Topic Category: Tax and Budget

Backroom Budget Deals Hurt Residents Who Need Help The Most

Posted on by NJPP Staff

Labor unions, faith leaders, essential workers, and advocates for immigrants’ rights, housing, and the environment panned the newly approved state budget as a missed opportunity to provide transformative relief to working families who need the most help. With billions of dollars in surplus and federal aid, the state budget was crafted behind closed doors, shut members of the public out of the process, and, as a result, left out important investments that would have benefited low-paid workers and their families.

When billions of dollars in funding are negotiated away from the public eye, it’s inevitably the public who loses out. The hard-working New Jerseyans who are struggling the most with rising prices, rent, and inflation do not have highly-paid lobbyists and special-interest dollars to fight for them. This budget could have made New Jersey affordable for all, but instead directed the state’s record-setting surplus towards tax relief for wealthy homeowners, corporations, and a gimmicky sales tax holiday.

Although there are many important and much-needed investments in the budget, a lack of transparency and accountability for the way public money is spent leads to worse outcomes for the people who have the least. Notably, the budget lacks proposals to expand safety net programs, tax credits, and assistance to those with the lowest incomes: Cash assistance in Temporary Assistance for Needy Families (TANF), the Earned Income Tax Credit (EITC), the Excluded New Jerseyans Fund, and hazard pay for essential workers.

Nicole Rodriguez, President, New Jersey Policy Perspective (NJPP):
“New Jersey’s working-class residents, immigrant families, and essential workers have faced serious economic challenges since the pandemic, and this budget should have been the prime opportunity to support them with direct relief. Instead, their voices were shut out of the budget process, while behind-the-scenes deals secured hundreds of millions in pet projects and corporate giveaways. With a growing and diverse population, New Jersey should not be a state where a few powerful people make decisions that affect the many without taking their voices into account.”

Rev. Sara Lilja, Executive Director, Lutherans Engaging in Advocacy Ministry:
“The bible teaches us that where your treasure is, there your heart is also. This budget reveals that our heart does not regard low and working families as essential. It is often said that budgets are moral documents; this budget does not align with a morality that is committed to supporting the hundreds of thousands of essential working families that are the economic engine of our state. Morally, our state budget should be for the many, not just the powerful elite.”

Laura Bustamante, Policy and Campaigns Manager, New Jersey Alliance for Immigrant Justice:
“It has been our immigrant workers who have helped us survive through this pandemic. There is still no meaningful or permanent relief for those who continue to put their lives at risk and have been excluded from aid. Essential workers have put their lives at risk and on the line day in and day out and today the legislature turned their backs on immigrant families and working people. The State needs to do more for those who risk their lives everyday.”

Marcia Marley, President, BlueWaveNJ:
“I applaud this budget for its commitment to housing, education, reproductive health, and the new Child Tax Credit. Unfortunately, it leaves out many working families, like those from our immigrant community, misses an opportunity to address the racial wealth gap, and is not bold enough on transit and infrastructure issues where we continue to ignore the need for dedicated funds.”

Kevin Brown, Executive Vice President and NJ State Director, SEIU 32BJ:
“We are disappointed to have to write these words again, but on behalf of our 13,000 hardworking SEIU 32BJ members living and working in New Jersey, we strongly and unequivocally condemn the lack of public transparency around this year’s budget process. Working families deserved a voice in the allocation of the budget’s historic surplus, which presented an unprecedented opportunity to improve affordability and level the playing field for the middle class and low wage workers. While we applaud the Legislature for expanding the Child Tax Credit, there is so much more they could have done to transform the lives of essential workers in our state during an unprecedented time of massive budget surpluses.”

Julie Larrea Borst, Executive Director, Save Our Schools NJ Community Organizing:
“Save Our Schools NJ applauds the continued steps toward fully funding our K-12 schools and the expansion of preschool. We are disappointed that the state’s huge budget surplus was not used to restore funding to S2 districts and that the funding allocated for the Schools Development Authority fell far short of what is needed for school construction and repairs in our most impoverished school districts. If we cannot meet these needs now, when the budget is abundant, then when can the Legislature step up and do the right thing?”

Banessa Quiroga, member of Make the Road New Jersey:
“This budget is a missed opportunity for essential workers like me and for immigrants across New Jersey. The Legislature has failed to fund the Excluded New Jerseyans Fund or hazard pay, and left out key, bi-partisan measures like the Earned Income Tax Credit expansion. These measures would have helped my family make ends meet in a time of unprecedented inflation and skyrocketing rents. Instead, the budget rewards upper middle class homeowners with tax breaks.”

