Governor Phil Murphy’s third shot at a higher tax for New Jersey millionaires may be the charm.

The first-term Democrat proposed a record $40.9 billion budget with a tax boost for the rich to help underpin unprecedented spending on New Jersey Transit, pensions and schools.

His odds are far better this year, with Senate President Stephen Sweeney saying he’d consider the levy if the governor would consider an even bigger-than-planned pension payment.

“I thank the Senate president and welcome his willingness to embrace a millionaire’s tax in this budget,” Murphy said Tuesday to lawmakers in Trenton. “When we have tax fairness, we can continue our historic investments in our pension systems and in our middle-class families.”

Murphy, 62, a Democrat and retired Goldman Sachs Group Inc. senior director, said his spending plan for the year that starts July 1 strikes a balance of fiscal responsibility and progressive spending.

Surplus Fund
He is seeking a record $589.5 million for NJ Transit, the ailing commuter bus and rail operator that he has pledged to rebuild. His budget also include an historic $4.6 billion pension payment. That’s in addition to about $300 million being pre-paid now toward 2021 because obligations increased slightly due to longer life expectancies and other factors, according to treasury officials.

Cigarette taxes would rise more than 60%, to $4.35 per pack, among the highest levied by U.S. states. New Jersey also would charge a “corporate responsibility fee” to companies with more than 50 employees enrolled in Medicaid, and raise an estimated $20 million from opioid manufacturers and distributors to help combat addiction.

While 13.2% of the state budget relied on one-time resources in 2010, Murphy’s 2021 spending plan calls for less than 1%. Murphy also called for building the state’s surplus to $1.6 billion, for a fund balance equal to 4% of the budget. The national average is about 11%, according to the administration.

“A stronger surplus and another payment into the rainy day fund are important signs to New Jerseyans that we, like them, understand that we can’t rush out and spend everything we have, without regard to future risks,” Murphy said. “It sends an unmistakable signal to the credit-rating agencies that we will not follow the irresponsible ways of the past that led to 11 consecutive downgrades.”

Progressive Values
Since Murphy came to office in January 2018, many lawmakers have called his progressive agenda too costly, and twice blocked his proposal to raise taxes on those who earn at least $1 million a year.

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