New Jersey has more money than it knows what to do with, and tax relief is now a top priority in Trenton.
New Jersey’s nonpartisan Legislative Services Office told lawmakers this week that the state will collect nearly $51 billion in tax revenue this fiscal year, which ends June 30. State Treasury Department estimates are even higher.
State Treasurer Elizabeth Muoio, who appeared before lawmakers on Wednesday for the first time since testing positive for COVID-19, said the Murphy administration now expects to raise $51.4 billion. dollars by the end of June.
Both of these updated projections are more than $8 billion higher than Governor Phil Murphy’s certified revenue at the start of the fiscal year last July. Tax revenues jumped by a remarkable $13.4 billion in just two years, more than 35% more than the $38 billion collected in 2020.
“The rapid recovery in revenue last year, followed by the continued rise in revenue this year, is unprecedented in modern New Jersey fiscal history,” Muoio said in his opening remarks Wednesday.
Shortly after budget analysts unveiled the historic revenue update on Monday, New Jersey’s top legislator in the state Assembly, Speaker Craig Coughlin, D-Woodbridge, issued a statement calling for a unprecedented tax relief program in the state’s history.
“We have extra money this year, and New Jersey needs tax relief now,” Coughlin said. “In this year’s budget, I will emphasize the largest tax relief program in state history. I look forward to working with legislative leaders and the Governor over the coming weeks to craft this proposal and deliver on this promise for the people of New Jersey.
Coughlin didn’t provide any details on what that might look like, and he’s catching up with Republican state lawmakers, who for months have been calling for substantial tax relief amid rising incomes.
Already expecting tax revenue to be higher than previous estimates, Republican members of the Senate Budget Committee last week called on Murphy to expand the tax relief in his budget proposal. In a statement, they highlighted their “Give it Back” initiative and a package of bills introduced in early March that seek to return $4.5 billion to New Jersey taxpayers through direct rebates of $1,000 and $500. dollars.
Under their initiative’s lead bill, taxpayers with gross incomes of $500,000 or less would receive a $1,000 credit if they are married and filing jointly, and individuals would receive a $500 credit. A second bill, the “Gasoline Price and Inflation Tax Credit Act,” would provide an additional $500 refundable tax credit to families with incomes below $250,000. .
“My fellow Republicans and I cannot support a budget unless four million families receive $1,500 in direct assistance this spring to help with the pain caused by overtaxation, soaring gas prices and inflation,” Sen. Declan O’Scanlon, R-Monmouth, the house’s Republican budget director, said in a statement released Wednesday.
But a growing list of experts, including the administration’s own treasurer Murphy, are warning lawmakers to avoid the temptation to overflow coffers and exercise caution when negotiating state budgets in the weeks to come. to come.
“The rich had a very good year thanks to soaring corporate profits across the world last year, and that is reflected in our tax revenues,” Muoio said in his opening remarks. “On the other side of the coin, we have seen an increase in requests for assistance from our most vulnerable.”
She said lawmakers should seek to prepare the state for an economic downturn and noted that even a moderate reversal could result in an annual revenue shortfall of at least 10%, or about $5 billion for a year or 10. billion dollars for two years.
Muoio said the administration wanted to increase the state’s surplus beyond the $6 billion cushion suggested by Senate Budget Chairman Paul Sarlo, D-Bergen, but did not provide an amount. precise. She said the administration would also like to use additional revenue to further reduce the state’s debt burden.
“We are in a very good position today, better than anyone could have hoped for 24 months ago,” Muoio said. “It’s a good problem to have, but it will clearly serve as a temptation. We have to be aware of the economic news that comes in daily.”
Wednesday’s revenue update caps a series of ministerial budget hearings held in recent weeks and marks the start of negotiations on Murphy’s spending proposal, which must be approved by the Legislature and signed by the governor before start of the new fiscal year on July 1.
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