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Yahoo
01-07-2025
- Business
- Yahoo
Tax hikes get lawmakers' OK in advance of full budget vote
Sen. Paul Sarlo, the state Senate's budget chair, said Thursday that when lawmakers eye certain tax hikes, it's "always a difficult ask and a difficult choice to make." (Dana DiFilippo | New Jersey Monitor) Budget panels in both legislative chambers approved a series of tax increases on Thursday meant to keep New Jersey's books balanced in the fiscal year that begins July 1, but legislators stopped short of a vote on the full budget. Lawmakers advanced proposals that would raise fees on the sale of certain expensive buildings, hike cigarette and nicotine taxes, and push up tax rates on online gambling and sports betting in a bid to keep the state's budget above water. Sen. Paul Sarlo (D-Bergen), the Senate budget chairman, said the tax hikes would help Gov. Phil Murphy keep his pledge to pass along a $6 billion surplus to the next governor. Murphy leaves office in January. 'Any time you have to tax an industry or ask someone to put more money in, it's always a difficult ask and a difficult choice to make,' Sarlo said. The full budget did not get a vote Thursday, with lawmakers saying the nonpartisan Office of Legislative Services was still drafting the bill after negotiators reached an agreement on how much New Jersey would spend in the next fiscal year. Budget committees are expected to vote on the bill at 8 p.m. Friday, with votes before both full chambers planned for Monday, the last day they have to pass a budget without shutting down the state government. Republican members, who broadly opposed the tax bills advanced Thursday, expressed some frustration over the budget process, noting the timing of the committee's vote on the budget bill made it likely that few would see the vote. 'This overall process, none of us is happy with,' said Declan O'Scanlon (R-Monmouth), the chamber's GOP budget officer. 'If you got something you want to release in the dark of night when no one's paying attention, everybody knows you put it after 4:30 on a Friday in the summer.' Among the tax hikes approved Thursday was a bill that would raise tax rates on online gambling and sports betting to 19.75%, from 15% and 13%, respectively. The proposal, earlier reported by the Press of Atlantic City, resembles a pitch the governor made in his budget address that called for the state to raise tax rates on online gambling to 25%. The governor's proposal was set to generate $402.4 million in additional revenue in the coming July-to-June fiscal year. The reduction from 25% to $19.75% would reduce those collections by about $85 million. 'Any time there's anything that could negatively impact our casinos in Atlantic City, we want to just raise our concerns because Atlantic City is kind of the powerhouse of South Jersey, and we don't want to do anything to impact their competitiveness with other states,' said Hilary Chebra, director of government affairs for the Chamber of Commerce of South Jersey. 'We do appreciate that it is less than what the governor proposed.' Some lawmakers have pushed to raise the state's tax rates on casinos' online gambling winnings, noting that New Jersey's existing rates are far out of step with its neighbors. New York levies a 51% tax on casinos' winnings from online sports betting, while Pennsylvania's online sports betting rate is 36%. Sen. John McKeon (D-Essex), the bill's prime sponsor, initially pitched raising New Jersey's rates to 30%. Legislators made broader changes to a separate Murphy proposal that would have doubled the 1% fee on property sales valued above $1 million and imposed an overall 3% fee on those worth more than $2 million. Under the Legislature's version, the fee would remain at 1% for homes worth between $1 million and $2 million but rise for more expensive homes, climbing to 2% for homes worth between $2 million and $2.5 million and rising by an additional half percentage point for every $500,000 in value, to a cap of 3.5% on property worth more than $3.5 million. 'This is one thing I wish didn't have to be included, but I also fully understand the need to balance a budget, provide necessary revenue, to continue to work down our structural deficit, to provide a healthy surplus,' Sarlo said. Lawmakers made another significant change: Their version of the tax would be paid by sellers rather than by buyers, as is the case under current law. The change would reduce owners' profits from the sale of property but reduce upfront costs for home buyers. Murphy's proposal was expected to generate $317 million in additional state revenue in the next fiscal year, though revenue relying on home sales can be highly volatile. Sarlo said legislators' version would raise about $282 million and impact between 2% and 3% of home sales. The bill calls for the state to refund the difference in fees for a property that was sold before July 10 and whose deeds were recorded no later than Nov. 15, 2025. The committee's vote on the so-called mansion tax measure was delayed by hours. When it first came up for a vote, the panel's Republican members had not seen the current version. When it was brought up a second time hours later, the measure had been amended again to allow additional time for homes to be sold and face the lower fee. Lawmakers also approved a bill that would raise the state's cigarette tax to $3 per pack, from $2.70, and triple tax rates on electronic cigarette cartridges to 30 cents per milliliter or 30% of the retail price for bottled fluid.
