New Jersey is not alone, according to a new report by the Center on Budget and Policy Priorities (CBPP), as states across the nation are facing what could be the largest budget shortfalls ever recorded. Federal lawmakers have already provided states with some fiscal relief through the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, but states are limited in how they can use these funds. As it stands, significantly more aid will be necessary for states to address the ongoing public health emergency, provide relief to families and small businesses who need it, and avoid drastic cuts to public services that would disproportionately harm communities of color and only prolong the nation’s ultimate recovery.
CBPP estimates that state budget shortfalls could total more than $500 billion, with most of the revenue loss concentrated in the upcoming fiscal year. These are conservative estimates as they do not include the substantial new costs that states are incurring to contain the COVID-19 virus, nor do they account for revenue shortfalls at the local, territorial, or tribal levels of government. Overall, these figures far exceed the federal aid given to states thus far, as well as what states already have saved up in their rainy day funds. What’s worse for New Jersey (and many other states) is that it will quickly exhaust its Rainy Day Fund, if it hasn’t already, as lawmakers left the state’s reserves empty for a full decade before finally making a modest deposit last year. To ensure a strong recovery from COVID-19, Congress should prioritize substantial and immediate fiscal relief in its next stimulus package.
What happens if the federal government does not provide states with significantly more aid?
One unattractive option is to make enormous cuts to state spending. This would mean laying off teachers and other public employees, as well as slashing spending on state programs and services that families rely on, especially during a crisis like the one we are living through. As we saw firsthand in the wake of the Great Recession, a cuts-heavy response to a downturn worsens the economy’s fall, slows the state’s recovery, and causes long-term harm to families and communities who are already struggling to make ends meet. It’s important New Jersey learns from this experience and does not make the same mistakes of the past.
So what else is there to do?
Another option is to borrow funds to support critical needs. Normally, New Jersey would not be allowed to borrow funds to cover operating expenses, but there is an exception in the state Constitution for “purposes of war, or to repel invasion, or to suppress insurrection or to meet an emergency caused by disaster or act of God.” In response to the COVID-19 pandemic, the Federal Reserve will buy up to $500 billion in bonds from state and local governments across the country to help shore up their finances. Governor Murphy has already expressed interest in borrowing up to $9 billion from the Fed, and NJPP has come out in support of that proposal, as President Brandon McKoy said the pandemic, “justifies, if not demands,” such action. Borrowing would help New Jersey avoid damaging cuts, which would help speed the state’s recovery from the recession.
But even if the state borrows to fill budget holes, more resources and funding will be needed to pay off these bonds in the short-term and stabilize the state’s finances in the long-term; after years and years of disinvestment and austerity, this should surprise no one. State lawmakers can accomplish this by ending tax breaks passed under the previous administration for the state’s wealthiest households and biggest corporations, as well as by reforming the income tax code to ensure that the top 5 percent of earners pay their fair share. Raising new, sustainable revenue will help New Jersey recover from the current economic downturn, prepare the state for the next one, and build an economy that works for the many, not just a chosen few.
Out of an abundance of caution, NJPP is canceling Progress 2020 due to the escalating COVID-19 outbreak. This is not a decision we take lightly. Progress 2020 is NJPP’s biggest event of the year and a unique opportunity for leading policy experts and advocates to discuss the most pressing issues facing the Garden State.
The theme of this year’s conference was “Policy for the People,” and right now canceling the event is the best tool we at NJPP have to protect the health and safety of Progress 2020 attendees, speakers, panelists, moderators, staff, and the broader New Jersey community.
We are grateful to have this option available to us as we recognize many low-paid and frontline workers do not have this choice. And while Progress 2020 is canceled, we at NJPP will continue to research and advocate for policies that promote social, economic, and racial justice, especially now as COVID-19 exposes the consequences of our nation’s insufficient social safety net.
We are currently exploring the feasibility of alternatives to the conference, including smaller online events, and will, of course, let you know if those become options. In the meantime, please do not hesitate to reach us at info@njpp.org if you have any questions. Thank you so much for being a part of the NJPP family and for your commitment to progressive public policy.
As the COVID-19 outbreak spreads across New Jersey, public health experts are advising those who feel sick to stay home. Fortunately, New Jersey is one of 12 states plus Washington D.C. to guarantee access to earned sick leave, ensuring workers do not lose pay if they call out sick. Of these states, New Jersey is among the few that includes coverage for public health emergencies. All businesses must provide paid leave to employees, with a few exceptions including independent contractors and per diem health workers.
How The Law Works
New Jersey’s Earned Sick and Safe Days Act allows workers to accrue one hour of earned sick leave for every 30 hours worked, which workers can then use after being on the job for 120 days. Workers can accrue up to 40 hours — or five full days — each year. The law applies to any person, firm, business, educational institution, nonprofit agency, corporation, limited liability company, or other entity with New Jersey-based employees, including a temporary help service firm. Employers of every size are covered, including employers based outside of New Jersey.