Debra Coyle, Executive Director, NJ Work Environment Council:
“Unfortunately, once again the Legislature has chosen to have an opaque budget process, entirely completed in the private backrooms of Trenton, that intentionally excluded the voices of New Jersey citizens and advocates. This is the largest budget in the state’s history and it presented enormous opportunity to address so many issues faced by every day New Jerseyans, but instead they decided to forge ahead with a broken process where no one even saw the budget until after it was voted on in committee and gave no real opportunity for public input.”Barbara Rosen, RN and First Vice President, HPAE:
“HPAE nurses and health care workers argued for, lobbied and, ultimately, challenged Gov. Phil Murphy and state legislators to adequately fund the operation of New Jersey’s only public hospital by raising the annual budget allocation for University Hospital in Newark to $151.1 million. Unfortunately, the 2023 Fiscal Year budget calls for just $44.7 million for University Hospital in Newark. This does not meet the needs of patients, workers and the community served by the hospital. This allocation is a profound missed opportunity at a time when the state has actual resources to put its money where its mouth is. University Hospital in Newark is committed to continuing as an anchor institution in the municipality and the Northern New Jersey region. In addition to the crucial, direct patient care that UH provides, it has a vital and unrivaled role as a public health institution in the state.”Joe Marchica, Our Revolution Trenton Mercer Chapter Chair and OR New Jersey Member:
“Yet again, our legislature drops a complex budget document on representatives, advocacy groups, and the public with next to no time for us to properly analyze and assess the most important piece of legislation in New Jersey each year. This budget mostly ignores the opportunity and necessity to invest in our people. It prioritizes the interests of the wealthy, instead of the programs needed to establish and maintain an economy that works for all of us. We do, however, applaud one notable exception to this: the inclusion of a Child Tax Credit, which is a bright spot in an otherwise gray budget.”Latino Action Network:
“Given unexpected tax revenues, the state of New Jersey was uniquely positioned to invest in and care for the communities who were hardest hit during this pandemic – the working class, communities of color, and Immigrant New Jerseyans. Instead, politicians ignored transparency and have continued to leave out budget reforms which could improve the lives of millions of New Jerseyans. New Jersey’s leadership cannot continue to tout New Jersey’s diversity and multiculturalism on the one hand and do little to materially support our communities on the other. It’s high time to create budgets that center the most marginalized.”

# # #
For The Many is a statewide coalition of more than 30 organizations working collectively to expand funding for essential services and improve budget practices to adequately meet current and future needs, especially for communities that have been historically marginalized.

Sales Tax Holidays Do Little to Ease the Burden on Working Families

Posted on by Sheila Reynertson

Good afternoon, Chair Sarlo, and members of the committee.

Sales tax holidays have a long track record of being untargeted, complicated, expensive, and easy to exploit, all while being inconsistent drivers of economic activity. If the goal of this legislation is to get money into the hands of working families with children, as well as educators and school districts, the straightforward approach would be to cut them a check through an appropriation, not a tax holiday that will disproportionately benefit wealthier families.

New Jersey Policy Perspective opposes this legislation in favor of fairer and more effective changes to the state tax code that make life more affordable for families.

Untargeted: By spreading the benefit over all residents, S-2914 fails to assist the low-paid and working-class families who need the most help. Wealthier residents are better able to schedule their spending for the holiday window, and when sales tax rates decrease — whether in the short-term or long-term — higher-income residents receive the bulk of the benefit because they tend to spend more. As a response to inflation, this also misses the mark. Lower-income residents’ budgets are more likely to have a higher percentage dedicated to inflation-sensitive categories like food, rent, and utilities — all areas outside the school supplies targeted by this tax holiday.

Complicated: The list of eligible goods captures a diverse but specific array of items. For merchants, administering this list for a short timeframe will add unnecessary burden by inserting them as middlemen, rather than giving direct aid to families.

Expensive: S-2914 does not include a budget estimate, but sales tax holidays have a history of causing substantial reductions in state revenues. Last year, sales tax holidays cost state and local governments more than $550 million nationally. This year, that number looks to grow even more.

Easy to exploit: Research shows that merchants raise their prices during sales tax holidays because there is no provision preventing them from doing so, reducing the benefit for consumers. Additionally, without distinguishing between online and in-person sales, S-2914 does not even ensure that the generated business will flow into local small businesses and communities, rather than Amazon’s corporate pockets.

Instead of one-off gimmicks that fail to make New Jersey more affordable, the budget should instead include strong investments in families and children, as well as sufficient school funding to allow them to purchase the supplies they need. I encourage committee members to vote no on this bill.

Thank you.

New State Budget is a Missed Opportunity to Make New Jersey Affordable for All

Posted on by Nicole Rodriguez

Today, the New Jersey Legislature released its budget proposal for Fiscal Year (FY) 2023. The $50.6 billion budget bill was not introduced to the Senate Budget Committee until 8:24 PM and was quickly passed out of committee 25 minutes later, depriving advocates, reporters, and lawmakers of an opportunity to read and analyze the legislation. In response to the budget proposal, New Jersey Policy Perspective (NJPP) releases the following statements.

Nicole Rodriguez, President, New Jersey Policy Perspective (NJPP):

On the lack of transparency in the budget-making process:

“New Jersey’s budget-making process is fundamentally broken, and this year was even worse than usual. This was yet another last-minute budget cooked up in a back room with no opportunity for residents, reporters, advocates, or even some lawmakers to analyze the document, let alone read it before it was voted on. Lawmakers could have released their budget proposal before the eleventh hour, held public hearings on how to spend the state’s record surplus and federal aid, and publicly released their budget resolutions. Instead, chaos and backroom deals ruled the day, with 60 budget bills introduced at the last minute, some added to and removed from the agenda with no notice, no bill texts available, and no chance for residents to meaningfully weigh in on billions of dollars worth of spending.

“As soon as budget negotiations moved behind closed doors, proposals that benefit big corporations, special interests, and wealthy residents were put on the fast-track, while many policies that would have helped working- and middle-class families were left on the cutting room floor. This is an affront to democracy and good governance and must be reformed so that more residents can have a seat at the table and hold their elected officials accountable.”

