NJ Proposed Budget Inspires Debate: ‘Affordable For Who?’
NEW JERSEY — When it comes to the upcoming state budget in New Jersey, “affordable” is the name of the game. But exactly what that word means is up for serious debate.
Gov. Phil Murphy introduced a $48.9 billion proposed budget earlier this month for fiscal year 2023. The spending plan, about $2.5 billion more than this year's, includes no new fees or tax hikes, and reshifts the state's tax-relief programs, which would also include renters and not just homeowners. Read More: Gov. Murphy's $49B NJ Budget Focuses On Property Taxes, Relief
"This budget is rooted in a renewed commitment to moving our state forward, creating opportunity for every family, and making our state more affordable," Murphy told the state Legislature.
The New Jersey Assembly budget committee held its first hearing on the proposed budget Monday, giving pundits a chance to weigh in. Here are some insights from two leading advocacy groups.
‘UNSUSTAINABLE ISN’T AFFORDABLE’
The New Jersey Business & Industry Association (NJBIA) said there are some positive aspects of the draft budget, including the lack of new taxes and a full pension payment. But the group also “strongly cautioned” that New Jersey’s rate of spending may not be sustainable, and said that much more can be done to help Garden State business owners.
In testimony before the Assembly Budget Committee, NJBIA Vice President of Government Affairs Christopher Emigholz said the $48.9 billion budget – the largest in state history – has grown more than 5 percent since the budget signed nearly nine months ago and 41 percent over Murphy’s five budgets.
Emigholz said the current level of spending is “unsustainable,” with FY23 appropriations exceeding revenue by $1.7 billion.
“Budget sustainability often becomes an affordability issue, because an unsustainable structural imbalance has a nasty way of becoming sustainable through tax increases which our taxpayers just cannot afford,” Emigholz said.
“An unsustainable budget is not affordable,” Emigholz added.
Emigholz also noted that the budget is lacking an appropriate amount of direct relief for New Jersey businesses. There is a $50 million appropriation for the Main Street Recovery Finance Program – which represents only 0.1% of the state budget. However, that funding is only for smaller businesses that are leasing new space or adding capital costs.
“To make New Jersey more affordable to do business in, additional relief is needed for all businesses, whether that comes in the form of tax relief or further pro-business spending,” Emigholz said.
Emigholz pointed out that the new Affordable New Jersey Communities for Homeowners and Renters (ANCHOR) property tax program, which will provide $900 million in property tax relief to homeowners and renters in FY23, excludes New Jersey businesses – even though they pay nearly half of the state’s property taxes annually. Read More: 1.8M Eligible For Proposed NJ Property Tax Relief Program, Murphy Says
Meanwhile, the NJBIA also noted New Jersey businesses are on the hook for nearly $1 billion in tax hikes over three years to replenish the state’s Unemployment Insurance Trust Fund. Read More: NJ Should Use Fed Aid To Soften $1B Business Tax Hike, Group Says
See Emigholz’s full written budget testimony here.
‘NOT JUST THE WEALTHY’
Ask nonprofit advocacy group New Jersey Policy Perspective (NJPP) what “affordable” means, and you’ll get a different answer, however.
At the first public legislative hearing on the FY 2023 state budget, representatives from the group urged lawmakers to prioritize policies that would make the state “affordable for all,” not just the wealthy and well-connected. In testimony delivered virtually, the think tank called for a budget that includes direct payments and cash assistance for families to reduce poverty and food insecurity, improve household finances and stimulate the economy.
“We have been hearing the drumbeat on making New Jersey ‘affordable,’ but as we have noted, the question we must ask is: ‘Affordable for who?’” asked Peter Chen, a senior policy analyst with the NJPP.
“An inclusive recovery is one where we prioritize making the state affordable for those hit hardest by the pandemic — Black and Hispanic/Latinx workers, students, families, and communities in particular,” Chen asserted.
“That’s why it’s so important that the FY 2023 budget advances changes which make the tax code more equitable and the state more affordable for low- and moderate-income households,” Chen said.
The NJPP has proposed a package of programs they say will “put money back in the pockets” of these families. They include:
A state-level Child Tax Credit
Expansion of the Earned Income Tax Credit, both in amount and eligibility
Replenishment of the Excluded New Jerseyans Fund
Reforms to WorkFirst New Jersey that improve eligibility and benefits
Other proposals from the group include:
HAZARD PAY FOR ESSENTIAL WORKERS – “The recommends direct relief payments and hazard pay for essential workers who put their lives at risk when COVID swept through the state, health care workers who now suffer from PTSD, and child care workers who are indispensable to the workforce yet remain severely underpaid. Those individuals held up as ‘heroes’ during the pandemic deserve actual compensation for the risks they continue to face, not lip service.”
RAINY DAY FUND – “Lawmakers should take a multi-year approach to budget-making this year to ensure the $4.5 billion surplus puts the state on solid ground once the federal aid is gone and economic activity slows … We strongly recommend making a deposit into the now-empty rainy day fund of $1.5 billion to prepare for the future.”
The NJPP also cautioned against making more “giveaways” to the Garden State’s richest corporations and residents.
“The wealthiest 1 percent of Americans have seen their wealth balloon by 50 percent since the pandemic began,” advocates said. “Corporate profits are up, as are home valuations. When budget proposals include giveaways to households in the top-20 percent of income, or blanket tax cuts for businesses, those benefits are going straight to the wealthy and widening the wealth gap.”
See related article: 'Pandemic Profiteers'; Report Blasts NJ Companies, Billionaires
See related article: NJ Has One Of America's Worst Racial Wealth Gaps, Study Says
Meanwhile, for low-wage workers, even modest wage growth has been swallowed by higher costs for housing and food. One in 10 New Jersey residents lives in poverty, and 1 in 3 live in an Asset-Limited Income-Constrained Employed (ALICE) household.
See related article: Nearly 8% Inflation Is Highest In 40 Years; What It Means In NJ
State lawmakers should prioritize making New Jersey affordable for those who need the most help — not the “wealthy and well-connected,” the group said.
“There’s no need to overthink this,” Chen said. “We have plenty of evidence from the pandemic that direct payments and cash assistance work to reduce poverty and food insecurity, improve family finances and stimulate the economy.”
“Making New Jersey affordable for low- and moderate-income households means giving them the resources they need to find economic security for themselves and their families,” Chen said.
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This article originally appeared on the Montclair Patch
