Last-minute budget deal averts shutdown in New Jersey

“Let me be clear: There will be no shutdown,” Murphy said at a news conference in Trenton on Saturday night. “The parks and beaches are open.”

The nearly four-month budget showdown centered largely on an impasse regarding a tax increase for the wealthiest in New Jersey. But with the two sides staking out seemingly intractable positions for months, Murphy; Stephen Sweeney, the Senate president; and Craig Coughlin, the Assembly speaker, all made concessions to reach a deal.

The budget agreement will raise the income tax to 10.75 percent from 8.97 percent on those making more than $5 million a year.

The deal also includes an annual surcharge of 2 percent on companies that earn more than $1 million annually that will be in place for four years. Murphy’s proposal to raise the sales tax to 7 percent from 6.625 percent was left out of the final deal.

The $37.4 billion budget includes financing for nearly all of Murphy’s proposed investments, including a $242 million increase in funding for New Jersey Transit, an additional $83 million for prekindergarten, an extra $25 million for community colleges and a $3.2 billion payment into the state’s struggling pension system.

But many of the revenue sources Murphy sought in his budget proposal in March — roughly $1.5 billion in new taxes — differed in the final deal, including the decision to leave the sales tax at its current rate.

The agreement on the so-called millionaire’s tax was very similar to an earlier proposal from the Legislature — to raise the income tax on those making $5 million or more to 9.95 percent — that just a day before Murphy had dismissed as merely “symbolic.” The governor had been seeking to tax those making more than $1 million, offering only a slight adjustment early Saturday morning.

Still, legislative leaders had initially been resistant to the idea of any income tax increase in a state where residents already face some of the most onerous tax burdens in the country.

After the deal was announced, Murphy said the final tax was now a “multimillionaire’s tax.”

But the prospect of a second shutdown in two years, which would have been an unwelcome stain on Murphy’s first year in office, proved motivation enough for both sides to broker a last-minute deal, despite weeks of bitter negotiations characterized by personal attacks.

“It was a hell of a journey, Governor,” Sweeney said during the news conference. “This is my ninth budget; it was probably just as hard as the other ones. But you know something, changing course, changing course in New Jersey is never easy.”

Murphy and legislative leaders were adamant that their differences were not as severe as it appeared during the monthslong standoff.

“We had honest, blunt, sometimes heated yet always civil discussions,” Murphy said, adding, “There was never a disagreement about our values and our principles. Just as how best to get there.”

The Senate and the Assembly were scheduled to vote on the budget Sunday morning, and Murphy pledged to sign it “as soon as humanly possible.”

The mere threat of a shutdown infuriated many residents of the state, who were decamping to state parks and beaches for extended holiday vacations. When the state shut down in 2017, Island Beach State Park and the rest of the state park system closed, forcing campers to pack up early and leaving a 10-mile stretch of beach vacant, except for the now infamous gathering of Gov. Chris Christie, a Republican, and his family.

At Bass River State Park, Jose Pitre and his wife, Maria Arce, have had their family reunion at the same campsite every year over the Fourth of July, with relatives driving as far as eight hours from Buffalo, New York, to get together.

But last year they were asked to leave their campsite when the state government shut down. Believing it would not happen again, they made reservations in January 2018 for their same family reunion camping trip. When they found out that they could get evicted again, the family decided their patience was exhausted.

“If that happens, that’s it for us, this would be the last year,” said Pitre, 51, who works in chemical production and lives in Penns Grove, New Jersey. “We’ll probably look for someplace in Pennsylvania where this doesn’t happen all the time.”

The current disagreement began in March when Murphy released his first budget. While Sweeney had at first supported a tax on the wealthy after Murphy’s election in November, pledging it would be the first bill he passes, the Senate president reversed course following the passage of the federal tax law that limited state income and property tax deductions.

But Murphy, who had campaigned extensively on raising taxes on the well-off, included the millionaire’s tax in his inaugural budget, leading to a stalemate.

Neither blinked until the final hours.

While 2017 was marked by budget standoffs in statehouses around the country, New Jersey was an outlier this year as the last state in the country that hadn’t reached some sort of a budget agreement by the fiscal deadline, according to the National Conference of State Legislatures.

Last year, the state remained shut down for three days, but national headlines followed the infamous photographs of Christie lounging on the beach with his family in Island Beach State Park, which had been closed as a result of the budget standoff.

The last time the state shut down under a Democratic governor was 12 years ago, when former Gov. Jon Corzine battled the Legislature over raising the sales tax during his first year in office. That shutdown, the first in state history, lasted eight days.

Despite a resolution, some residents remained frustrated by the behavior of the state’s leaders. Jason Long, a facilities manager from Audubon, Pennsylvania, was relaxing on Island Beach State Park with his father-in-law Saturday morning, angry that for the second year in a row, their weekend was still in doubt.

“Why don’t they work this out in the winter months?” asked Long.

This article originally appeared in The New York Times.

Last-minute budget deal averts shutdown in New Jersey

The deal arrives just in time for the coming Fourth of July holiday and saves Murphy, a Democrat, from closing the government during his first year in office, a move that would prove unpopular to many, including bathers looking to cool off on a sweltering weekend at state parks and beaches.

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