On the budget being a missed opportunity to help those with the least:

“This budget deal was a missed opportunity to provide direct relief to working families who have been historically left behind in the policy-making process. In a year where there was no shortfall of dollars, there was a shortfall of political will to do the right thing and help those with the least. The state could have made transformative investments in direct relief to low-paid essential workers, immigrant taxpayers who are banned from safety net programs they help fund, and very low-income families who can’t keep up with rising prices and inflation. It makes little economic sense to spend more on tax relief for upper-middle-class homeowners and corporations than on families who need the most help. Prioritizing the state’s lowest-paid working families would have been both the moral thing to do and the best way to build an economy that works for everyone.”

On the newly created Child Tax Credit for working families:

“New Jersey will become a more affordable place to start and grow a family thanks to the state’s newly created Child Tax Credit, which will put hundreds of dollars back into the pockets of families with young children. Modeled off the highly successful federal Child Tax Credit, this program will provide working families a critical lifeline for basic needs like food, housing, child care, and more. With that federal credit in limbo and one in 10 children living in poverty, this is a big policy win for families in every corner of the state.

“Families earning up to $30,000 would earn $500 per child under six years old, slowly reducing for taxpayers until they reach $80,000 in income. We are under no illusion that this credit alone will end child poverty, but this commitment will go a long way for the working- and middle-class families who qualify. This credit can also be expanded and built on in future years, which we think lawmakers will do once they see its success.

“The Child Tax Credit should be one part of a broader reimagining of New Jersey’s social safety net: expanding the Earned Income Tax Credit to make work pay, reforming our WorkFirst New Jersey program for very-low-income residents, and building stronger supports for immigrant residents shut out from federal aid. NJPP will continue to fight for these changes in the coming year.”

# # #

Sales Tax Holiday is a Gimmick That Will Not Make New Jersey Affordable

Posted on by NJPP Staff

Advocates, essential workers, and policy experts from For The Many NJ slammed a 10-day sales tax holiday proposal announced earlier today by Governor Phil Murphy and legislative leaders, calling it a gimmick that will not make the state more affordable for low-paid workers and their families.

“This tax holiday proposal is a gimmick that will not provide meaningful relief to working families who need it most,” said Sheila Reynertson, Senior Policy Analyst at New Jersey Policy Perspective (NJPP). “Changes to the sales tax, whether they’re temporary or permanent, are not targeted, so guess who benefits the most? Wealthier residents who generally buy the most and have the flexibility to stock up during the holiday period. And if this tax holiday applies to online purchases, there’s no guarantee it will do anything to help local businesses here in New Jersey.”

Sales tax holidays are a poorly targeted form of tax relief, reduce state revenue that could be invested in other areas, are often exploited by retailers who raise prices, and can be difficult to administer, according to research by the Institute for Taxation and Economic Policy (ITEP), a non-partisan tax and budget policy think tank in Washington, D.C.

“Instead of a tax holiday that benefits New Jersey’s wealthiest residents, we should invest in working families like mine,” said Banessa Quiroga, leader of Make the Road NJ from Elizabeth, NJ. “I was an essential worker during the pandemic. My labor saved lives, but I’m still struggling to put food on the table and pay my bills. Expanding the Earned Income Tax Credit, and providing hazard pay and funds for excluded workers are a better use of our dollars. People who put their lives at risk throughout the pandemic shouldn’t be going hungry, especially when New Jersey has billions in surplus.”

Wealthier residents benefit the most from sales tax cuts and holidays as they have the most disposable income and can easily shift the timing of their purchases to take advantage of the holiday. Similarly, those who purchase more expensive items — like laptops and TVs — will benefit more from the tax holiday than those who cannot afford higher-priced goods.

“New Jersey’s communities of Color and low-income families are still struggling to recover from the pandemic, and a gimmicky sales tax holiday won’t provide them the relief they deserve nor safeguard us from future crises,” said Laura Bustamante, Policy and Campaign Manager of the New Jersey Alliance for Immigrant Justice. “Our racial and economic disparities are systemic, not episodic. They require lawmakers to dig deeper, beyond new computers or fancy big-screen TVs, and use the historic budget surplus to provide hazard pay, direct relief, and robust safety net programs.”

When New Jersey lawmakers cut the sales tax in 2016 from 7 percent to 6.625 percent, the state’s lowest income residents saved roughly $32 a year, while the top one percent of earners saved more than $720 a year.

“While working families appreciate measures such as a back-to-school sales tax holiday, they would have hoped to see some REAL, long-term targeted relief,” said Kevin Brown, SEIU 32BJ  Executive Vice President and New Jersey State Director. “These band-aid measures are a disservice to the role of the Legislature and governor’s office of protecting and building a New Jersey for all. Our workers need hazard pay, rental assistance, more Earned Income Tax Credit, more Excluded New Jerseyans Fund. As we continue the recovery process, we urge the authorities to come up with reasonable measures that improve affordability and level the playing field for the middle class and low-wage workers throughout the state.”

“The sales tax holiday isn’t a permanent fix; it has no staying power,” said Sue Altman, Executive Director of the New Jersey Working Families Party. “We’d far prefer the Legislature take up reforms that would provide real savings to working families. They can start by cutting the New Jersey Corruption Tax, which is the premium we all pay for living in a state with machine party bosses running the show. Unaccountable grifter insurance brokers, corporate tax incentives with no benefit to local communities, and tons of Christmas tree giveaways to politically connected professional services firms does nothing to make the state affordable for most residents. It does plenty, however, to help the politically connected buy shore homes.”

