putting this budget through on Thursday and there’s been almost no pushback at all’ from caucus members.

 

 

That day, Murphy had the added circumstance of having to fight back against a Star-Ledger article on his son, saying the article ‘turned my son’s youth into click bate. It’s quite simply a disgrace. He’s a special dude, imperfect to be sure, but special.’ Assembly Minority Leader Bramnick came to Murphy’s defense, saying the article ‘has no redeeming value’, while ally Senator Codey released a statement echoing the Governor, saying ‘our children have a right to grow up’.  Sweeney, too, released a statement saying ‘there is much that divides us in politics, but not our respect for one another’s families.’ A day later, Murphy would offer a note of appreciation to Bramnick, saying ‘Jon was one of the first to offer words of support’ and ‘I’ll never forget that.’

On Tuesday June 19th, Murphy held a press conference in Trenton in the morning, warning that the NJ Transit overhaul could be jeopardized if sustainable revenues weren’t enacted in the budget. Responding to comments by Bramnick characterizing him as a ‘inexperienced dictator’, saying ‘if you think that’s extreme, I’m your guy‘.

 

 

At the Statehouse, the Senate Budget Committee advanced the Legislature’s budget proposal by an 8-3-2 vote, with Chairman Sarlo saying he’s hopeful for a ‘continued dialogue‘ with the Governor.  The Assembly Budget Committee passed the proposal along party lines, 9-5, with Chair Pintor Marin saying ‘I don’t think this is a perfect bill’ while Assemblyman McKeon expressed his disappointment with the revenues. Assembly Republicans, having unanimously rejected the budget proposal, countered that the Democratic proposal is worse than the Governor’s, with Assemblyman DiMaio saying it’s ‘much more likely to make businesses will move out, not the other way around.’ See the score sheet of the Legislatures budget proposal.  The school funding reform bill was advanced by the Assembly Budget Committee that day as well; the day before, it passed the Senate Budget Committee, with both chambers planning to vote on it on Thursday.

Murphy doubled-down on his veto pledge, having said earlier in the day at his press conference that he hasn’t considered 2019 primary challenges to intransigent Democrats: “It’s never occurred to me.  It’s the 19th. I’m not suggesting this was bad [failed meetings with legislative leadership last Friday]. We were not throwing food at each other. I think at the end of the day we’ll find common ground.”  On whether or not his budget – and push for the millionaire’s tax – could be a burden for Democrats in battleground congressional districts, he said “I’m still of the opinion – and history will be the judge – that we can have it both ways”, making the case that his proposal is an asset, not a deficit (see CD11).

On Wednesday June 20th, with the Legislature going full speed ahead with a vote on their budget proposal the next day, sources said there continued to be zero movement on a compromise between the Governor and legislative leadership.  Speaker Coughlin had some tough words for the Governor: ‘campaigning is easy, governing is hard”, saying it would have been better for the Governor to ‘actually get in a room and meet face-to-face to be productive.’ Former Senator Lesniak, observing his first budget seasons since he left office, bemoaned the failure of the parties not getting together months ago to discuss the budget, saying ‘there’s a compromise there‘ on taxes coupled with reform – but believing it too late a lift for two weeks.

The Legislature released their school aid figures under their proposal, which would provide an increase of nearly $350 million, as Murphy warned that there would be no agreement on school funding or on modernizing the funding formula without sustainable recurring revenues.

 

Sweeney and Coughlin comfortably tag-teaming.

 

On Thursday June 21st, with negotiations having gone nowhere during the week, Sweeney, Coughlin, and Murphy huddled up, with Sweeney playing it close to the vest initially, then telling his caucus there was no deal at hand around noon, gaveling the Senate into session shortly after. The GOP held a press conference, bemoaning both the legislative proposal and Governor’s budget for the inclusion of tax increases. The Senate quickly passed Sweeney’s school funding reform bill as did the Assembly later in the day) 25-13, with several Democratic votes against. The chamber also voted on a resolution denouncing the family separation policy, with Senator Ruiz giving an emotional speech, to the applause of her colleagues. The Senate broke at 3pm, as Sweeney and Coughlin headed into another meeting with the Governor, with buzz of a potential deal swirling in the Statehouse. In wait and see’ mode, as the meeting was delayed, Bramnick emerged from the Governor’s office saying his caucus was united and wouldn’t vote for a tax increase. When the meeting ended, there was no deal, as the talks had apparently collapsed. Governor Murphy scheduled a 5pm press conference, where he ripped the Legislature – and his predecessor.  Coughlin rallied his caucus amid a few resistors – who wanted a budget vote the following Monday – and scheduled a vote.

