NJ Budget Mixes Some of the Familiar (and Not-So Familiar)
This episode of The Bottom Line takes a look at newly elected Governor Phil Murphy’s inaugural NJ budget. We’ll highlight some the proposed revenue raisers along with what’s on the governor’s shopping list and how these could impact state residents.
Dave Plaskow: Hello and welcome to The Bottom Line. This podcast examines the everyday business and finance issues faced by closely-held and private businesses.
We hope to provide you with news you can use in what we like to think of as a jargon free zone. I’m your host Dave Plaskow and with us is Tim Schuster, a Manager in EisnerAmper’s Private Business Services Group. In this episode we’re highlighting the newly elected Governor of New Jersey Phil Murphy’s $37 billion budget. Nice to see you Tim.
Tim Schuster: Dave, a pleasure as always.
DP: So, it looks like Governor Murphy is trying to make a splash here and do some out of the box things with his first budget as New Jersey Governor.
TS: Well, he is off to an interesting start as most Governors tend to be.
DP: Ok. Well let’s start with the revenue side. What do we need to know here TS: Well the Governor has proposed generating an additional approximately $1.5 billion by increasing the sales tax back to 7% which as we all know that just dropped about a year ago, or two years ago.
DP: Right. TS:The Governor is trying to include a 10.75% tax on gross income over a million, and they’re calling this the millionaire’s tax…
DP: Right. TS:Generating up to $80 million from marijuana legalization. You know, the always headline attention grabbing closing loopholes on hedge funds and corporations and we hear this a lot. Everyone’s always trying to close loopholes. DP:Right, right. Right. The very mysterious nebulous closing loopholes.TS:Yes, yes. It’s… all of them are doing it. We’re still trying to do that. And also taxi share services like Uber and Airbnb, you know, which is an interesting approach just because that economy really has – or micro economy – really has started to flourish, especially in the States.
DP: Yes, yes. The gig economy.
DP:What about the spending side?
TS:So it’s a pretty progressive agenda, you know, as we would expect from a Governor of a Democratic sort. Funding for education from pre-K to community colleges, payments to the state pension system which is – every Governor for years have been talking about funding the pension system.
TS: You know, and… this is interesting actually – Create a child and dependent care tax credit for families earning less than $60,000. So increase a tax credit for the working poor, increase the state property tax deduction cap from $10,000 to $15,000 and an increase in the minimum wage for state workers and – this is also expected to begin in 2019 approximately – at $11/hour and phase into $15/hour over four years.
TS:And then the last thing is, you know, an increased funding into the New Jersey Transit which if anyone has been seeing the news recently, desperately needs to have an injection of capital to fix that thing.
DP:Yup. Yeah. Yeah. I don’t think anyone will object to that. What kind of opportunities does this present to you as a business advisor?
TS:So this is going to be interesting. You know, we have to see how the legislator comes to… comes to vote, or comes though with the vote and there could be slight competitive disadvantages actually that we would have with the sales tax increase on the state side. For those high earners, you know, everyone’s familiar with the new Tax Cuts and Jobs Act that just was passed back in December, you know, along with the new Federal laws, you know, you’ll probably and potentially see a spike in New Jersey tax liability for… especially anyone who earns over a million dollars. But, you know, not that I’m taking a particular stance on this, but it would be interesting to see if Marijuana is legalized in this state. You know, that would actually have a lot of business impact other than just on the cannabis industry and just to name a few that I can think of – Real Estate and the Security industry but particularly would have a spike in, you know, increased business as well. You know, I can see a micro-economy potentially forming if that were to go for a passing vote. DP:Sure. Ok. So how do you see this playing out over the next couple of months? TS:So, you know, as we’re all, you know - not everyone here is a New Jersey resident but, you know, with New Jersey politics, which is often unpredictable, it’ll be most like most budget deals. You know, a good compromise is reached when everyone is dissatisfied. You know, we’ll see, the state needs to pass a budget by June 30th. DP:Ok. So, so, to be continued. TS:To be continued.
DP: So Tim, we’re at the point in our program for your New Jersey Historical Society fun fact, so, lay it on us.
TS:So I’m sure you, and most people listening to this podcast have or has played Monopoly and you might know this but the properties on Monopoly board are named after the streets of Atlantic City. You know, do not pass go, do not collect $200.
DP:Yup. Yup. Baltic Ave. Atlantic. Yup.
TS:That’s it, that’s it. And the Boardwalk – infamous.
DP:Ok. Cool. Well Tim, thanks for this valuable information as always.TS:My pleasure.
DP:And thank you for listening to The Bottom Line as part of the EisnerAmper podcast series. If you have any questions or there’s a topic you’d like us to cover email us at email@example.com and visit EisnerAmper.com for more information on this and a host of other topics and join us for our next EisnerAmper podcast when we get down to business.