Gov. Murphy’s FY 2022 Budget Address: 5 Key Takeaways

Highlights from Gov. Murphy's FY 2022 budget address, including one big omission.

Published on Feb 24, 2021 in Tax and Budget

With the nation still reeling from the COVID-19 pandemic, Governor Phil Murphy unveiled a state budget proposal that once again rejects austerity and makes major investments in New Jersey’s economic recovery. The proposal, buoyed by borrowed funds and stronger than expected revenue collections, includes significant funding for public health, schools, transit, and economic support for workers and businesses alike — all key drivers of strong communities and a strong economy. With a full pension payment, which would be the first since 1996, the budget also protects the retirement security of nearly 800,000 public workers and looks to shore up one of the state’s biggest financial obligations.

Here are key takeaways from the governor’s address:

1. All Kids Health Coverage

Universal health coverage for all kids. If that sounds like a big deal, it’s because it is. As it stands, there are approximately 80,000 uninsured children in New Jersey, but that would change under Governor Murphy’s proposed budget. With Black and Latinx/Hispanic children representing three-quarters of those uninsured — during a health crisis that has catastrophically and disproportionately harmed Black and Latinx/Hispanic families — policies that promote health equity are necessary for a strong recovery.

Providing affordable coverage to all children works hand-in-hand with the reopening of schools, keeping workers and their families safe, and the promotion of the positive health and economic outcomes tied to childhood health conditions. By funding All Kids Health Coverage, the governor’s budget provides protections for children and families so that they may not only survive the current crisis, but also have the resources to thrive in the long-term.

Other big health care investments include $19 million for a new Reproductive Health Care Fund, an extension of Medicaid coverage for postpartum care to a full year, and an additional $25 million to state subsidies on the state-based exchange (GetCoveredNJ), which boosts enrollment and keeps costs low.

2. Tax Credits for Low-Paid Senior Workers

The governor’s budget proposal expands who can qualify for the Earned Income Tax Credit (EITC), a powerful tool for providing income support to low- and moderate-income families. Currently, workers who do not have dependent children at home are only eligible for the federal EITC if they are between the ages of 25 and 64. This year’s budget proposal removes the upper age limit for workers without dependent children, increasing the after-tax income of thousands of New Jersey’s low-wage seniors who earn less than $15,980 per year.

While removing the maximum age threshold is a welcome change, there is much more the state could do to improve access to the EITC. Lawmakers could remove the minimum age threshold, allowing more young workers to benefit from this important program. Similarly, lawmakers could provide a more meaningful boost for more families by raising the benefit level for childless workers. Further, lawmakers should extend the credit to include all tax filers, regardless of where they were born. Right now, the EITC explicitly excludes workers who do not have a social security number, even if they file taxes using an Individual Taxpayer Identification Number (ITIN). By removing these barriers, lawmakers can help more New Jersey residents cover the cost of basic needs and provide a much-needed boost for state and local economies.

3. Child Care Tax Credit Expansion

The Governor’s proposed budget expands eligibility of a vital tax credit for working parents — the Child and Dependent Care Tax Credit (CDCC) — and boosts benefits for the state’s lowest-income families. This credit is available for working parents with kids under age 13 and for workers supporting parents or other dependents. It helps offset child care expenses, providing critical relief, but it is available only to a narrow set of families. This leaves working families with the lowest earnings with no benefit at all. By making the credit fully refundable and expanding the eligibility income cap from $60,000 to $150,000, the proposed budget substantially expands the reach of the program.

4. Full Pension Payment (One Year Early!)

Stronger than expected revenue collections, paired with $4.5 billion in borrowing from last year, has allowed Governor Murphy to make a bold proposal: a full payment into the state’s pension system, one year ahead of schedule. This would be the first full payment made by the state since 1996 — a stark reminder of New Jersey’s long history of raids on the pension fund by past administrations of both parties. The proposed payment, at $6.4 billion, is approximately $600 million more than what the Murphy administration intended to make as part of a scheduled phase-in. Now, one of the country’s most underfunded pension systems is on the road to solvency without shortchanging approximately 800,000 public workers. Here’s hoping credit rating agencies will take notice and reward New Jersey’s financial improvements with credit upgrades.

 5. No Pandemic Relief for Immigrant Workers

While the proposed budget includes several critical investments that will support workers and families across New Jersey, many immigrants are once again pushed further behind. New Jersey’s immigrant communities have faced disproportionate harm from the current health and economic crises. Unlike most other New Jersey residents who have access to support, however, certain immigrants are excluded from programs like federal stimulus payments and unemployment insurance when they fall on hard times. Nearly one year since the onset of the COVID-19 pandemic in New Jersey, state lawmakers have yet to take action to address this gap. To ensure strong recovery from the current crisis, is it critical that all New Jersey residents have access to financial support needed to cover the cost of basics.