How New Jersey Can Expand Paid Sick Leave Protections
It’s a triumph that New Jersey has this policy in place at this critical moment. But given the magnitude of this public health crisis, New Jersey must take immediate action to further protect its workforce by ramping up efforts to inform employees of their rights and improve the existing earned sick day law. No worker should have to make a choice between going to work sick, putting others at risk of a highly contagious virus, and potentially falling behind on living expenses during these extraordinary circumstances.
NJPP is a proud member of the New Jersey Time to Care Coalition, which supports initiatives that make sure working families have paid time off to care for themselves and their families in times of need. Time to Care recommends the following expansion to the Earned Sick and Safe Days Act to help slow the COVID-19 virus and provide financial stability for all New Jersey families.
Immediately require 14 additional days of paid sick leave when there is a public health outbreak or emergency.
Remove the 120 day waiting period after an employee’s first day of work to access their accrued paid sick days.
Include coverage for workers currently excluded under the law. These include per diem health care workers, independent contractors, construction workers under a union contract, and public employees already receiving paid sick at full pay under another state policy.
Remove the ability for employers to require a doctor’s note after 3 days of consecutive absence, and allow for self-certification in lieu of documentation.
New Jersey lawmakers can and should expand the Earned Sick and Safe Day Act immediately, as many workers do not have the ability to work remotely and cannot easily quarantine themselves without fear of losing wages. Making these changes to the law will help prevent unnecessary spread of the COVID-19 virus, mitigate harm to our communities, and provide necessary relief to already stressed health and social systems.
Welcome to NJPP’s Budget Address FY 2021: Rapid Reaction, your source for commentary and data analysis on Governor Murphy’s address. The transcript below was taken from NJPP’s conference room, over a delicious Sicilian pizza, and has been lightly edited.
Lou (Louis Di Paolo, Communications Director): Budget season is back! Earlier today, Governor Murphy delivered his budget address for fiscal year (FY) 2021, where he detailed new investments in education, transportation, tax credits for working families, and so much more. The budget proposes the largest pension payment in state history, limits one-shot revenues and (some) raids of dedicated funds, and makes another big investment in the state’s Rainy Day Fund.
For New Jersey Policy Perspective (NJPP), this year’s budget season started a week early with the launch of For The Many NJ. This new coalition, made up of faith-based organizations, labor unions, and nonprofits advocating for education, the environment, transportation, affordable housing, and more, stood on the State House steps to call for a new approach to budgeting that puts the needs of ordinary people over those of corporate special interests.
Joining me in reflecting on what we heard today are Nicole Rodriguez and Sheila Reynertson! Sheila, can you give a brief overview of the coalition and its priorities this budget season?
Sheila (Sheila Reynertson, Senior Policy Analyst): Happy to do that, Lou. We are over 30 organizations working together to advance smart, responsible budgets that are sustainably funded. We are also prioritizing racial and economic equity as a critical component in realizing a New Jersey that works for the many instead of the few. We want to see New Jersey reverse ill-advised tax cuts like the tiny decrease of the state sales tax, close remaining corporate tax loopholes that allow profits to be parked overseas, and ensure the ultra-wealthy pay their fair share on inherited wealth.
Nicole (Nicole Rodriguez, Research Director): The coalition recognizes that budgets are about more than numbers. That’s because each line item represents real people – our neighbors, our families, our coworkers, as well as students and seniors in every corner of the state. Budgets have direct implications on all our livelihoods and we need to keep that in mind when discussing and advocating for sound budget practices and investments that will help all residents thrive.
Lou: Beautifully said, Nicole. Budgets really are moral documents and represent the state’s priorities. Keeping that in mind, let’s jump into the governor’s address. First, what did we like?
Nicole: The governor proposed a boost to working families across the state by way of the Earned Income Tax Credit (EITC), a refundable tax break for lower-income workers. The EITC is an important anti-poverty program that helps families struggling on low wages to make ends meet and provide basic necessities for their children. Think of it like a refund for low-paid workers.
Specifically, the FY 2021 budget proposal increases the state tax credit to 40 percent of the federal benefit and proposes lowering the age threshold for workers without children to 21, making about 60,000 more workers eligible.
Sheila: I was really impressed with another round of solid investments in education across the board. Students and teachers should be very excited about this budget.
Pre-Kindergarten expansion continues to be an important priority with $83 million in additional funding. That will help 30 more districts introduce early education. That’s on top of the expansion to 60 districts over the past two years. Direct formula aid for K-12 public schools is slated to receive an additional $336 million. In total, the Murphy administration has increased this funding by 11 percent. It was great to see continued support for the community college grants program, which started in 2019, and it was a pleasant surprise to learn this budget will bring this model to 4-year public college and universities.