Earlier this week, essential workers and advocates from For The Many NJ called on lawmakers to use the state’s $10 billion surplus on targeted relief to low-paid workers and their families by: expanding the Earned Income Tax Credit (EITC), establishing a state-level Child Tax Credit, boosting cash assistance in WorkFirst NJ, providing essential workers with hazard pay, and fully funding the Excluded New Jerseyans Fund.

“There are better ways to get money to working- and middle-class families struggling to keep up with inflation and rising prices,” Reynertson added. “There are proposals in the Legislature right now that would expand the Earned Income Tax Credit and create a state-level Child Tax Credit, both of which put hundreds of dollars back in families’ pockets. A sales-tax holiday is needlessly complicated, untargeted, and expensive, all while failing to make the state more affordable.”

# # #
For The Many NJ is a statewide coalition of more than 30 organizations working to expand funding for essential services and improve budget practices to meet current and future needs, especially for communities that have been historically left behind.

New ANCHOR Proposal is a Big Improvement, But More Needs to Be Done For Low-Income Families

Posted on by Peter Chen

Today, Governor Murphy announced a new deal with legislative leadership to expand his ANCHOR Property Tax Credit proposal, which revises and expands the Homestead Benefit. The new proposal would include roughly 300,000 more renters earning between $100,000 and $150,000 in income, and expands credit amounts for both homeowners and renters. NJPP analyzed the Governor’s previous proposal in an April 2022 report, in which it recommended more funding to go towards renters and raised concerns about credits going to high-income families. In response to the new ANCHOR proposal, New Jersey Policy Perspective (NJPP) releases the following statement.

Peter Chen, Senior Policy Analyst, NJPP:

“The new ANCHOR proposal is a big improvement over the original as it directs more relief to renters, many of whom are facing historic rent increases and risk being priced out of their homes. Renters, on average, have lower incomes and less wealth than their home-owning peers. Renters also pay property taxes indirectly through their rent, so it’s only fair that they are included in property tax relief programs like this.

“While this proposal would provide historic relief to millions of residents, more must be done to make New Jersey affordable for those struggling the most to cover everyday costs. We hope that this proposal will be paired with more relief targeted to families living below or just over the federal poverty line. With a record-breaking surplus, state lawmakers can do just that by expanding the Earned Income Tax Credit and creating a new, state-level Child Tax Credit. Targeting relief to those who need it most is the only way to make New Jersey affordable for all.”

 
# # #

New Jersey’s Budget Surplus Presents an Opportunity — and Obligation — to Help All Residents Recover From the Pandemic

Posted on by Sheila Reynertson

Today, updated revenue collections for FY 2022 were presented by the New Jersey Department of the Treasury to the Senate Budget and Appropriations Committee. The Treasury announced projected revenues of $51.4 billion, $4.5 billion above Governor Murphy’s proposed budget. This coincides with higher anticipated revenues in Fiscal Year 2023. In response, New Jersey Policy Perspective (NJPP) releases the following statement.

Sheila Reynertson, Senior Policy Analyst, NJPP:

“A multi-billion dollar surplus provides state lawmakers with a historic opportunity — and obligation — to help those who are struggling the most. Robust pandemic-related stimulus showed that fiscal responsibility and support for working families can and should go hand and hand, because what’s best for workers is what’s best for the economy. As state leaders decide how to allocate these surplus funds, it’s critical that they go to working- and middle-class families rather than profitable corporations and wealthy households who don’t need it. And there’s no need for lawmakers to reinvent the wheel. The best way to target relief is to build upon programs that we know work, like expanding cash assistance, increasing the Earned Income Tax Credit, and establishing a state-level Child Tax Credit.

“Lawmakers would also be wise to make a substantial deposit in the state’s rainy day fund to prepare the state for the next economic downturn. The good news is that, with a surplus of this size, we can do this and still provide relief to families in need. Using these funds to shore up the state’s finances is the most responsible course of action because it protects essential public services and safety net programs when they are needed most.”

# # #

Essential Workers, Advocates, and Policy Experts Urge Lawmakers to Spend American Rescue Plan Funds on Direct Relief for Working Families

Posted on by NJPP Staff

With more than $3 billion remaining in federal pandemic assistance — and no hearings planned on how to spend these funds — advocates and policy experts held a virtual “People’s Hearing” for members of the public to weigh in on how the federal relief should be used.

“Lawmakers may have said they’re finished with budget hearings after this week, but today’s People’s Hearing sends a clear message: New Jerseyans aren’t finished speaking up for what our communities deserve,” said Amy Torres, moderator of the virtual hearing and Executive Director of the New Jersey Alliance for Immigrant Justice.

The virtual hearing, organized by the For The Many NJ coalition, included testimony from essential workers, community leaders, advocates, and policy experts in support of using the federal funds to provide direct relief and support to families struggling to keep up with everyday costs.

“To advance racial equity and help the people still getting back on their feet from the pandemic, New Jersey should spend its flexible federal recovery funds on their intended purpose: direct relief,” said Peter Chen, Senior Policy Analyst at New Jersey Policy Perspective (NJPP). “Direct relief is itself a transformational investment. Helping people avoid poverty, homelessness, and deprivation reduces pain right now but also builds resiliency for the future.”

