Senate Republicans Propose $8 Billion of New Tax Relief, Bolstering Surplus, Doubling Debt Repayment & Increasing Oversight in Budget Plan

Republicans serving on the Senate Budget & Appropriations Committee proposed $8 billion of new tax relief, increasing the state surplus to $5 billion, more than doubling proposed debt repayments, and increasing legislative oversight of Murphy administration spending in a detailed budget plan (click here for PDF) to amend Governor Murphy’s proposed FY 2023 State Budget.

“Senate Republicans have offered a detailed budget plan to make responsible use of an unprecedented $11 billion windfall of state and federal taxpayer funds to support struggling families, solve long-term problems, and ensure that New Jersey is well prepared for the next recession,” said Senator Declan O’Scanlon (R-13), the Republican Budget Officer. “We’re leading the way in showing Governor Murphy and the Democrat legislative majorities how to give back billions to taxpayers while building a responsible surplus and paying down substantial additional debt. It’s no surprise that everyone else is suddenly rushing to find ways to ‘Give It Back’ as Senate Republicans have advocated for months.”

The Senate Republican budget plan provides a comprehensive framework for utilizing $8 billion of previously unexpected revenues that recently have been forecast for the current and upcoming fiscal years and $3 billion that remains unallocated from the $6.2 billion block grant New Jersey received last year through the American Rescue Plan Act. Additionally, it imposes spending restraints and addresses important needs ignored by the governor’s budget proposal in a balanced manner.

Senate Republicans have proposed $8 billion of increased tax relief for New Jersey families and businesses, including:

• $4.5 billion through a pair of “Give It Back” tax rebates (S-2243 and S-2290) totaling $1,500 for millions of families;
• $1 billion of property tax relief by reversing Governor Murphy’s proposed cuts to municipal aid and school aid, fully funding extraordinary special education, increasing the veterans property tax deduction, and more;
• $790 million in structural tax reductions, including raising the retiree income exclusion to $250,000, creating a deduction for charitable contributions, and eliminating the CBT surcharge early; and
• $2 billion to halt planned tax and toll increases by indexing state income tax brackets for inflation, replenishing the Unemployment Insurance Fund to prevent upcoming employer/employee payroll tax increases, stopping automatic toll increases on January 1, and rescinding a major tax increase on the state’s largest health insurer and its customers.

“We have this unprecedented situation where families are struggling to pay their bills amid the highest inflation in a generation while the state is simultaneously bringing in record tax collections that are billions beyond expectations,” said Senator Steven Oroho (R-24), the Senate Republican Leader. “Our ‘Give It Back’ rebates would help address this imbalance by returning $1,500 in direct tax relief to most New Jersey families immediately. We’ve also proposed substantial increases in property tax relief, tax cuts for families, seniors, and veterans, stopping pending toll hikes on drivers, and ending an unnecessary tax surcharge on businesses early. We’ve proposed a comprehensive and responsible plan that includes structural reforms to provide New Jerseyans with substantial tax and toll relief at a time when it’s desperately needed.”

The Republican proposal would prepare New Jersey for the next recession through a balanced approach that includes:

• Growing the budget surplus to more than $5 billion, which is approximately 10% of the budget;
• Focusing one-time revenues on funding nonrecurring needs such as pay-as-you-go capital infrastructure investments (including MVC and unemployment computer system upgrades), restoring the health of the Unemployment Insurance Fund, and more than doubling proposed debt repayments to $3.1 billion;
• Advancing longer-term reforms that make our economy stronger, including repatriating income taxes unfairly collected by New York and pension and benefit reforms that end abuses and give employees more choices; and
• Establishing additional restraints in recurring spending in amounts that far outstrip proposed increases to address unfunded priorities.

“We recognize that much of the windfall at our disposal is likely nonrecurring, which would make it irresponsible for anyone to propose substantial permanent spending increases that we won’t be able to support when the next recession comes, which may be sooner rather than later,” said Senator Sam Thompson (R-12). “Our plan ensures that New Jersey is prepared for the next downturn by establishing a healthy $5 billion surplus that amounts to 10% of the budget, while making substantial investments in critical infrastructure, including to fix broken computer systems at unemployment and the MVC. Given the current financial challenges many families are facing due to high gas prices and inflation, we’ve proposed temporary school aid restorations to prevent property tax hikes in nearly 200 districts that could devastate household budgets. Further, we’ve proposed real reforms that would strengthen the state budget, lower costs, and provide additional relief to taxpayers in both good times and bad.”

Finally, the Senate Republican budget plan imposes legislative oversight over billions of dollars that the Murphy administration wants the unilateral authority to spend in the upcoming fiscal year by:

• Providing for full legislative approval of $3 billion of unspent American Rescue Plan Act funding. Under the current fiscal year budget, the secretive Joint Budget Oversight Committee (JBOC) rubber-stamps proposed allocations after Democrat leaders make backroom deals to divvy up the funds. Governor Murphy has stripped all legislative oversight and approval of these funds in his proposed budget;
• Ending blank-check provisions in the budget that allow the governor to appropriate funds to settle litigation without legislative approval. This blank check allowed Governor Murphy to pay $53 million without oversight to settle lawsuits related to unnecessary deaths caused by his administration’s pandemic policies at State-run veterans homes. These provisions also allowed the Murphy administration to pay a $21 million settlement without scrutiny for a string of administrative failings that led to serious abuses at the Edna Mahan women’s prison;
• Denying Governor Murphy’s requests to spend as much money as he wants to: expand the scandal plagued free-and-reduced-price school meals program; subsidize health insurance bought on the state exchange; and provide free insurance to the children of illegal immigrants, which could easily grow from the $11 million proposed by the administration to more than $200 million when fully phased-in; and
• Closing loopholes in the Debt Reduction and Avoidance funds that allows for new capital spending that is not authorized under both the constitution and existing statutory debt authorizations. We propose all funds for debt retirement and avoidance be appropriated by the full Legislature after a full and detailed proposal has been submitted by the governor. Otherwise, funds can be allocated by the governor and JBOC with little transparency for pork spending rather than actual debt reduction.

“If we don’t impose strict legislative oversight and discipline to effectively utilize the state’s $11 billion windfall, the Murphy administration is sure to make last year’s ‘orgy of pork’ look tame,” said Senator Michael Testa (R-1). “Governor Murphy will cut backroom deals to waste this money in unimaginable ways, all while New Jersey families and seniors suffer and their taxes and tolls continue to rise unnecessarily. In contrast, our Senate Republican plan is completely transparent and would increase public input significantly, while strengthening the state’s finances and providing $1,500 of immediate tax relief directly to New Jersey families. There’s absolutely nothing in our proposal that any leader of conscience should oppose.”