Lou: I’d like to point out the $1.6 billion surplus and $300 million deposit into the Rainy Day Fund (RDF). These aren’t sexy investments, but they help rebuild the state’s fiscal foundation and prepare New Jersey for the next recession or superstorm. The governor remarked that this is the first time the state is making back-to-back deposits into the RDF in over 20 years. That really surprised me given that this is such a basic budgeting best practice.
Sheila: Yes, baby steps! The state’s Rainy Day Fund was emptied during the height of the Great Recession and then was allowed to grow cobwebs for years. While this is a relatively small investment, it is an important step in rebuilding an emergency savings account that will give New Jersey the ability to weather tough times without having to resort to making drastic and dangerous cuts to programs that, might I add, low-income communities depend upon the most.
Lou: You know what else was emptied during the last decade? Billions and billions of dollars in revenue. New Jersey enacted $15 billion in cumulative tax cuts that primarily benefited the state’s wealthiest families and biggest corporations.
How’s the governor’s proposal stack up in terms of recouping this lost revenue and ensuring the ultra-wealthy pay their fair share? Or, more broadly, how do we feel about the governor’s proposals to raise revenue?
Sheila: It’s baaack! Governor Murphy has proposed the millionaires tax for the third year in a row.
This time the Senate President has signaled his willingness to support it in exchange for a larger pension payment. We shall see how this all plays out in the next few months, but it’s a proposal that is long overdue. Since the Great Recession, there has been a 62 percent increase in the number of New Jersey residents with incomes over $500,000 in annual income. A third of them make over $1 million in annual revenue. These high earners have further enriched themselves and their families through the many new loopholes and tax cuts in the 2017 federal tax law. It’s time for the income tax code to reflect this reality – permanently. It would generate much needed, sustainable revenue for direct property tax relief and address worsened income and wealth inequality in the Garden State.
Lou: I can’t wait for New Jersey to pass the millionaires tax. Then I’ll finally be able to change my twitter name back to normal.
Nicole: Let’s be clear here: The millionaires tax is not the end all be all of tax fairness. New Jersey can and should do more to ensure the ultra-wealthy and corporations pay their fair share. The Senate President made a valid case this weekend for extending the corporate business tax surcharge for companies with over $1 million in annual profits. Many of these corporations pay little-to-no federal taxes and received a huge windfall thanks to the Trump administration’s 2017 tax cuts.
The state can also do a better job of taxing inherited wealth, whether it be through bringing back the estate tax or reforming the inheritance tax for wealthy heirs.
Lou: All great points. New Jersey can definitely do more to advance equity through the tax code. Sheila, were there any new programs or services in the budget that could help reduce disparities?
Sheila: Yes! In his speech today, Governor Murphy highlighted three initiatives that would have a direct impact on racial disparities. He lifted up the Amistad Commission, which will help revitalize African-American history curriculum in public schools, highlighted ongoing efforts to eliminate the racial disparities in New Jersey’s dismal maternal mortality rates, and announced new programs to break the school-to-prison pipeline which disproportionately harms Black and Latino communities.
Lou: I’m curious to hear more about eliminating racial disparities in maternal mortality rates. New Jersey truly is a tale of two states when measuring the experiences of people of color with white people. We have the best public schools in the nation but the worst racial segregation; the best maternal health care but one of the worst maternal health rates for Black mothers; one of the biggest gaps between the wealth of white families compared to Black families. I could go on.
Sheila: We would be here pretty late if you did. This pizza is already getting cold, and I’m sure all of our cats miss us.
Lou: That is very true! Let’s move this thing along: What was missing in the governor’s address?
Nicole: The Governor did not mention immigrants in his address. And what’s more disappointing is that he is proposing to flat fund, which is essentially a funding cut, the programs that provide legal representation to immigrants. Access to counsel is not only a smart budget choice but also necessary in the wake of harmful national policies that increase the need for such representation. It is proven to dramatically affect legal outcomes, reduce the costs of detention, and provide due process to a system that perpetually fails immigrants. In fact, according to a study by Seton Hall University, immigrants with representation were at least 3 times as likely to obtain a successful outcome as those who were not represented. Immigrants are vital to our communities and our economy. Although this state has done a lot to help immigrants feel welcomed, the state must do more to help as they are targeted by federal agencies.
Sheila: I noticed that the NJ Transit investment looks a little shaky compared to the last two years. An additional $132 million has been designated for operating expenses in this budget, but with that comes diversions from the Turnpike Authority to the tune of $154 million and $82 million from the Clean Energy Fund. It reveals how long it is going to take to undo the damage of hollowing out NJ Transit during the last administration. That being said, kudos for keeping a lid on ticket prices for another year.