Signed into law in March 2021, the American Rescue Plan (ARP) provided billions of dollars in flexible funding for states and local governments to begin reversing the harms done by the pandemic and promote an equitable economic recovery. New Jersey state government received $6.2 billion in flexible aid, more than $3 billion of which is still available.

“New Jersey should not squander this opportunity. As state policymakers consider how to use more than $3 billion in remaining Fiscal Recovery Funds, they should work with communities to identify the best ways to use these funds,” said Ed Lazere, Senior Fellow in State Fiscal Policy, The Center on Budget and Policy Priorities. “The economic recovery remains uneven and incomplete, with many still struggling with incomes that are not enough to pay rent or afford food.”

Residents from across the state joined the hearing to share their stories and encourage lawmakers to provide more relief to families struggling to keep a roof over their heads and food on the table.

“The impact of the pandemic is not over for many who were already struggling in our state,” said Wandalynn Miftahi, a member of the Anti-Poverty Networks Garden State Leaders program who is unable to afford housing on her own. “Mature people who are viable parts of their communities and striving to assist future generations look forward to a more positive, supportive community to live in. With high and rising housing costs, New Jersey must devote more to help people of color access and maintain safe, affordable homes. We must remember everything starts at home.”

The hearing served as a reminder that the pandemic is not over, with many families still living in poverty: 1 in 10 families in New Jersey are currently having trouble finding enough to eat, a third of renters are worried they’ll be evicted in the next two months.

“Between COVID and the current economy, the low- and moderate-income families continue to struggle to pay for basic living expenses,” said Susan Biegen, another member of the Garden State Leaders program. “The Emergency Rental Assistance Program has not been able to keep up with the need with many families being told there is no funding left. American Rescue Plan funds would best be used by providing back rent, utilities, and food assistance so families won’t have to worry about eviction and hunger.”

Some lawmakers have suggested using federal assistance to provide tax cuts to profitable businesses despite a clear need to make the state more affordable for low- and moderate-income families.

“To make New Jersey more affordable for our low- and moderate-income families we must prioritize state revenues and American Rescue Plan funds to increase supports for families in deep poverty, allocate sufficient funds to keep people in their homes, expand health coverage to all kids and uninsured residents, and establish a state child and earned income tax credit,” said Maura Collinsgru, Director of Policy and Advocacy, New Jersey Citizen Action. “These programs will help ensure residents most impacted by the pandemic and rising inflation can not only survive, but thrive.”

Immigrant community members joined the virtual hearing to urge lawmakers to provide further relief to residents excluded from most forms of federal and state assistance — and for the state to invest in language access so all residents can apply for programs and services they already qualify for.

“Two years into the pandemic, there still are more than a half million people left behind from all forms of relief,” said Aida Mucha, Member Leader with Make the Road New Jersey. “It’s a disgrace that half of New Jersey’s federal ARP fiscal recovery funds are still sitting unused and unallocated when families like mine are struggling to pay bills. I worked throughout the pandemic to deliver food to families in quarantine, but I was excluded from aid like so many immigrant essential workers. I urge the state to take action now to provide direct relief to excluded workers.”

“Nearly one in two New Jerseyans is a person of color and almost a quarter of us are foreign born,” said Laura Bustamante, Policy & Campaign Manager, New Jersey Alliance for Immigrant Justice. “New Jerseyans speak over 155 languages, one in four households speaks a non-English language at home. With the recent increase in access to status neutral services and programs, newly eligible New Jerseyans are facing linguistic barriers, leaving these landmark initiatives inaccessible. Beyond that racial and ethnic categories currently used in agencies that capture demographic information are overly generalized, rendering distinct populations invisible. If the State is looking to make wise use of the dollars it invests in public programs, language access and data disaggregation will be necessary tools. ”

The pandemic and resulting economic fallout has disproportionately harmed Black and Latinx/Hispanic communities. Policy experts and advocates testified at the hearing in support of targeting aid to these communities to begin reversing racial inequities.

“Before New Jersey can become stronger, fairer and a more affordable state, there must be a commitment to equity and justice,” said Racquel Romans-Henry, Director of Policy at Salvation and Social Justice. “That commitment begins with but is not limited to significant investments in the development of violence interruption, harm reduction and restorative justice hubs; investments in neighborhood maternal health centers; community reinvestment of cannabis revenue; and funding the Office of Legislative Services so that they may prepare racial impact statements for policy changes that affect pretrial detention, sentencing and parole as required by S677 passed in 2018.”

“For the many students in our school who have seen pre-pandemic inequities impact their education at an even greater level, it is important that the state act now and accelerated addressing these challenges,” said Kaleena Berryman, convener of Our Children/Our Schools. “Funds should be allocated for student and educator mental health, building health and safety upgrades, and a concentrated approach to ensure students with disabilities and English language learners receive the extra support needed due to months of lost time. To make this happen, the state must also concentrate of fully staffing the Department of Education.”

“The impacts of the pandemic are still being felt by our schoolchildren and their teachers, especially in lower-income communities,” said Greg Stankiewicz, Statewide Coordinator, NJ Community Schools Coalition. “We urge the Governor and Legislature to allocate $10 million in American Rescue Plan funds to support expanding community school approaches to more low-income public schools, helping nonprofits and universities work together with school districts to provide additional needed services to students and families.”

