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Murphy fears StayNJ costs could upend fiscal legacy

By: Charles Stile
Political Stile
USA Today Network

..... Phil Murphy's final lap as a two-term Democratic governor of New Jersey will begin Tuesday [01/14/2025] as he takes to the dais in the state Assembly chamber to deliver his seventh State of the State speech.
..... The speech gives Murphy a chance to lay out his final set of priories as he formally wobbles into the final year as a lame duck, eclipsed by the all-consuming race to succeed him in January 2026.
..... He is expected Tuesday [01/14/2025] to outline a "robust" agenda for his final year - initiatives on reproductive rights, property tax relief, education and public safety are expected - but preserving of his past achievements may very well be the chief goal for Murphy before he leaves office.
..... Although he was elected in 2017 by running as a "sanctuary state" liberal, Murphy's biggest accomplishments won murmurs of approval in Wall Street boardrooms - spaces he navigated as a Goldman Sachs executive for tow decades before entering politics.
..... He patched together healthy budget surpluses, put New Jersey's ailing pension system back on a sound footing after decades of fiscal neglect by his predecessors, fully funded public education and cut the state's debt.
..... Murphy didn't vanquish these chronic problems - it will still take another decade of large annual payments to the public employee pension system to bring to where it needs to be. Still, Wall Street liked what it saw and boosted the state's credit rating after ti was battered with 11 downgrades under his predecessor, Republican Governor Chris Christie.
..... Maybe these high-finance success stories are not the subjects that stir kitchen-table debates,e specially when people are confronted with the day-to-day challenges of stubborn inflation, ever-rising property tax rates and an unavailable mass transit system.
..... In recent months, Murphy has tied to explain how those high-finance accomplishments yield long-term real-life benefits for average New Jersey residents, and it's likely he will take the same approached in Tuesday's [01/14/2025] speech.
..... In November, [2024] for example, Murphy inserted this self-congratulatory passage in the "signing statement" that accompanied a bill he signed into law.
..... "When I first ran for Governor, the issue that concerned me as much as any other was that New Jersey's credit rating had been downgraded 11 times under my predecessor," he wrote. "Equally troubling was New Jersey's failure to meet its commitments to those most in need - specifically our children, who w4re in a school system that had been underfunded billions of dollars, and our retires, whose hard-earned pension were dependent on a system that was woefully insolvent. ... When I came into office, my administration and the legislature completely reoriented our budgetary priorities."
..... Ironically, Murphy raise his :reorienting" boast just a she was signing legislation that he believes to be the biggest threat to that very legacy: an expensive, ambitious plan to slash property tax bills by up to 50% for senior citizen homeowners.
..... StayNJ, as it's called, is the brainchild of Assembly Speaker Craig Coughlin, the Middlesex County Democrat who unveiled the plan in 2023. he touts the expensive program - which extends relief in tandem with two other existing tax relief programs - as a way to keep Jersey grandparents close to their Jersey grandkids.
..... It could also yield political benefits for Coughlin. All 80 seats in the Assembly will also be on the ballot this fall, [2025] and Coughlin will oversee the Democratic Party's push to retain control of the assembly.
..... Currently, democrats hold a 47-33 edge over the Republican giving Assembly Democrats a seven-vote cushion for passage on most bills. But Republicans have made steady gains in registration over the past four years, a13% increase, while the Democratic registration growth was stagnant. And Democrats are susceptible to Republican charges that they have simply been in majority control for way too long and that has gone wrong in New Jersey over the past tow decades. It's time for change, Garden State Republicans will be sure to argue.
..... Coughlin's StayNJ, which is scheduled to start in 2026, could help defuse the attack by claiming to come to the rescue of cost-saddled seniors. Checks will soon be in the mail.
.... Critics of the program says it primarily benefits high-income senors and could serve to tighten an already tight housing market by encouraging seniors to remain in their homes longer rather than sell them to younger, first-time homeowners.
..... But the biggest skeptic has been Murphy, who fears that the cost of StayNJ could upend his legacy. when the program was first created in 2023, Murphy insite on adding a few "guardrail" provisions designed to protect his achievements - such as requiring that the state maintain a 12% budget surplus before moving ahead with the program. That's a high hurdle - although easily evaded in budget negotiations.

And what about NJ's potential for a budget deficit in a new Trump era?

..... Still, StayNJ remains a source of anxiety for Murphy as the state faces other fiscal challenges in his final year: a looming structural budget deficit that has already forced him to order state agencies to freeze spending and the potential upheaval of the second Trump administration.
..... The ex-president has vowed to deport millions of illegal immigrants, many of whom pay taxes, supplying revenue for the state budget. And there was threats by a republican-controlled Congress of cutting Medicaid, a move that would put pressure on New Jersey to cover the cost of the program, which supplies medical coverage for the poor and disabled and is a major source of revenue for New Heresy hospitals.
..... "while I am very proud of the fiscal progress we have made, like many other states around the country, New Jersey faces a structural budget deficit that if unaddressed will wipe away the surplus that we have worked so hard to amass," Murphy fretted in his November [2024] signing statement.
..... So is Murphy on a collision course with his intra-party allies in the Assembly? Coughlin was not available for comment last week. [01/08/2025]
..... Some observes believe that it is unlikely, for now: the program would take effect halfway through the next fiscal year, [2026] minimizing the startup expense. And lawmakers have already socked away $600 million for the program.
..... "What I heard was very consistent with his platform and his agenda, his priorities of the last seven years. It's not striking out new ground," said Micah Rasmussen, director of the Rebovich Institute for New Jersey Politics at Rider University, referring to the expected talking point in Murphy's speech Tuesday. [01/14/2025] "But I also think that potentially, these are issues that don't come into conflict, or at least into serious conflict, with either Trump's agenda or with the Legislature's agenda."
..... Fair enough. But let's see when the first major revenue reports come cascading in to the Treasury Department in April and May. [2025] then they'll know if there is enough money for StayNJ before Murphy leaves Trenton for good.

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