Nicole: We could definitely use some clarity on the new health insurance assessment. This is another proposal supported by the For The Many NJ coalition as it recaptures a fee on insurers that the federal government no longer collects. It’s unclear where this new revenue will go, though. NJPP supports the assessment in theory, but it must be put towards expanding health coverage for those who need it most, including uninsured children and low-income families who cannot afford the cost of premiums in the marketplace.
Lou: Brandon’s not here so I’ll ask: Did the governor mention poverty once in his address?
Sheila: I’m doing a Ctrl-F search for it in his speech and nothing is coming up. But I did notice that the administration claims it will cut the co-pays parents pay for subsidized child care by 50 percent. Also, in response to the federal gag rule, $20 million is allocated for family planning services to replace lost federal dollars, providing low-income families affordable birth control and, by extension, greater economic stability.
Lou: Anything else missing? Can we go rapid fire so we can wrap this up?
Nicole: It looks like most departments are flat-funded. That’s not good as these agencies were decimated under the previous administration. These are the offices tasked with running state government, and they need adequate resources and support, otherwise they can’t do the job we all need them to.
Sheila: Charity Care is flat funded too, unfortunately. This is a critical resource that foots the bill for hospital care for those who are under- and uninsured.
Lou: Anything else?
Nicole: Oh, good budgeting practices! No mention of consensus revenue forecasting or multi-year projections for revenue and appropriations. These are common-sense reforms that will make the budget process more transparent.
Sheila: And the credit rating agencies love them! Speaking of love, how did no one mention how delicious this pizza is?
Lou: The pizza was very tasty…
Nicole: Like this pizza, I’m walking home!
Lou: Fair enough. Great job, team! Looking forward to doing this again after the budget gets signed.
On January 1, 2020, the Trump administration set a new threshold under which salaried workers are automatically entitled to overtime pay at $35,568 a year. This rule leaves behind thousands of New Jersey workers who would have received overtime protections under the much stronger rule, published in 2016, that was abandoned by the Trump administration.
But all is not lost. New Jersey can step up to protect its workers by creating its own, stronger overtime rule, similar to the policies implemented in New York, Washington, and California.[1] Specifically, the Murphy administration can implement its own rule to restore and strengthen the state’s overtime protections.
If New Jersey adopts its own overtime threshold at 2.5 times the minimum wage—$78,000 by 2024—it would restore the standard that existed from the 1940s through the late 1970s. Under this threshold, 287,000 more workers would gain new overtime protections than under the Trump administration’s new overtime threshold. In total, by 2024, when the minimum wage will reach $15 an hour, 842,000 salaried white-collar workers — or 38 percent of all salaried workers — would gain coverage. Of those workers, 315,000 would gain overtime protections for the first time and 528,000 would have strengthened protections, as they would be less likely to be misclassified as exempt, white-collar workers.
Workers deserve the right to overtime pay and New Jersey should take the necessary steps to make that happen. By raising the overtime threshold, the Murphy administration has the chance to right the wrongs of the Trump administration and protect New Jersey’s working families with the pay and protections they are due.
Today, Americans commemorate the 47th anniversary of Roe v. Wade, the 1973 U.S. Supreme Court decision that struck down statewide bans on abortion, thereby allowing people to make decisions about whether and when to have a family. Thankfully, New Jersey has consistently upheld the right to abortion care since the procedure was legalized.
New Jersey is one of just twelve states that uses state funds to support Medicaid access to abortion services to mitigate the impact of the Hyde Amendment, which blocks all federal funds from paying for abortion information, referrals, or care. Equally important, the state has largely remained outside the national trend of state-level abortion restrictions like waiting periods and mandatory ultrasound exams.
Though the right to abortion exists in theory, for many people in New Jersey and around the nation, it is inaccessible in practice. The leader of Yellowhammer Fund, an abortion fund and reproductive justice organization in Alabama, describes this reality in a thoughtful refection of this day. In a post-Roe world, Amanda Reyes asserts, access to abortion care requires a person have the financial ability to travel to and obtain the service; it requires a doctor or clinic savvy enough to remain in business despite chronically low Medicaid reimbursement rates; it requires a new generation of abortion providers to replace those who retire. When one or more of these are absent, the harm falls hardest on lower income communities and the under- and uninsured, people who are transgender and non-binary, and people who may face significant barriers to health care more generally.
New Jersey can do better.
In his State of the State address, Governor Murphy detailed an agenda for the year ahead that includes passing legislation to enshrine the right to abortion access and reproductive health care in state law. That makes sense, as it recognizes that reproductive health care is inextricably linked to racial and economic justice. With Roe v. Wade under threat by the U.S. Supreme Court, it’s more important than ever that New Jersey build on its strong track record of supporting reproductive health.