“As Dickens wrote, we are living in the best of times and the worst of times for our state budget,” said Doug O’Malley, Director, Environment New Jersey. “We have a historically flush budget with an ample surplus as well as an additional $3 billion in reserve through the American Rescue Plan. Unfortunately, we still see ongoing raids to NJ Transit’s capital budget and the state Clean Energy Fund and flat funding to state agencies, as well as lead service lines and water infrastructure that need to be replaced. This is the moment to invest in our environment, clean energy and public health and make historic investments — and give the public a chance to weigh in on this opportunity.”

“New Jersey should not squander this opportunity. As state policymakers consider how to use more than $3 billion in remaining Fiscal Recovery Funds, they should work with communities to identify the best ways to use these funds,” added Ed Lazere of the Center on Budget and Policy Priorities. “The economic recovery remains uneven and incomplete, with many still struggling with incomes that are not enough to pay rent or afford food.”

Watch a recording of the virtual hearing here.

###

ANCHORs Aweigh: Explaining Governor Murphy’s New Property Tax Relief Program

Posted on by Peter Chen

Everyone in New Jersey deserves a fair property tax system, where lower-income and lower-wealth families get money back for the high cost of housing, while wealthier families pay what they owe to support schools and high-quality public services that strengthen our communities. So when property tax relief proposals come along, we must ask: Who does this program make New Jersey affordable for, and by how much? Does it advance equity and close the gap between wealthy and the rest, or does it widen that gap?

As the centerpiece of his latest budget proposal, Governor Murphy announced a new property tax credit named “ANCHOR” (Affordable New Jersey Communities for Homeowners and Renters). This explainer outlines the size and scope of the proposal, how it stacks up against existing property tax relief benefits, and highlights who benefits most from it — and by how much.

What is ANCHOR?

Despite the new name, ANCHOR is really an expansion of the Homestead Benefit program, which provides property tax relief to homeowners who earn up to $75,000 per year, as well as seniors and those who meet the state’s definition of “disabled” earning up to $150,000 per year.

The proposed ANCHOR program would expand the Homestead Benefit in three main ways:

  • Increasing the credit amount for current recipients
  • Extending the benefit to homeowners with higher incomes ($75,000-$250,000 annual income)
  • Reopening the benefit to renters on a limited basis.

 

The credit would cost an additional $550 million in Fiscal Year 2023 — for a total of $893 million in property tax credits — and would increase in subsequent years.[i] The average yearly credit amount for homeowners would be $682 and the renter credit would be fixed at either $150 or $250, depending on other factors.

Who benefits from ANCHOR?

It’s important to contrast the proposed ANCHOR program with the Homestead Benefit that it would replace.

Homeowners: As noted above, the ANCHOR proposal would extend property tax relief to households earning between $75,000 and $250,000, well into the top 15 percent of earners in the state.[ii] For reference, the median household income in New Jersey was roughly $83,000 in 2019.[iii]

The following graphs show how much homeowners would receive in the new ANCHOR program, as a percentage of their total property tax bill, compared to the current Homestead Benefit program.[iv]

Although households in all eligible income ranges receive increases, the increases are largest for the higher-income homeowners not previously eligible for the credit. More than $150 million of the credit would go to households earning $150,000 annually or more, including households well within the top 20 percent of New Jersey earners.[v] Of the $550 million in additional funding for the program, more than a quarter would go to well-off households.

A property tax credit that advances equity should not include benefits to the wealthiest households simply because they happen to own their homes.

Renters: The ANCHOR proposal notably includes renters in property tax relief. Renters, on average, have lower incomes than homeowners in New Jersey – where median homeowner income ($112,000) is more than double median renter income ($52,000).[vi] Although renters do not pay property taxes directly, a substantial portion of their rent goes toward their landlords’ property tax payments.[vii]

The credit amounts proposed in ANCHOR are substantially smaller than for homeowners. Benefits are fixed at $150 for most renters earning under $100,000, and $250 for seniors or disabled renters who earn less than $70,000.[viii] In total, payments to renters make up only about $100 million of the nearly $900 million cost of the ANCHOR program in the coming fiscal year – less than the amount going to households earning $150,000 or more. To advance a more equitable tax code, the dollar amount going to renters should be increased to parity with homeowner benefits.

To better enable the program to alleviate wealth inequality and help those who need it most, the ANCHOR program should direct fewer dollars to high-income homeowners, and more to renters.

How does a property tax credit affect wealth inequality?

As lawmakers on both sides of the aisle talk about the need to make the state more affordable —  in this case, through property tax rebates  — they gloss over the fact that property ownership is heavily tied with wealth. The median homeowner nationally has $255,000 in net worth, compared with a mere $6,300 for the median renter.[ix] And this wealth includes non-home wealth as well, as homeowners possess on average more financial assets like bonds, stocks, and retirement accounts.[x]

Why does wealth matter? Wealth provides families and communities with greater economic security and opportunity, enabling them to sustain financial shocks, afford educational opportunities for their children, invest in business opportunities, and engage in greater political advocacy.

And because Black and Hispanic/Latinx New Jersey residents make up a much smaller proportion of homeowners than they do of the population as a whole, the gap between wealth in homeowners and renters also drives racial wealth inequality. As one recent report from the New Jersey Institute for Social Justice points out, the median white household in New Jersey has $132,000 in home equity, while the median Black and median Hispanic/Latinx household have $0.[xi]

White householders make up 74 percent of all owner-occupied units in the state, but only 39 percent of renter-occupied units. Benefits that go primarily to homeowners run the risk of disproportionately benefiting wealthier, white households.