Yahoo
01-04-2025
- Business
- Yahoo
Budget experts warn lawmakers of upcoming fiscal uncertainty
New Jersey Treasurer Liz Muoio told lawmakers Tuesday that federal funding changes could have "a drastic" impact on the state budget. (OIT/NJ Governor's Office) State budget experts warned lawmakers on Tuesday of widespread uncertainty as the state moves to enact a budget for the coming fiscal year. Though officials from the Treasury and the nonpartisan Office of Legislative Services expressed optimism about revenue collections in the current fiscal year, which have exceeded expectations, they warned a tightening economy and residents' response to it could lead to a revenue slowdown in the fiscal year that begins July 1. 'While the broader state economy remains on stable footing, volatility in capital markets, shifting consumer behavior, and potential policy shifts could adversely impact revenue collections,' Oscar Mendez, a revenue and economic policy analyst with the Office of Legislative Services, told the Senate Budget Committee. The office estimated $55.33 billion in revenue for the current fiscal year, about $456.5 million higher than Treasury's own projections, with the differences mostly attributed to strong collections from the state's pass-through business alternative income tax in the weeks after Treasury issued its estimates. Stronger collections could ease the impact of the $1.2 billion structural deficit Gov. Phil Murphy has proposed for the upcoming fiscal year by expanding the state's reserves, which are spent down when state expenditures outpace state revenue. Legislators will receive another update on state revenue reflecting April tax filings in May. That update is expected to have positive news for lawmakers because markets were strong in the 2024 tax year despite the recent tumble fueled by President Trump's tariff policies. 'We're going to need those revenues. Any April surprises, we're going to need them for next year,' said Sen. Paul Sarlo (D-Bergen), the Senate budget chairman. Though the previous stock market hum may be a comfort to the state budget in the coming fiscal year, staggering drops across U.S. markets — including the S&P 500's worst quarter since Russia's full-scale invasion of Ukraine in February 2022 — could signal a potentially steep decline in income tax collections in the near future. 'Whenever the financial markets suffer, you can assume that there will be an echo in our revenue collections,' said Thomas Koenig, the legislative budget and finance officer. Uncertainty around federal funding — particularly on the $14 billion in federal dollars New Jersey receives for Medicaid — could also upend the state's budget. The future of Medicaid is particularly troubling not only because it sees an outsized share of federal spending but also because those federal funds are often paid to reimburse expenditures already made using state funds. The fact that many federal cuts have been issued on short notice or even retroactively compounds uncertainty at the state level, said Treasurer Liz Muoio. 'It is very difficult, A, to predict what's coming through because it's coming piecemeal, but then it's coming in and it's immediate,' she said. 'So when you are dealing with this on a reimbursement level, you've already spent that money, so the potential hit to our budget and our programs, I should say, could be drastic.' Legislators continued to express skepticism about some of the revenue raisers Murphy has proposed for the coming fiscal year, with particular resistance to a sales tax expansion that would tax services at laser tag arenas, swimming pools, and speedways, among a host of other recreational businesses. 'I want to make it clear to everybody who's listening to this. There's no desire from this Legislature to tax those services,' Sarlo said. 'I think they were a talking point by the governor. I think the governor realizes those will be eliminated.' Sarlo added he hopes revenue foregone by eliminating the expansion could be made up through governmental efficiencies or spending cuts. Public pans spending cuts, tax hikes in governor's budget plan Health benefits for public workers are also set to be a major cost driver in the coming fiscal year. The local part of the State Health Benefits Program is projected to see total cost increases of more than 20% for 2026, before even considering increases in the cost of health benefits. Municipalities have increasingly moved off the state plan amid steep cost increases in recent years, feeding a cycle where a smaller and increasingly less healthy pool of subscribers leads to cost increases that spur more departures. 'There is no doubt that the rate increases our plans have experienced in the past four years outpace what other, similar state and public employers are experiencing, especially in the SHBP local government section,' Muoio said. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
