Six months ago, Liz Muoio served on the Assembly Budget Committee. Wednesday, she testified before it as acting state treasurer.
“Having served on your side of the table, I can truly appreciate the challenges you face as you make decisions that will affect our state’s residents,” she said.
Muoio was there to defend Gov. Phil Murphy’s fiscal year 2019 budget proposal. One flash point was the school funding formula. Lawmakers of both parties wondered why Murphy is still using the old, discredited 2008 formula, and not the one they tinkered with last summer.
“The governor stands ready to work with the Legislature to amend the formula if that’s what the Legislature would like to do,” said Muoio.
“These numbers just don’t work. And frankly, for the purposes of a new governor coming in, he got off on a very bad foot on a public discussion that I think could have been avoided if there had been a little more back and forth,” said Assemblyman John Burzichelli.
But the heart of the debate is about taxes and spending. Murphy’s budget totals $37.4 billion. That’s $2.7 billion over the current year, and it involves raising some taxes.
“If we did nothing but tread water in this budget, we would still have a $161 million deficit with no initiatives, no revenue raisers. We need to bring in additional revenues in the state,” said Muoio.
Murphy wants to hike the income tax on million dollar earners and restore the sales tax to 7 percent. It’s now at 6.625 percent.
The new chair of the Budget Committee, Assemblywoman Eliana Pintor Marin, did not fully embrace the tax hike proposed by her fellow Democrat Murphy.
“I don’t think myself or the members are there yet in the sense that we have to see more clarity in the budget. Some of these revenue raisers that we heard today, what the projections are really going to be like if we will be getting all of what is projected,” she said.
Republican Budget Officer John DiMaio worries about the additional spending.
“Not one part of this discussion has been about, what if we have an economic downturn, what does our surplus look like, can we ride out the storm. I say no, we keep spending more, taxing more, chasing out the high income earners,” he said.
Murphy wants to increase school aid, expand pre-K, increase tuition aid at community colleges and fund NJ Transit. Muoio blamed previous tax cuts for putting those goals out of immediate reach.
“When we took the billion dollars from the lottery out of the general fund, when we reduced the sales tax, that was a hit to the fund, the estate tax being sunsetting out, that was all general fund revenue,” said Muoio.
Republican Nancy Munoz said why not just fully fund the schools?
“We have needs across the entire educational spectrum, which is what we’re trying to address in this budget. And, as I said, we can’t fix it overnight but we’re taking a first step,” said Muoio.
“There’s something missing that we can’t get the money to the K-12 schools that need the money, and yet at the same time we’re starting new initiatives. It seems that there’s something that’s just not right here,” said Munoz.
Where Democrats see necessary investments, Republicans see excessive spending and misplaced priorities. The debate will go on until the end of June.