Democratic Legislative Budget Plan Advances

TRENTON – The Democratic Legislative budget that addresses the state’s needs and priorities with a fiscally-responsible plan that makes investments in key programs that will move New Jersey forward, provide support for middle-class families and aid to those most in need gained the approval of the Senate Budget Committee today with a vote of 8-3-2. The budget plan, S-2019, appropriates $36.5 billion and includes a surplus of $790.8 million, Senator Paul Sarlo said.

“This is a fiscally-responsible budget that maximizes the use of state resources to improve the quality of life for the people of New Jersey,” said Senator Sarlo, the chairman of the Senate Budget and Appropriations Committee. “It invests in educational opportunities with increased support for schools, provides a significant boost in property tax relief for middle-income families and restores assistance for a wide array of services that help the disadvantaged. It is a plan that carries through on the shared values and goals of the state’s residents.”

The budget also addresses key needs such as long-delayed improvements to NJ Transit, continued contributions to the pension system, expansion of Pre-K and support for affordable housing. The school funding reforms would continue with an increase of $347 million for school districts at the same time that the inequities that have plagued the distribution are corrected.

The budget also increases the Earned Income Tax Credit for the working poor and provides tax credits to care for children and the disabled.

“At the same time we invest in our future we also must care for the disadvantaged and those suffering from neglect,” said Senator Sarlo. “This budget shows compassion. It’s about people, not just a balance sheet.”

Senator Sarlo emphasized the economic advantages of the tax on corporations instead of people.

“We are being smart about how we raise taxes and by how much,” Senator Sarlo said. “New revenue consists primarily from a two-year Corporation Business Tax surcharge on large corporations that are experiencing windfall profits from the federal tax laws. It will be borne mostly by multinational corporations headquartered out of state and by foreign and out-of-state investors and it will be applied only to in-state profits, so it will not matter where the businesses are located.”

The budget bill calls for a 4 percent surcharge on corporations earning more than $25 million in profit in New Jersey and a lower 2.5 percent surcharge on corporations making between $1 million and $25 million. The tax would raise $805 million, but corporations would be able to deduct $169 million of that amount from their federal taxes.

The other revenue portions of the budget include a tax amnesty program, surcharges on e-cigarettes, “transient” rooming accommodations and prearranged ride services. The bill would also close corporate tax loopholes, which would increase state revenue.

Senator Sarlo said that the budget plan also focuses on savings and efficiencies that reduce expenditures. “We have to look at both sides of the budget equation,” said Senator Sarlo, noting that the budget includes more than $240 million in health care savings from the new Pharmacy Benefits Manager and Medicaid Advantage contracts that the administration issued.

The Budget Committee also approved a series of bills tied to the budget:

  • The CBT Surcharge – S-2746: Imposes surtax on corporation business tax liability; decouples certain provisions from Internal Revenue Code; imposes tax on certain dividends. A 4 percent surcharge on corporations earning more than $25 million in profit in New Jersey and a lower 2.5 percent surcharge on corporations making between $1 million and $25 million. The tax would raise $805 million. Sponsored by Senate President Sweeney.
  • Carried Interest Corporate Tax Reform – S-64: Imposes corporate business tax and gross income tax on income attributable to investment management services that a corporate or individual partner provides on behalf of a partnership. The bill would tax income attributable to certain “investment management services.” Sponsored by Senator Singleton & Senator Turner.
  • Tax Amnesty Program – S-1841/S-2523: Requires the Division of Taxation to establish a six-month tax amnesty program which would end no later than December 1, 2018. Taxpayers who have not paid any State tax due between January 1, 2012 and January 1, 2018 would be able to pay their overdue tax and only one-half of the balance of interest on the unpaid tax due on May 1, 2018, and without the imposition of any civil or criminal penalties. Sponsored by Senator Cryan & Senator Diegnan.
  • The Surcharge on Temporary Accommodations – S-749: Imposes sales and use tax and hotel and motel occupancy fee on transient accommodations; authorizes various municipal taxes and fees on transient accommodations. This bill would subject any residential rental of less than 90 consecutive days to the same fiscal treatment as hotel and motel rooms.  Sponsored by Senator Diegnan.
  • E-Cigarette Tax – S-2731: Imposes $0.10 per fluid milliliter tax related to sales of liquid nicotine. The bill would extend the tobacco products wholesale sales and use tax to liquid nicotine used in electronic cigarettes.  Sponsored by Senator Sarlo.
  • Surcharge on Prearranged Rides – S-2767: Imposes surcharge on prearranged rides. The bill would set a $0.30 surcharge on prearranged rides provided by transportation network companies that are not shared while shared prearranged rides would have a $0.15 surcharge. Sponsored by Senator Cruz-Perez.
  • Audit Savings for Health Benefits – S-2771: Requires SHBP and SEHBP to establish audit programs ensuring that all persons in SHBP and SEHBP eligible for Medicare have Medicare as primary provider. SHBP and SEHBP already require members who are at age 65 or have a Social Security Disability at retirement to enroll in Medicare. The bill would extend these requirements to ensure New Jersey does not pay more for people who could be covered under Medicare. Sponsored by Senator Singleton.
  • Medicaid Emergency Room Reimbursement Reform – S-2657: Establishes Medicaid emergency room triage reimbursement fee for low acuity emergency room encounters. Hospitals providing emergency services to patients enrolled in the State Medicaid fee-for-service program would be required to accept as final payment an emergency room triage reimbursement fee of $140 for minor health care incidents. Sponsored by Senator Sarlo.