But the legislation must go further to show that New Jersey won’t back down in the face of ongoing attacks. Lawmakers must ensure that everyone has equitable access to care regardless of a person’s income, zip code, age, race, or immigration status. When everyone can make decisions that are best for their own lives, families thrive and communities grow stronger.
At NJPP, we know that ensuring access to comprehensive reproductive health care is critical to reducing poverty, ensuring racial equity, and advancing economic justice. But access to these services should not depend on how wealthy you are or which zip code you happen to live in. The governor and legislature have a unique opportunity this legislative session to not only affirm these rights, but ensure that the state is taking an active role in breaking down harmful barriers so all New Jerseyans can decide what’s best for them and their families.
A trusted and reliable revenue estimate is central to any fiscally responsible budget. Yet, in New Jersey, the legislative and executive branches calculate revenue for the upcoming fiscal year on separate tracks. These competing projections often cause gridlock and invite unnecessary politics into the budget-making process.
Fortunately, there are concrete ways to ensure a more realistic and transparent budget debate, starting with a “consensus” process for developing a reliable, nonpartisan estimate of how much money the state has to work with. A proposal in the Legislature would do just this — institute consensus revenue forecasting, a well-established budgeting practice utilized by 28 other states.
The proposal would establish a “Revenue Advisory Board” comprised of a representative of the executive branch, the Office of Legislative Services, and a mutually agreed-upon, qualified member of the public. The board would work collaboratively to calculate the amount of revenue the state can expect to collect in the upcoming fiscal year based on analyses of current economic conditions and outlooks. While this legislation would not change the Governor’s authority to certify revenues, it would create a public revenue projection process that actively encourages more collaboration and transparency.
However, the bill could be stronger in two ways. For one, forecasting by the year leaves policymakers unable to anticipate and respond to predictable changes beyond one fiscal cycle, making the state vulnerable to revenue shortfalls and subsequent cuts to programs and services that families rely on. A better approach would be three-year revenue estimates because they provide policymakers with more clarity for long-term planning.
Second, the bill lacks similar long-term estimates on the spending side, which is another budgeting best practice. Being aware of potential cost increases before they happen gives policymakers a firewall against year-end budget changes. By simply projecting out the next three years of some foundational spending areas, policymakers would have a better understanding of how much revenue the state needs just to keep these existing programs stable. This would give New Jersey a stronger grasp of the real costs of meeting its obligations, like the state’s contribution to the pension system, and programs like K-12 education, municipal aid, and property tax relief.
New Jersey should follow the lead of the 28 states and set a trustworthy benchmark for how much to invest in schools, mass transit, and other public services. This best practice, valued by credit rating agencies, would also give New Jersey a welcome opportunity to further retreat from its losing streak of credit downgrades.
While a more comprehensive bill would better improve the budget-making process in New Jersey, this bill is a step in the right direction. Otherwise, lawmakers remain blind to the impact of their budgeting decisions, putting the Garden State’s economic future at risk.
Welcome to NJPP’s State of the State 2020: Rapid Reaction, your source for commentary and data analysis on Governor Murphy’s address. The transcript below was taken from NJPP’s conference room and has been lightly edited.
Lou (Louis Di Paolo, Communications Director): On Tuesday, Governor Phil Murphy delivered his second State of the State address, where he touted major policy wins from the last year and outlined his vision for 2020.
As the speech made apparent, this was a big year for New Jersey lawmakers. In 2019, the state passed landmark legislation to raise wages, expand access to health care, create opportunities for immigrant communities, and so much more. New Jersey’s families are certainly on a stronger footing today than they were a year ago, and that’s a direct result of policies enacted over the last twelve months.
One major theme from today’s speech: changing the culture in Trenton. The governor reiterated this time and time again in his remarks, insisting his administration is “putting the needs of families ahead of the well-connected and entrenched special interests.”
My first question is, what does changing culture look like in practice?
Brandon (Brandon McKoy, President): I think it means a few different things. The governor mentioned this refrain — changing the culture in Trenton — with regard to economic justice and fiscal responsibility, transparency in government leadership, and the toxic culture of sexual violence that harms women throughout politics in New Jersey. These are all crucial issues that have been long overdue for impactful change and it’s heartening to see the governor highlight them in his State of the State remarks.
Concerning economic justice and fiscal responsibility, turning one-off occurrences into recurring habits is key, especially for policies like boosting our budget surplus, increasing the state’s rainy day fund, and reliably paying for our obligations and critical assets. All of these require a shift from focusing on what it takes to get to the next fiscal year or election, and towards a vision of what New Jersey needs to be ready for the challenges of the next decade and generation.
Sheila (Sheila Reynertson, Senior Policy Analyst): That’s right, and one concrete way to put the needs of the people before those of special interests is to rein in corporate tax subsidies. Study after study shows that these tax breaks are both costly and ineffective at growing the economy.
If the governor truly wants to limit the influence of special interests, this is the place to get it done.