 

Senator Smith, right, hobnobs with Sierra Club Director Jeff Tittel following today’s preliminary voting session.

 

The Senate got underway and passed their budget proposal 21-17, with GOP Senators Bateman and Corrado in support and Democrats Codey, Sacco, Gill, and Rice opposed, with Stack abstaining. The Senate also passed Sweeney’s corporate business tax bill (expected to be a close vote); the Assembly followed suit in passing the budget, and landed on the Governor’s desk. Later in the evening, Sweeney and Coughlin held a joint press conference with bitter words in response to Murphy’s earlier press conference. Sweeney said ‘I can tell you that many of my members were threatened. It reminds me of someone in the past. It’s time for him to negotiate with us’.

 

 

Over the weekend, Sweeney made the rounds on the weekend TV shows, who penned an op-ed on his budget in the Bergen Record.  Coughlin, meanwhile, highlighted an Asbury Park Press article which said that ‘the number crunching in the legislative budget would cause the least harm to the largest number of people.’  Sweeney and Coughlin released a joint statement noting that they reviewed the OLS budget figures in their budget plan and had complete confidence in their projections, despite the Governor’s caution. The Statehouse, spinning on its axis, now awaited the next turn of the sharp-elbowed budget brawl, hurtling towards that July 1st deadline.

 

 

On Monday June 25th, despite the weekend buzz, Murphy took no action on the budget proposal, as sources in the morning conveyed tamped down expectations of a full blown veto, as the Governor’s brain trust nibbled at both sides of the question: should he give in and cave, or should be dig in and fight? As Murphy prepared for an afternoon presser, mobilized with the heft of progressive allies, Coughlin and Greenwald held a presser of their own, sans Sweeney. Coughlin reiterated the legislative argument that their budget is ‘responsible and balanced’, while Murphy objected to the Legislature’s revenue figures, saying they were down by $1B and likened it to a ‘return to Chris Christie’s New Jersey’. With progressive groups’ chanting ‘no gimmicks, no tricks, millionaire’s tax is the fix‘, Murphy expressed optimism that a deal would be reached by the deadline. Later that afternoon, Murphy, Sweeney, and Coughlin – along with their full leadership teams for the first time – huddled up for a meeting. Making his way back to the Statehouse, Senator Scutari said ‘I want people to get along‘ as sources gauged the latest sit-down, ranging from ‘progress’ to a more sanguine ‘just not a bad meeting’.

 

 

The next morning, Tuesday June 26th, Murphy held a press conference in Rutherford to highlight his budget’s priorities for NJ Transit. Flanked by allies (and without district Senator Sarlo), he doubled-down on his assertion that the Legislature’s budget proposal’s revenue projections are too rosy, saying ‘I am absolutely prepared’ to make cuts, amid headlines that he yanked his predecessor’s security detail ahead of the usual six-month period (a source commented ‘you don’t get to head Goldman Sachs Asia Division by being just a guy with a nice smile’).

 

Murphy

 

Sweeney, meanwhile, was touring a disabilities resource center in Westville, highlighting the legislative budget proposal’s funding for disabilities services. Coughlin, who spent part of the day stumping in Woodbridge, said the Legislature shares Murphy’s commitment to NJ Transit, and they included funding in their budget proposal.

