TRENTON – Senate President Steve Sweeney said today that the Democratic Senate and Assembly leadership will offer to add two revenue sources to the budget plan that was approved by the Legislature in an effort to break the budget impasse.
The proposal includes an expansion of the tax on transient housing and an increase in the realty transfer tax for property sales above $1 million, which will combine to generate an additional $360 million. The proposal also includes an extension of the corporate business surcharge from two to four years.
“We approved a fiscally responsible budget with reliable revenues and fully justifiable cost savings, but we are offering these additional sources of revenue in the spirit of compromise so that we can put a budget in place,” said Senator Sweeney (D-Gloucester). “As long as the Governor has the sole ability to officially certify revenue projections, we must work within certain constraints. These additional revenues will further increase the already healthy surplus in our budget.”
“We remain confident and committed to the revenue and savings projections assumed in our budget, but we are offering an option that will satisfy the Governor’s call for additional recurring revenues,” said Senator Sweeney. “We are committed to working with him to get this budget enacted and to move forward.”
The expansion of the tax on short-term rentals would apply the surcharge to all rentals of less than 90 days, extending the current budget proposal beyond online rentals. A significant portion of this tax would be paid by out-of-state visitors. New Jersey is the only state from Maine to Florida that does not tax short-term rentals. It would generate an estimated $250 million increase annually.
The boost in the existing realty transfer tax from one percent to two percent on properties worth more than $1 million would add $110 million.
While the Governor has conceded the financial legitimacy of close to $200 million in cost-saving measures in the Legislature’s budget, there are additional savings of approximately $260 million that are achievable as well, funds that will add to the surplus or to meet budget needs.
The plan also includes a $66 million increase over the $125 million in additional funds in the Governor’s plan, attributable to the recent United States Supreme Court decision in South Dakota v. Wayfair Inc., which expanded the ability of state and local governments to tax on-line and remote sales.