Lou: All good points. I was a little surprised the governor didn’t say more about corporate tax subsidies, but at the same time, he didn’t really have to. Every investigative article and study that’s come out over the last year shows that significant reforms, including hard caps on awards, are sorely needed.
Nicole, I’m curious to hear your thoughts on the governor’s comments on culture change, especially as this was your first State of the State here in New Jersey (some helpful context here is that Nicole is from Massachusetts).
Nicole (Nicole Rodriguez, Research Director): I was very heartened to hear him single out misogyny and inappropriate behavior. Unfortunately, every woman has a story to tell in this area. We will need to keep each other accountable not only with creating a better culture for women, but also with holding men accountable for their actions through actual repercussions, and creating better protections for women to be able to tell their stories without fear.
New Jersey has done good work in putting accountability into action, such as pay equity, but we can do a lot more. The state can eliminate the subminimum wage for tipped workers. We know that low wages and dependence on tips creates a culture where tipped workers must tolerate inappropriate behavior at work. Dignity shouldn’t be an add-on but a prerequisite.
Sheila: Was this the first time misogyny was referenced in a governor’s State of the State address? I wouldn’t be shocked if it was.
Lou: I wouldn’t doubt it. New Jersey could definitely do a better job of living out its purported values, and that starts at the top. Fortunately, Governor Murphy made this a big pillar of his speech, along with ethics reform and addressing rising inequities.
Sheila: Yes, it was refreshing to hear a leader of state government acknowledge that the old ways of addressing disparities hasn’t moved the needle nearly enough and more often than not has left communities behind, which hurts New Jersey’s ability to become stronger and better. The governor announced a task force to take a deep dive into the complex causes and concrete solutions to close the wealth gap, especially for Black and Latinx families.
Nicole: Unfortunately, I have seen these types of task forces before with no real change being done. Why? Because it is hard. Meaningfully addressing racial inequities requires complex approaches with sustained commitment from many different sectors and from all levels of government. What I would like the state to do — and hope that this task-force does — is create long-lasting mechanisms to build assets for families, particularly for those who have been left behind.
Wealth enables families to make long-term investments in their future. Unfortunately, policy decisions made over the course of generations are inhibiting people, mostly people of color, to thrive and prosper.
Lou: Agree 110% with Nicole. I’m really excited to see what the wealth inequality task force finds and ultimately recommends, especially as it relates to the tax code. Lawmakers need to recognize that tax policy is a tool to advance racial equity, as Chye-Ching Huang from the Center on Budget and Policy Priorities makes clear in this thread:
Pivoting a bit, the task force wasn’t the only new agency unveiled by the governor, as he also announced the creation of a new office, within the Governor’s office, to rein in the cost of health care. Ray, want to weigh in on this?
Ray (Raymond J. Castro, Health Policy Director): Yes, the governor’s proposal to establish an office to reduce health care costs statewide is an important first step in controlling health costs. Unaffordable health care costs is the number one problem that consumers face in New Jersey.
Historically, the state has done a lot to reduce billions of dollars in public health care costs, such as in Medicaid and for public employees, but very little to reduce costs for the average resident. This is one of the reasons why New Jerseyans pay the third highest premiums in the nation for employer based coverage and why the state uninsurance rate ranks so poorly.
Unaffordable health coverage makes businesses less competitive and consumers less healthy than in some other states that are doing a much better job. However, we will need to obtain a lot more information about the office before we know whether it will tackle the biggest health cost issues facing New Jerseyans.
Lou: Keeping health care affordable is critical, especially if the state wants to make a real attempt at ensuring all residents have comprehensive health coverage.
Ray: Agreed. It is very unlikely that the state will ever be able to make inroads in reducing the 700,000 New Jerseyans who are uninsured until health coverage can become more affordable. There could be major pushback to any substantial proposal from this office by some health interest groups (read: special interests), which is one of the reasons this office has not been proposed before, but the benefits to the public could be enormous if the office has an ambitious enough agenda.
Lou: Another major theme was a shift in thinking from short-term thinking to long-term solutions. That came up in almost every major issue area.
Sheila: Yes, this was one of the strongest elements of the speech, especially in his closing remarks.
Good stuff.
And an appropriate way to frame New Jersey’s precarious fiscal standing after years and years of tax cuts for those at the top, short-changing key services and programs, and expecting New Jersey families to make up the difference.
Taking on the long-term goal of becoming more fiscally responsible should give the state a fighting chance of digging out of an outsized fiscal hole. Things like creating a healthy surplus, making the first deposit into the Rainy Day Fund in over 10 years and working in collaboration with public workers to find savings in health care benefits are all great steps in the right direction.
Brandon: Those are critical steps, along with making the tax code fairer for everyday families. The nation’s tax code is upside down, with the wealthiest families paying a lower effective tax rate than anyone else.