The negotiators headed back to Trenton for another round of budget talks, as Assemblyman Burzichelli made the case for the CBT over the millionaire’s tax as a revenue generator. Murphy then sent a letter offering a compromise to the Legislature, asking for a modified CBT surcharge, a two-year phased-in sales tax increase, and a ‘modest increase’ of the millionaire’s tax. Sweeney and Coughlin released a statement in response, noting that their budget proposal was ‘fiscally responsible’ but would give his offer ‘full consideration’. Meanwhile, the Building Trades came out in support of the legislative proposal, saying it puts money into NJ Transit and called it a ‘workers’ budget’, as the CWA prepared to lit drop targeted districts, urging compromise and support for the millionaire’s tax. Assemblywoman DeCroce released a statement blasting Democrats for the budget proposal’s tax on ride-sharing services such as Lyft and Uber, while Working Families released a video montage of Sweeney voicing support for the idea of a millionaire’s tax over the years.

 

Sources said of the earlier meeting that Murphy and Sweeney were civil towards each other – and both sporting pink ties – but ‘someone needs to put a bottle of Jameson on a table and lock the two of them in a room for an hour’.  Republicans, meanwhile, began to examine more avidly in off line conversations the prospects of joining a Sweeney-led override in the event no agreement would be reached.

 

 

The next morning, Wednesday June 27th, on the heels of his compromise letter, Murphy held a presser in Newark, saying the whole budget could get done in ‘30 minutes‘. Assemblyman Caputo, in support of Murphy, said he hoped lawmakers coalesce around the compromise (‘a good deal is better than a bad war‘, he said) or present their own version – which is exactly what they did.

 

 

Largely unimpressed with Murphy’s compromise, legislative leaders had been kicking around the idea of a seasonal rental tax. Sweeney then presented his own compromise proposal, including the seasonal rental tax, a 1% realty transfer fee increase, a CBT adjustment, and other provisions. He offered an explanation to his opposition to the millionaire’s tax, which he had previously supported for years, Sweeney said that the federal government’s tax cuts ‘changed the game‘ and warned ‘if there’s a shutdown it’s because the Governor wants it and wants to raise taxes on people.’  Senator Gopal, representing shore-based LD11,  immediately bucked Sweeney on the shore tax, saying ‘I can’t support that. That would just be devastating.’ Senator Van Drew came out against it as well, saying New Jerseyans have been ‘taxed, tolled and charged to death.’ While the Senate Majority Office sent out a release detailing quotes of support for their budget, Coughlin, who earlier in the day met with Assemblyman DeAngelo’s Mercer Building Trades to thank them for their support, sent a letter to his caucus notifying them that he and Sweeney developed the plan together, and outlining it’s provisions. Meanwhile, Clean Water Action urged support for the Governor’s budget remedies and the Better Choices coalition sent an open letter to legislators in support of Murphy’s budget compromise.  NJGOP Chairman Steinhardt released a statement saying there are ‘reasonable alternatives’ to Murphy’s ‘tax and spend mentality’.

With the two dueling compromise proposals and no direct meeting between the trumvirate on Wednesday, the Assembly wouldn’t meet again until Friday (in fact, both the Senate and Assembly would end up rescheduling for Saturday) – leaving Thursday and Friday for potential negotiation.

 

 

On the morning of Thursday June 28th, Murphy met with his Cabinet, putting them on war-footing, while coming out in opposition to a shore rental tax increase. Senator O’Scanlon joined Senators Gopal and Van Drew in opposing an increase in the rental shore tax, while the LD10 legislators bemoaned the tax hikes of ‘bickering Trenton Democrats’. Assemblyman Wimberly came out in support of the millionaire’s tax as part of the budget compromise. Meanwhile, the Assembly GOP and Democratic staff lunched together, which ‘hasn’t happened before’ according a source.  The Assembly wouldn’t meet, having rescheduled its session from Thursday to Friday (‘don’t read too much into it, said a source); Sweeney then cancelled the scheduled Senate session, moving it to Saturday. The Assembly, later in the day, would follow suit – moving it all to the last day of the fiscal year.