Further, like the current Homestead credit, the ANCHOR credit is based on a percentage of a homeowner’s tax bill, which will likely benefit those with more expensive homes. For example, 10 percent of a $1 million home’s tax bill is much higher than 10 percent of a $300,000 home’s tax bill in the same town.[xii]

Any property tax benefit runs the risk of primarily benefiting homeowners who already have substantial wealth, rather than low- and moderate-income residents who need the most help with housing costs.

How will this work in practice?

These concepts can be difficult to convey, especially the interplay between higher incomes and higher property values and tax bills. Here are some hypothetical examples of the ANCHOR credit as proposed for FY 2023 to better illustrate who will benefit — and by how much. The dollar amounts are in the ballpark of the median property tax bills and household incomes for the towns indicated.

Although all income groups in the eligibility range benefit, the largest gains would go to those with high property tax bills earning between $75,000 and $250,000. But this range is quite wide, and individual results may vary on factors including a property’s assessed value, local property tax rates, and special levies, to name a few.

There’s also a large difference in financial footing between a household of four with an income of $200,000 and a household of one with an income of $100,000, including the home they might own or rent and the town where they live.

Even with the wide range of possible credit amounts, a credit that advances affordability and economic equity should not provide households with income above $150,000 with average benefit amounts three times greater than the maximum renter benefit amount.

So, as lawmakers propose ways to make New Jersey more affordable through new property tax relief, the question remains: Affordable for who?

End notes

[i] State of New Jersey, Budget in Brief FY 2023, pg. 11-12.  https://www.nj.gov/treasury/omb/publications/23bib/BIB.pdf

[ii] U.S. Census Bureau, American Community Survey 2019 5-Year Estimates, Table S1901: Income in the Past 12 Months (in 2019 Inflation-Adjusted Dollars). https://data.census.gov/cedsci/table?q=s1901&g=0400000US34&tid=ACSST5Y2019.S1901

[iii] U.S. Census Bureau, American Community Survey 2019 5-Year Estimates, Table S1901: Income in the Past 12 Months (in 2019 Inflation-Adjusted Dollars). https://data.census.gov/cedsci/table?q=s1901&g=0400000US34&tid=ACSST5Y2019.S1901

[iv] Derek Hall, Here’s how much you would get in N.J. property tax rebates under new Murphy plan, NJ.com (March 8, 2022). https://www.nj.com/politics/2022/03/heres-how-much-you-would-get-in-nj-property-tax-rebates-under-new-murphy-plan.html

[v] The top quintile in New Jersey income starts around $166,000. See U.S. Census Bureau, American Community Survey 2019 5-year estimates, Table B19080: Household Income Quintile Upper Limits. https://data.census.gov/cedsci/table?q=income%20quintile&g=0400000US34&tid=ACSDT5Y2019.B19080

[vi] U.S. Census Bureau, American Community Survey 2019 5-year estimates, Table S2503: Financial Characteristics. https://data.census.gov/cedsci/table?q=income%20tenure&g=0400000US34&tid=ACSST1Y2019.S2503

[vii] Under New Jersey’s current property tax deduction system, 18% of rent paid during the year is considered property taxes paid. https://www.state.nj.us/treasury/taxation/njit35.shtml

[viii] Budget in Brief FY2023 at pg. 12.

[ix] Federal Reserve, Survey of Consumer Finances, year 2019 data. https://www.federalreserve.gov/econres/scf/dataviz/scf/table/#series:Net_Worth;demographic:housecl;population:all;units:median

[x] Federal Reserve, Survey of Consumer Finances, year 2019 data. https://www.federalreserve.gov/econres/scf/dataviz/scf/table/#series:Net_Worth;demographic:housecl;population:all;units:median

[xi] New Jersey Institute for Social Justice, Making the Two New Jerseys One, February 15, 2022, https://assets.nationbuilder.com/njisj/pages/689/attachments/original/1645217098/Making_the_Two_New_Jerseys_One_2.15.22-compressed.pdf?1645217098

[xii] The Homestead Benefit does have a cap of $10,000 on claimable property taxes paid. N.J. Division of Taxation, How Homestead Benefits Are Calculated, last updated July 16, 2021, https://www.state.nj.us/treasury/taxation/homestead/hrhomeowneramounts.shtml.

[xiii] The Homestead Benefit currently caps eligible property tax bills at $10,000. This table assumes the cap will remain in the ANCHOR program.

https://www.state.nj.us/treasury/taxation/homestead/hrhomeowneramounts.shtml.

Multi-Year Budgeting Would Encourage Lawmakers to Plan for the Future

Posted on by Sheila Reynertson

Senate Budget Chairman Paul Sarlo today announced that he would like the state to take a multi-year approach to the state budget. Multi-year budgeting is a best practice long-recommended by good-governance advocates and budget policy experts. There are 22 states that project revenue for periods longer than a single year and 19 states that project spending for multiple years. In response to Chairman Sarlo’s comments, New Jersey Policy Perspective (NJPP) releases the following statement.