Granted, New Jersey’s tax code is less regressive than most but there’s still much more work to be done. The state is precisely in the situation it’s in because of three decades of short-sighted budgetary decisions. There’s no silver bullet or one policy to fix that.
Sheila: That’s right — and the governor said as much in his speech. These issues will not be solved in one election cycle.
It’s an important reminder now that the governor has called again for a true millionaire’s tax. A common reaction to this perennial proposal is that it “won’t fix New Jersey’s problems.” That’s an unfair and oversimplified characterization of long overdue tax reform. Increasing the tax rate on earnings of $1 million and above would not only provide at least another $450 million to property tax relief for middle class families, but also be an appropriate counter reaction to the widening gap between the highest earners and everyone else.
Lou: What was your favorite part of the speech? Try to keep this to a topic we haven’t covered yet.
Nicole: Can I tell you what wasn’t my favorite part? All of the clapping!!!
Brandon: I was waiting for that to come out.
Nicole: I kid, I kid! As you know, I hail from good ole Boston, Massachusetts and attendees of MA’s State of the State don’t typically clap for five minutes straight when the governor walks in. Don’t get me wrong, I was happy to clap, but I did have to take breaks to keep up with the excited crowd!
Sheila: This was my favorite moment: hearing the governor announce that New Jersey will be the next state to codify the right to abortion care!
Right now, the right to abortion is protected by New Jersey’s Supreme Court decisions, but not protected in state statute. With Roe v. Wade under threat nationally, it’s more important than ever that New Jersey enshrines the right to abortion access and reproductive health care in our state law.
Nicole: I appreciated when the governor elevated common sense solutions for people who are currently in the justice system, specifically when he called for eliminating mandatory minimum sentences for nonviolent offenders. While this policy will not address all racial disparities in our criminal justice system, it is a good step forward. Hopefully, we will see a transition that emphasizes restorative justice over retribution.
Brandon: I really liked this line towards the end: “Where others have focused only on the next election, we’re focused on the next generation.” There’s often a sense, working in state policy in New Jersey, that there’s no real long-term plan to tackle the challenges we deal with on a day-to-day basis, let alone the ones we’ve yet to come across.
Too much of the state’s politics and policies focus on just getting through the next budget or the next election and those sorts of decisions have led us astray. Prioritizing the long-term future, and thinking about what the next generation will need to succeed, should take greater precedence over our decision-making in general. It was really nice to see that sentiment highlighted in the State of the State.
Sheila: Oh, can I do another one? I was impressed with the Governor’s call to revitalize the Amistad and Holocaust education programs as a tool against rising hate crimes in the age of dangerous polarization. Such a welcome and straightforward strategy to instill values of inclusion, equity, and empathy. Bravo!
Lou: And what was missing?
Brandon: While there was a lot of focus on economic inequality, the word “poverty” wasn’t mentioned once. We can’t truly tackle rising inequality without explicitly naming and highlighting the damaging effects of poverty on our society. The poverty rate in New Jersey remains significantly higher than it should be and, looking at the ALICE report from the United Way of Northern New Jersey, we know that 4 in 10 households struggle to make ends meet. Poverty is truly a national security issue and if we don’t attack it while centering racial and gender equity, New Jerseyans across the spectrum will continue to suffer. So, going forward, I would like to see poverty mentioned explicitly and more frequently.
Ray: I have to agree with Brandon. It is also unfortunate that the poorest families in the state weren’t explicitly included in the governor’s speech. Major progress was made this year because the state increased basic assistance to these families in Temporary Assistance to Needy Families (TANF). This assistance, however, is still only at about 30 percent of the federal poverty level. The entire TANF program really needs to be reformed to help lift families out of poverty and achieve economic independence.
Lou: Anything else, Ray?
Ray: There was also no mention of increasing health coverage for the uninsured. Without help to reduce premiums and cost sharing in the new state exchange that starts this year, it is likely we will see another drop in enrollment for health coverage. The state can start to move toward universal health care by assuring that all uninsured kids in New Jersey are eligible for NJ FamilyCare. This can be done with little cost because the state has already made great progress under the Affordable Care Act at reducing the number of uninsured children.
Sheila: No mention of rising state college tuition fees or how to help New Jersey families getting crushed by child care costs. Child care is still largely unaffordable for many working parents — the state really needs to expand eligibility for child care subsidies and make tax credits for child care fully refundable.
Lou: You know what this rapid reaction is missing?
Brandon: Gritty?
Lou: Gritty!
Sheila: So predictable… not that I’m complaining.
Lou: Thanks, team! Looking forward to doing this again for the budget address in a few week.
