Gov. Murphy Unveils $56 Billion Budget, Proposes New Tax On Wealthy Companies, Tax Breaks For Residents

Governor Phil Murphy on Tuesday unveiled an ambitious $55.9 billion proposed state budget for fiscal year 2025. The budget plan aims to elevate state spending to unprecedented levels during Murphy’s tenure, with a moderate increase from the current $54.3 billion budget, aligning with inflation rates. The budget is set against a backdrop of financial uncertainties, characterized by reduced tax revenue, coupled with the challenges of high inflation and interest rates.

Central to Murphy’s financial strategy is the introduction of a new tax targeting the state’s most prosperous corporations, designed to secure a reliable revenue stream for the financially beleaguered NJ Transit.

The proposed tax, called the Corporate Transit Fee, has sparked controversy, particularly among the state’s business sector, for its potential impact on approximately 600 large companies, which would be subject to a 2.5% tax on profits exceeding $10 million annually. This initiative, expected to generate around $1 billion annually for NJ Transit, has been met with criticism from business leaders who view it as an unnecessary burden, contrasting with Murphy’s recent decision to let a corporate business tax surcharge expire.

Murphy’s plan also proposes a $6.1 billion surplus to fortify the state’s financial health – a decrease from the current budget’s $8.1 billion surplus.

The budget also proposes new revenue measures, including a higher fee on gun permits and the elimination of certain tax waivers and holidays, such as the sales tax waiver on electric vehicles and free entry to state parks. However, it notably avoids increases in the state sales and gas taxes, though adjustments to the latter may emerge as state officials negotiate the renewal of the Transportation Trust Fund.

Murphy’s budget highlights over $3.5 billion in tax relief measures aimed at mitigating the state’s high living and property tax costs. These include continued funding for the ANCHOR program, increased investment in the Stay NJ program for seniors, expanded eligibility for the Senior Freeze program, and the maintenance of key tax credits benefiting families and low-income earners.

The proposal also marks a significant milestone in public pension funding, with $7.1 billion allocated to fully support the retirement system for the fourth consecutive year. Additionally, the budget commits to fully funding the state’s school aid formula, providing $11.9 billion to public schools, which represents an increase of $908 million and includes funding to expand the state’s pre-K program.

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