Budget Increases School Aid, Expands Earned Income Tax Credit & Restores Homestead Rebate
Budget Proposal Also Includes Corporation Business Tax Surcharge, Pre-K Expansion, Child & Dependent Tax Credit & Cost Cutting Initiatives to Minimize Tax Increases
(TRENTON) – The Assembly Budget Committee today approved a $36.5 billion budget that provides more funding for schools, restores the homestead rebate, reduces healthcare costs, restores valuable social programs and calls for forensic audits to eliminate costly inefficiencies.
The budget (A-4200) restores the full homestead rebate to help ease the burden on seniors and working families, restores $15 million from the Fair Housing Trust Fund to build affordable housing, provides additional funding for NJ Transit and contributes to the state pension obligations.
“The budget we approved today reflects an earnest attempt to provide our working families with property tax relief, make vital investments in education, and maintain valuable services while minimizing the financial impact on our overtly taxed residents,” said Assembly Budget Chair Eliana Pintor-Marin (D-Essex). “Our budget is not that different from the governor’s spending plan. In fact, they are largely the same. But we cannot keep adding to the burden of living in one of the most expensive states in the country. We owe it to our residents to be fiscally responsible and I believe we’ve done that with this budget.”
Like the governor’s budget, the Assembly plan provides tax relief for the working-class by expanding the Earned Income Tax Credit, and establishing a Child and Dependent Tax Credit to help families with the rising cost of child care. Both budgets also increase the property tax deduction from $10,000 to $15,000 annually to help homeowners affected by President Trump’s tax reform law.
In place of the millionaire’s tax, the Assembly budget proposes a 4 percent temporary surcharge on the current 9 percent Corporate Business Tax (CBT), which would help raise an estimated $800 million annually. Under this proposal, corporations making more than $1 million would pay a 2.5 percent surcharge, and corporations making over $25 million would pay a 4 percent surcharge. The surcharge would sunset in two years.
The budget also restores many of the FY2018 legislative additions that were removed from the FY 2019 budget, including re-entry programs, court appointed special advocates for children, cancer programs and legal services. It also reduces healthcare costs by expanding health care programs for New Jersey military, vets and first responders, and eliminates inefficiencies and achieves savings by addressing state prescription plan overcharges, accounting errors and unnecessary debt service payments.
Assembly Budget Highlights
· $283.6 million increase in formula aid plus an additional $61 million
· $57 million in new preschool funding
· $700 million increase to pension system ($3.2 billion total)
· $167 million increase to NJ Transit
· $100 million increase in TTF local aid
· Increases the property tax deduction cap from $10,000 to $15,000
· Increases the Earned Income Tax Credit to 37 percent
· Creates child and dependent care tax credit
· Increase TAG and EOF
· Provides $100 million to address the opioid epidemic
· CBT surcharge
· Tax Amnesty
· New fees on marijuana expansion, AirBnB and ride-sharing services
Cost Cutting Initiatives
· $100 million savings from new PBM contracts
· $50 million in savings Early Repricing PBM
· $50 million savings from Medicare audit
· $43 million from SEHBP Reforms
· $30 million by reducing Medicaid RER Reimbursement to $140/per visit for low acuity
· $30 million from Medicaid Drug Manufacturer Rebates
· $20 million in savings from auditing SHBP/SEHBP/PBM
The budget bill will go before the full Assembly on Thursday.