Murphy rejects ‘symbolic’ budget compromise as state veers toward shutdown

 In Politics

New Jersey Assembly Speaker Craig Coughlin (L) and Senate President Steve Sweeney are pictured. | AP Photo

Coughlin and Sweeney agreed to impose a 9.95 percent tax rate on those making more than $5 million. | AP Photo

TRENTON — New Jersey moved dramatically closer to a second government shutdown in as many years on Friday, even as legislative leaders agreed for the first time to support higher taxes on some millionaires, a proposal Gov. Phil Murphy rejected as “symbolic.”

Lawmakers emerged grim-faced from the second of two meetings in the governor’s office and immediately scheduled a press conference at the Statehouse.

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With barely a day left to pass a budget before the end of the fiscal year, Senate President Steve Sweeney and Assembly Speaker Craig Coughlin described the proposal they offered as their most significant overture to date.

In addition to agreeing for the first time to support some version of a higher tax rate for millionaires, they said they also agreed to cut down the amount they want to tax corporations and provide $25 million in funding for community colleges, half of what the governor had sought.

“I wish I had better news, but I am bitterly disappointed we weren’t able to reach an agreement with the governor today,” Coughlin said at the Statehouse press conference.

Murphy, he said, offered “no compromise, no counterproposal. He rejected it out of hand.”

Coughlin and Sweeney, who has steadfastly opposed higher income taxes up until now, agreed to impose a 9.95 percent tax rate on those making more than $5 million. Murphy had proposed a 10.75 percent rate on all people earning more than $1 million, up from the current 8.97 percent.

Murphy said at his own news conference late Friday afternoon that he saw “a glimmer of hope” when Sweeney and Coughlin “agreed that we need to ask the wealthiest to pay more to pay for the priorities that we share.”

He called it “a very good step,” but said it fell woefully short and amounted to nothing more than “a symbolic thought.”

“When you come up with a symbolic offer just to say you can check the box — and we have had real, substantive movement on things like corporate business tax, being creative around millionaire’s tax — I have no time for that,” Murphy said. “They know exactly the genuineness with which we have approached this and will continue to approach it, by the way.”

The lawmakers said they also agreed to cut down on their proposal to tax some corporations, offering to impose a 3 percent surcharge on all companies earning more than $1 million per year. That rate would fall by 1 percent each year before being eliminated.

The budget lawmakers sent to the governor this month would raise the corporate tax rate from 9 percent to 11.5 percent for companies that earn between $1 million and $25 million per year, and to 13 percent for larger firms — the highest rate in the nation. The tax would sunset after two years.

The lawmakers did not offer to support a restoration of the state sales tax to 7 percent, as the governor has proposed, but Murphy said he’d be willing to drop the issue if they can get to a “good place” on the corporate business tax and “as long as we have a credible millionaires tax as part of the strategy.”

“I am willing to compromise and always have been on what solutions we use,” the governor said. “What I am not going to compromise on is the need for a real sustainable solution. I’m not going to bargain away that principle for the sake of a deal that I know weakens our future and that remains our sticking point.”

The governor’s tough negotiating tactics left Democratic lawmakers frustrated and openly hostile. The Senate president said Murphy seemed like his Republican predecessor — a jab both sides have lobbed at the other in recent weeks.

“His behavior is exactly like Chris Christie’s, but he smiles more,” Sweeney quipped.

He said negotiating with Murphy was “insanity” and that he felt as though lawmakers were talking to themselves, with Murphy offering “no compromise. It’s all been one way.”

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