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Public pans spending cuts, tax hikes in governor’s budget plan

Marathon session is first in a series of budget hearings planned for lawmakers


A broad range of speakers asked lawmakers on the Assembly Budget Committee Wednesday to avert proposed spending cuts and prevent new fees and tax hikes proffered by Gov. Phil Murphy, or seek other ways of raising revenue.

The seven-hour-long hearing marked the public’s first formal response to the governor’s $58.1 billion budget proposal, which he unveiled last month. Lawmakers must pass and Murphy must sign a budget before July 1 to avoid a state government shutdown.

A range of witnesses urged legislators not to move forward with cuts Murphy has proposed to community college funding and social and disability services, and to block proposed diversions from the state’s affordable housing trust fund.

“We’re operating with limited staff. I sort the mail and I mop floors, and we all do multiple jobs when you’re a small institution,” said Mike Gorman, president of Salem Community College.

The governor’s budget proposes reducing state assistance to community colleges by $20 million and would reduce student financial assistance by $69 million, including by entirely eliminating a $20 million line item for summer tuition aid grants.

Other witnesses urged legislators to avert a $10 million cut proposed for Legal Services of New Jersey, whose attorneys provide representation to low-income New Jerseyans in civil matters.

“Despite our best efforts, the gap in resources necessary to provide legal services assistance to eligible low-income people remains vast, and the demand is just increasing,” said retired Supreme Court Justice Jaynee LaVecchia, who sits on the organization’s board of trustees.

Housing advocates warned Murphy’s planned diversions from the state’s affordable housing trust fund — with $20 million of it headed for rental assistance and $40 million for down payment assistance programs within the New Jersey Housing and Mortgage Finance Agency, among other diversions — could imperil New Jersey’s efforts to build more housing units.

 Assemblywoman Verlina Reynolds Jackson (Hal Brown for New Jersey Monitor)


“It’s almost like robbing Peter to pay Paul. We love the affordable housing trust fund, we love HMFA, but we’re just shifting the money from one pot to the other,” said Assemblywoman Verlina Reynolds Jackson (D-Mercer).

Additional money for the trust fund could come from an increased dedication from a higher tax on home sales Murphy has proposed, said Matthew Hersh, vice president of policy and advocacy for the Housing and Community Development Network of New Jersey.

The governor’s budget would raise a 1% fee on home sales above $1 million to 2% and charge a 3% fee on home sales worth more than $2 million. Combined, that proposal is expected to bring in an additional $317 million in revenue.

Murphy has proposed a range of new revenue raisers for the next fiscal year, including higher tax rates on online gambling winnings, an expanded sales tax, and higher excise taxes on tobacco and alcohol products, among a raft of other higher fees.

Business groups cautioned those hikes and others, including a $2 per-truck fee on warehouses expected to generate $20 million, would make New Jersey less competitive. Murphy proposed a $1 per-truck fee last year, but the measure did not survive budget negotiations.

“Last year, just the proposal of a $1 truck excise fee was enough for one of our member businesses to lose a warehouse project to another state,” said Hilary Chebra, director of government affairs for the South Jersey Chamber of Commerce. “The reintroduction of this truck fee, now at $2 a truck, will not only make New Jersey a less favorable place to do business, it will make goods more expensive for residents across the state.”

Some others urged the state to expand the types of tax and fee hikes it would consider to prevent cuts.

 Peter Chen of New Jersey Policy Perspective testifies before the Assembly budget committee on June 28, 2023. (Dana DiFilippo | New Jersey Monitor)


“We will need higher revenues to avoid the kind of cuts that we’re talking about, because as much as this year’s budget is challenging — and I think we can all say there are going to be difficult decisions that have to be made — next year’s budget is lining up to be a potential disaster,” said Peter Chen, senior policy analyst for progressive think tank New Jersey Policy Perspective.

Those revenue raisers should target high-earning individuals and corporations, Chen said.

Murphy’s proposed budget calls for the state to spend $1.2 billion more than it takes in through taxes and other revenue sources. Absent broader budgetary changes, that deficit would expand by at least $920 million next year to pay for a full-year benefit under the Stay NJ Property tax relief program.

Numerous speakers raised concerns about the possible loss of federal funding amid the Trump administration’s far-reaching efforts to limit U.S. government spending.

The governor’s budget anticipates roughly $26.2 billion in federal funding for the coming fiscal year, though administration officials have cautioned uncertainty around those forecasts because of unpredictability at the federal level.

It’s not likely all federal funding will go away, though congressional Republicans are exploring cuts to Medicaid, which at $14.4 billion accounts for the lion’s share of the state’s federal funding.

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Source : https://newjerseymonitor.com/2025/03/19/public-pans-spending-cuts-tax-hikes-in-governors-budget-plan/

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