Emily GirschJun 18, 2018, 10:55 pm

Gov. Phil Murphy, top lawmakers butt heads over budget

Murphy said he would veto any proposal sent to his desk that had unsustainable and temporary revenues

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TRENTON, N.J. (AP) — Democratic New Jersey Gov. Phil Murphy and the state's top two lawmakers clashed over competing budgets on Monday, with a deadline to enact the roughly $37 billion spending plan approaching at the end of the month.

Murphy said he would veto any proposal sent to his desk that had unsustainable and temporary revenues, which he called "gimmicks." He said he is sticking with the $37.4 billion proposal he unveiled earlier this year.

That plan includes increased spending for education, New Jersey Transit and the public pension. It pays for the increased costs by raising income taxes on millionaires from 8.97 percent to 10.75 percent, while also raising the sales tax from 6.625 percent to 7 percent, along with other increases.

Murphy suggested he inherited a financial mess from his predecessor, Republican Gov. Chris Christie, but also warned lawmakers against relying on short-term revenues.

"When you build a financial house of cards year after year and see it fall year after year at some point you have to realize that the same old way of doing business in Trenton isn't working," Murphy said.

Senate President Steve Sweeney and Assembly Speaker Craig Coughlin, both Democrats, outlined their proposal on Monday, saying it would rely on new revenues from an increase in the corporate business tax, raising the rate from 9 percent to 11.5 percent on business income from $1 million to $25 million and boosting the rate above $25 million to 13 percent. That would make New Jersey's rate the highest corporate business rate in the country, topping Iowa's at 12 percent.

Their proposal also includes a tax amnesty as well as audits to raise revenue.

The Legislature's tax hike would sunset in two years. That gives the governor "two years to start fixing the things that are wrong," Sweeney said.

He added: "We will not be bullied into doing the wrong thing because the governor says to do it."

Lawmakers also want additional spending, including for some of the most financially strapped groups in the state.

Asked about what happens if Murphy and lawmakers disagree on a budget, Coughlin said he was focused on his constitutional role.

"The time has come when we have to pass the budget," he said.

Lawmakers say they expect to hold votes on their spending plan on Thursday.

A balanced budget must be in place by June 30.

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