 

 

At a Trenton press conference later that afternoon, flanked by the LD15 legislators, Murphy warned that ‘time is running out‘, and ‘we’re war-gaming a whole series of different scenarios’ with less than 48 hours to go until the budget deadline, at the time of the press conference. The NJ Realtors came out in opposition to increasing the realty transfer fee and to seasonal shore rentals, while the NJBIA released a statement saying budget negotiations were ‘moving in the wrong direction‘ with the inclusion of tax increases.  Later in the evening, insiders mulled the dynamics of the budget showdown at Insider NJ’s Statehouse Mixer.  The triumvirate met that night, and it appeared a deal could be within reach, following what sources say is the most productive meeting yet between the Governor and legislative leaders, as the state awaited the outcome heading into Friday morning.

 

 

On Friday June 29th, Murphy, Sweeney, and Coughlin headed back into negotiations in the morning after the productive meeting the night before – but it wouldn’t last long.  ‘It’s going sideways‘, a source opined, as Assembly Budget Chair Pintor Marin said ‘we’re still working on it‘.  Breaking from the meeting, there was no deal. Sweeney said ‘we’ll be talking all day‘, while Bramnick held a press conference, fuming over tax increases and vowing not to back any budget the Democrats would try to advance as an emergency measure. ‘It’s not happening,’ he said.

 

SHUTDOWN CENTRAL: Bramnick, left, and DiMaio. Based on what he observed of a tax debate from Democrats, the Assembly MInority Leader said he wouldn’t cooperate with Dems to move the emergency legislation they’d require to pass their budget.

 

Scheduled to meet again, Sweeney said ‘as long as we’re talking, there’s hope‘ as he headed back to the Governor’s office. Meanwhile, LD31 Assemblyman Chiaravalloti told supporters on Facebook that he was in support of a millionaire’s tax and had no interest in a veto override vote.  The CWA took the budget fight to the skies with an airplane banner on the Jersey shore.  Shutdown talk – and blame – was growing.  LG Oliver sent out a statement urging her ‘friends and former colleagues in the Legislature’ to support Governor Murphy’s budget proposal, saying ‘I’ve been through my fair share of legislative fights, and I know what can happen when egos are at play and people are dug in.’  NJGOP Chairman Steinhardt released a statement on the ‘inevitable’ shutdown, blasting Trenton Democrats and Murphy for having ‘carried on a completely partisan process‘.   A coalition of progressive women leaders came out in opposition to the ‘mega-millionaire’s tax’ proposal, saying the fault of a shutdown would lie ‘squarely with the ‘Democratic legislature” (with Democratic in quotation marks). Senator Oroho called for action on legislation to keep state parks open during a shutdown, while Senator O’Scanlon announced legislation to allow roadwork to continue and racetracks to operate during a shutdown.

 

Sweeney

 

Again, the meeting broke, and there was still no deal. Sweeney and Coughlin held a press conference where they said they made an offer to Murphy: a ‘mega-millionaire’s tax‘ with an income threshold of $5M, and that he didn’t respond. ‘He wants it exactly his way and no other way. That’s what they did at Goldman Sachs, not in the legislature,’ said Sweeney. Senate Majority Leader Weinberg backed the offer, saying at the presser ‘my hope is the Governor will call us back’.  Senator Ruiz said ‘we did right by the people of New Jersey, it’s time for the Governor to do the same.’ Coughlin said he was ‘bitterly disappointed‘ that Murphy rejected their offer, while Pintor Marin said ‘the word of the day is disappointed‘. Greenwald said he hoped the Governor would ‘take another look‘ at their compromise offer.

 

 

Murphy held his own press conference, saying ‘there was a glimmer of hope’ but rejected Sweeney’s and Coughlin’s claim that he didn’t respond with a counter to their offer. ‘It’s just not true‘.  LG Oliver said she’s ‘never seen the level of obstructionism [that’s on display now]’, while Murphy doubled-down: ‘We will not wake up tomorrow less reasonable or less resolute than today.’ If Sweeney had stumbled a few days before with his shore rental tax proposal, then Murphy would head into Saturday morning bruised by the perception – at the very least – that he didn’t try to get five to three on the millionaire’s tax.  Then, Murphy sent the letter to legislature leadership taking the 7% sales tax restoration off the table, setting the millionaire’s tax income threshold at $1.75M, and a 4-year CBT surcharge at 2%.  They would resume negotiations the next morning.

