Murphy wants to increase the marginal tax rate on every earned dollar over $1 million to 10.75% from 8.97%, for $494 million in annual revenue. That rate currently is on $5 million or more. The change would apply to about 42,000 taxpayers, more than half who live out of state but earn income in New Jersey, according to the governor’s office.

The budget would add $50 million to fund tuition-free college at four-year institutions, an expansion of a plan in community colleges. It would give $20 million to support apprenticeships, paid internships and career training.

It proposes $1.26 billion in direct property-tax relief, an increase and eligibility expansion for the earned income tax credit and the elimination of income tax on combat pay.

“It isn’t the wealthy who bear the burden of our tax system – it’s the middle class,” Murphy said.

Spending Growth
Senate Republican Leader Thomas Kean Jr. said the 5.5% spending growth in Murphy’s budget isn’t what the state needs.

“This budget is a continuation of disastrous fiscal policies that are breaking up too many of our families,” Kean said in a statement. “This proposal doesn’t move the needle on giving people a reason to stay in New Jersey.”

Murphy’s NJ Transit subsidy proposal is a 29% boost, partly coming from funds for highway tolls and fees on energy ratepayers, as well as shifts from capital-improvement accounts to fund day-to-day needs. That subsidy had dipped to $33.2 million in 2016 under Republican Governor Chris Christie, while breakdowns, safety violations and service delays soared.

Sweeney, a fellow Democrat and New Jersey’s highest-ranking lawmaker, wants to maintain the corporate tax rate as an ongoing revenue source for NJ Transit. He also would ban the practice of capital-to-operating fund transfers.

In a statement after the speech, Senate Majority Leader Loretta Weinberg, a Democrat from Teaneck, said she “will push for immediate reductions in capital-to-operating transfers as part of this year’s budget process.”

Sweeney, who often is at odds with the governor over his higher-tax agenda, has said he’ll stop blocking the millionaire’s tax if the governor promises an additional $1 billion for the pension payment. Even with that boost, the fund would fall short of the $6.1 billion actuarially required contribution.