Sheila Reynertson, Senior Policy Analyst, NJPP:

“Multi-year budgeting would move the state away from short-sighted, politically convenient decisions and encourage lawmakers to plan for the future. Looking at revenue collections and spending beyond the current year is the only way for lawmakers to see the full impact of tax and budget decisions and what’s needed to sustainably fund programs that families and communities rely on. Ideally, the state would project revenue and spending three to five years into the future so lawmakers and the public can have a long-term view of the state budget. Given the state’s current financial outlook and disappearing federal aid, this is the perfect time for New Jersey to reform its budget-making process to be more transparent and responsible.”

Read more about multi-year budgeting and other best practices like consensus revenue forecasting in NJPP’s April 2021 report, Tools for Building a Healthy Budget.

# # #

The State Budget Can Do More to Make New Jersey Affordable for All

Posted on by Peter Chen

Good morning, Chairwoman Pintor Marin and members of the committee. My name is Peter Chen and I am a senior policy analyst at New Jersey Policy Perspective (NJPP), a nonpartisan think tank focused on advancing economic, social, and racial justice. Our organization is also a member of the For The Many budget coalition.

Thank you for this opportunity to submit testimony on New Jersey’s Fiscal Year 2023 Budget.

Affordable for Who?

We have been hearing the drumbeat on making New Jersey “affordable” but as we have noted, the question we must ask is “affordable for who?” New Jersey’s economy works best when it works for all of us. An inclusive recovery is one where we prioritize making the state affordable for those hit hardest by the pandemic — Black and Hispanic/Latinx workers, students, families, and communities in particular. That’s why it’s so important that the FY 2023 budget advances changes which make the tax code more equitable and the state more affordable for low- and moderate-income households.

NJPP has proposed a package of programs to put money back in the pockets of these families and individuals, including:

  • A state-level Child Tax Credit;
  • Expansion of the Earned Income Tax Credit, both in amount and eligibility;
  • Replenishment of the Excluded New Jerseyans Fund;
  • Reforms to WorkFirst New Jersey that improve eligibility and benefits.

 

These proposals would directly support the families still fighting to make ends meet, as federal aid dries up.

And to help the middle-class and working-class New Jerseyans are struggling with skyrocketing housing costs and inflationary pressure, the state must spend the remaining $3.5 billion Fiscal Recovery Funds (FRF) in ways that reflect the principles President Biden set down: to directly address the public health crisis, help the people who need it most, and reduce racial and economic inequities exposed and worsened by the ongoing pandemic.

NJPP recommends direct relief payments and hazard pay for essential workers who put their lives at risk when COVID swept through the state, health care workers who now suffer from PTSD, and child care workers who are indispensable to the workforce yet remain severely underpaid. Those individuals held up as “heroes” during the pandemic deserve actual compensation for the risks they continue to face, not lip service.

Planning for the Future

With anticipation of funding cliffs in the future, New Jersey must begin planning for the future responsibly. As the pandemic demonstrated, a hollowed-out state government and lack of financial cushion cannot effectively meet crises when they emerge.

Lawmakers should take a multi-year approach to budget-making this year to ensure the $4.5 billion surplus puts the state on solid ground once the federal aid is gone and economic activity slows. Taking this more balanced approach to state finances ensures that the next crisis does not result in cuts that disproportionately harm Black, Hispanic/Latinx and lower-income communities.

We strongly recommend making a deposit into the now-empty rainy day fund of $1.5 billion to prepare for the future.

No Giveaways for the Wealthy

The pandemic has laid bare the deep economic chasm between the wealthy and the rest of the state. The wealthiest 1 percent of Americans have seen their wealth balloon by 50 percent since the pandemic began. Corporate profits are up, as are home valuations. When budget proposals include giveaways to households in the top-20 percent of income, or blanket tax cuts for businesses, those benefits are going straight to the wealthy and widening the wealth gap.

Meanwhile, for low-wage workers, even modest wage growth has been swallowed by higher costs for housing and food. One in 10 New Jersey residents lives in poverty, and 1 in 3 live in an “ALICE” (Asset-Limited Income-Constrained Employed) household. Will these budget proposals benefit these populations? Or will they be further giveaways to wealthy residents and corporate shareholders?

Despite this clear gap, this legislative session is teeming with proposals on “affordability” whose benefits go to the wealthy. Business owners, residential property owners, and corporate shareholders are disproportionately white and wealthy. Without careful tailoring, benefits that go to these groups will widen, rather than narrow, the gap between haves and have-nots.

State lawmakers should prioritize making New Jersey affordable for those who need the most help — not the wealthy and well-connected.

The taxes we pay are how we work together to all chip in for our shared goals and to make sure we have what we need. But the truth is some pay less than what they truly owe, putting the burden on the rest of us. Closing corporate tax loopholes and ensuring the ultra-wealthy pay their fair share can help New Jersey both fully recover and reach its full potential.

NJPP’s set of tax credit and direct-payment proposals would ensure that the hard-working New Jerseyans who kept residents safe, healthy and cared-for during the pandemic receive the help they deserve. This budget must help the grocery worker, the home health aide, the child care teacher, and the educational support aide to find the opportunity they deserve. As you evaluate this budget, NJPP asks that you keep these folks in the front of your mind, not the wealthy.

There’s no need to overthink this. We have plenty of evidence from the pandemic that direct payments and cash assistance work to reduce poverty and food insecurity, improve family finances, and stimulate the economy.

Making New Jersey affordable for low- and moderate-income households means giving them back the money they need to find economic security for themselves and their families.

Thank you for your time and attention.

«« Previous Posts∞Older Posts »»