N.J. Inches Closer to Shutdown as Budget Talks Break Down

(Bloomberg) -- With less than 31 hours until a constitutional deadline, New Jersey Governor Phil Murphy and his fellow Democrats in the Legislature remain unable to agree on a state budget.

After another round of talks today, Assembly Speaker Craig Coughlin told reporters he was “bitterly disappointed” they couldn't reach agreement. Failure to pass a spending plan before the July 1 start of the fiscal year could force a shutdown of state government.

Murphy, 60, who took office in January, is at odds with Democratic legislative leaders over which taxes to raise to balance spending on priorities such as education and transportation. Murphy, a former Goldman Sachs Group Inc. senior partner, had proposed raising the sales-tax rate to 7 percent from 6.625 percent, and the tax rate for millionaires to 10.75 percent from 8.97 percent.

Democratic leaders of the Senate and Assembly were seeking more short-term fixes, including a two-year, 4 percent surcharge on corporate business taxes. That would raise the overall tax rate for the biggest corporations to 13 percent, higher than any other state.

Read more about the New Jersey tax fight here

Senate President Steve Sweeney, 59, said he offered a corporate surcharge that would start at 3 percent and drop to 1 percent over four years; and a higher income-tax rate of 9.95 percent only on those who earn more than $5 million.

“He is more concerned about protecting corporations that had billion-dollar windfalls from Donald Trump,” Sweeney said of Murphy. “He'd rather raise taxes on the people of New Jersey.”

Christie Comparison

Sweeney said Murphy's style was similar to that of his Republican predecessor, Chris Christie. The attitude, Sweeney said, was “My way or the highway.”

No further talks between the governor and lawmakers were scheduled. Murphy, at a subsequent press conference, said he planned to meet with his Cabinet tonight.

Lieutenant Governor Sheila Oliver, who worked on 14 prior budgets as an assemblywoman, fired back at her former colleagues.

“I have never seen the level of obstructionism come from the legislative leadership as I have from this cycle,” Oliver said.

Murphy said millionaires were “protected by Governor Christie” and given a break by Trump. Sweeney's compromise, an increase for just those with incomes above $5 million, would raise $160 million, about 20 percent of what's needed, the governor said.

"What I won't compromise on is the need for a real, sustainable solution,” Murphy said. “I'm here to get our state right and fix it once and for all.”

To contact the reporter on this story: Elise Young in Trenton at eyoung30@bloomberg.net

To contact the editors responsible for this story: Flynn McRoberts at fmcroberts1@bloomberg.net, Stacie Sherman, William Selway

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