 

 

The morning of Saturday June 30th – the final day of the fiscal year – began with legislative leadership mulling over Governor Murphy’s counteroffer in response to Sweeney’s and Coughlin’s offer of a ‘mega-millionaire’s tax‘.  The GOP was looking hard at a possible override vote in the event that Murphy line-item vetoed the budget.  With no fanfare, back channel negotiations continued ahead of a 2pm meeting, while progressive activists found themselves blocked at the Statehouse, eventually gaining access and besieging the subterranean passageways.  As Working Families NJ took to the streets of Trenton with a TV sound truck of a Sweeney-millionaire’s tax support montage, the Senate Majority Office pushed back against national Democratic buzz by figures such as Howard Dean and Al Gore for Murphy’s budget as the more progressive budget, saying ‘their comments to the press do not reflect an accurate understanding of what the Legislature has proposed.’ Assemblyman Gusciora, who would be bidding farewell to the Assembly later that day, said he’s all in with Murphy.  The Assembly Democratic caucus was the rowdiest one yet for Coughlin, with a handful of members telling him that an override vote wouldn’t be a good look for the party.

 

 

At 130pm, the Assembly began its scheduled voting session, while the Senate lunched in the caucus room.  Sweeney allies were reluctant to say he would budge towards Murphy’s latest offer. ‘Craig moved the big guy yesterday’, said one source, referring to Coughlin’s getting Sweeney to snap on the $5M threshold, to no avail from the Governor.  The Senate GOP sent a letter to the legislative leadership and Governor calling for structural budget reforms, including public employee health benefits and a cap on state spending increases, while Bramnick told Insider NJ he was prepared to override a budget veto, and would begin discussions with Democratic leadership. Back in the halls of the Statehouse, ATU chief Ray Greaves, a strong ally of Murphy, said the Legislature’s ‘antics’ were ‘really pissing off our membership‘.  The triumvirate went under the hood again, with Sweeney (wanting $5M or bust on the millionaire’s tax) and Murphy (wanting $1M originally, and moved to $1.75M) both appearing to be dug in.  But Murphy would budge, a source said, willing to compromise to $2.5M. With the Senate and Assembly having left by 3:30PM, reporters caught sight of SMO ED Kevin Drennan and AMO Deputy ED Mickey Quinn coming in and out of 225 West State Street, as Trenton awaited word on a budget agreement.

 

Drennan

 

Then, after weeks of acrimony, details of a deal emerged, first reported by Insider NJ, as lawmakers reached an agreement. The sales tax restoration was dead (Murphy wanted it), there would be a 2.5% hike on the corporate business tax over a four-year period (Sweeney had wanted 3 and settled at 2), and a 10.75% tax on incomes over $5M (Sweeney had initially wanted no millionaire’s tax, up until Friday, where he proposed the $5M threshold, while Murphy had originally wanted a $1M threshold) – the basics of the deal that was on the table on Friday.   At 7:30pm, they held a joint press conference (watch here), where Murphy announced he wouldn’t initiate a shutdown in the interim and Sweeney played down the budget acrimony over the past two weeks (‘we’re Democrats’, he said).  Legislators and stakeholders offered their reactions to the budget deal, as the Assembly and Senate prepared to head back to the Statehouse the next morning.

 

 

On Sunday July 1st, the Legislature convened early in the morning to pass a flurry of bills and eventually the budget.  While legislators had hoped to be finished in the afternoon, the Senate and Assembly recessed due in part to concerns about the combined reporting bill, as per a report in ROI-NJ.  Eventually, in the evening, the budget passed by a vote of 41-23 in the Assembly and 23-15 in the Senate. Murphy also took action on several other pieces of legislation, conditionally vetoing them and then signing with the Legislature’s concurrence with his recommendations.  Shortly before midnight, the Governor signed the FY2019 budget into law.

 

Who won the FY2019 budget fight?

 

 

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