More than 1 in 9 workers across the state will
see a modest increase in their take-home pay on January 1, 2020, when the
minimum wage increases to $11 an hour. This increase will boost the economic security of over
460,000 workers and represents the second phase of a six-step increase to the
$15 minimum wage approved by state lawmakers in 2019.
Of these 460,000 workers, they are mostly adults, workers of color, women, and many are parents.[1]
Local businesses also benefit as minimum wage workers’ spending power increase by $480 million in 2020.[2] When consumer spending increases, so can the demand for goods and services, keeping money circulating in the economy and furthering a virtuous cycle that benefits workers, local businesses, and communities.
While
all minimum wage workers will see an increase in 2020, not all wage increases
will be the same nor will all minimum wage workers be entitled to a $15 minimum
wage by 2024:
Tipped workers’ wages will go up slightly from $2.63 to
$3.13 on January 1, 2020, and only to $5.13 by 2022.[3]
Minimum wage workers who are seasonal or who work at small
businesses (with fewer than six employees)[4] will
also see an increase from $8.85 to $10.30 in 2020. However, they will not reach
$15 until 2026.[5]
Farmworkers’ wages will increase from $8.85 to $10.30 in
2020 and will reach $15 in 2027.[6]
Once
fully phased-in, the minimum wage will increase every year to inflation. With
the exception of tipped workers, seasonal, farm, and workers at small
businesses will reach the full-minimum wage by 2030.
For more information on the phase-in schedule of New Jersey’s $15 minimum wage, see our previous blog here.
End Notes
[1] Economic Policy Institute Minimum Wage Simulation Model using data from the Census Bureau, Bureau of Labor Statistics, and Congressional Budget Office. See EPI Minimum Wage Simulation Model 2019. Dollar values adjusted by projections for CPI-U in CBO August 2019 projections. https://www.epi.org/publication/minimum-wage-simulation-model-technical-methodology/
[6] Ibid. 3. Please note that no later than March
31, 2024, the Commissioner of Labor and Workforce Development and Secretary of
Agriculture will review the minimum wage’s impact on farm employers and on the
State’s agricultural industry. Through this, they will be able to suggest
whether to continue or pause the minimum wage increases for farmworkers.
Subsequently, the legislature would decide whether they want to take
legislative action on suspending the remaining increases.
Today, the U.S. Supreme Court will hear oral arguments on the legality of the Trump administration’s attempt to terminate the Deferred Action for Childhood Arrivals (DACA) program. In place since 2012, DACA protects young people without documents from deportation and allows them to work legally in the United States. These arguments will ultimately inform the Court’s decision by no later than July 2020.
What this means for New Jersey:
In New Jersey, nearly 17,000 DACA recipients could lose their protections against deportation.[i] Being stripped of their work permits, driver’s licenses, and other benefits attached to their protected status would all but eliminate their opportunities to earn a living. If this happens, New Jersey as a whole will feel the negative effects both socially and economically.
DACA recipients are important members of our communities and have been so ever since they arrived in the U.S., with the average age of arrivals being just 8 years old.[ii] They have attended and graduated from our public schools, colleges and universities, work alongside us every day at our jobs, and are neighbors and loved ones who make our communities stronger.
DACA recipients also contribute to the economic fabric of the Garden State. Taken as a group, they pay about $183 million in federal taxes and $100 million in state and local taxes each year – amounts that will significantly shrink if the Supreme Court sides with the Trump administration.[iii] This would result in the loss of important revenue at local, state, and federal levels, reducing critical resources to invest in public assets and programs that we all rely on.
Additionally, DACA recipients contribute $718.9 million to New Jersey’s economy, representing an important degree of spending power.[iv] If DACA is terminated, New Jersey residents would spend less in their local economies, hurting local businesses that help our communities thrive.
Finally, DACA recipients pay $15.7 million in mortgage payments and $79.2 million in rental payments each year.[v] If DACA is terminated, many New Jersey residents would lose their work permits, putting them at risk of losing their jobs and creating a dangerous scenario where they cannot afford to pay basic living costs such as mortgage or rent.
What can New Jersey officials do:
Regardless of whether DACA is rescinded or remains active, New Jersey legislators and the Governor should support and pass proactive immigration policies that will help DACA recipients and their families thrive in New Jersey. Such policies include:
Passing a state executive order, as Washington and Oregon have done, that would prohibit state and local law enforcement agencies, school police, and security departments from using state and local resources to investigate, detain, detect, report, or arrest people for immigration enforcement purposes.
Passing legislation, such as California’s Trust Act, that would prevent local jails from holding people for longer periods of time just so they can be deported.[vi] This is similar to the Trust Directive from New Jersey’s Attorney General, but codified into law.
[iv] Spending power is measured as household income after federal, state, and local tax contributions; these data are based on household incomes, which are available in the ACS microdata, see Svajlenka, Nicole P. What We Know About DACA Recipients, by State. Center for American Progress. September 2019.
