Gov. Phil Murphy Unveils $38.6-Billion Budget Plan

New Jersey Gov. Phil Murphy's second budget proposes a roughly $1 billion increase over the current year's spending and finances it with higher income tax rates on wealthy residents and savings in public worker benefits.

The Democrat presented the spending plan for fiscal year 2020 to a joint meeting of the Democratic-led Assembly and Senate on Tuesday.

The $38.6 billion budget would replace the current year's $37.4 billion budget expiring July 1.

Among the changes Murphy proposes are boosting income tax rates to the top bracket of 10.75 percent from 8.97 percent on people making more than $1 million.

He's also calling for a boost to New Jersey Transit, K-12 school aid and a higher public pension payment.

Murphy also says his budget has a 16 percent decrease in public worker health benefits.

Here's a closer look at key changes:

Taxes

The first-term former Wall Street executive is once again calling for higher income tax rates for people earning over $1 million.

His proposals seek to apply the state's top bracket of 10.75 percent, which is currently levied only on incomes over $5 million, to people making more than $1 million.

The Democratic leaders who control the Legislature have said they oppose higher taxes. It's unclear how Murphy's spending proposal could be balanced without the roughly $450 million in revenue from the tax on the wealthy.

Savings

Murphy says his proposal reflects a projected a 16 percent decrease in the cost of public worker health benefits. The savings are expected to come from shifting workers into cheaper health care plans, lowering costs related to out-of-network providers as well as from booting ineligible dependents from state plans, such as divorced spouses.

Murphy says about $200 million will come from state government staff reductions and other "departmental savings."

School Aid

The budget calls for a $206 million boost in state aid for pre-kindergarten to 12th grade. That's a 3 percent increase over the current year's budget. Increased education aid, the governor said, helps reduce the need of school districts to raise their property tax rates.

Higher Education

The governor is calling for increasing this year's $25 million allocation for tuition-free community college by $33.5 million. He says the beefed-up fund should help over 18,000 students get a two-year degree.

New Jersey Transit

Murphy is calling for an additional $100 million in general fund subsidies for the state's transit agency. That will bring the subsidy from about $307 million to $407 million.

Property Taxes

Murphy is asking lawmakers to approve $201 million for a property tax relief program that benefits seniors and disabled residents by freezing their rates. He's also budgeted $283 million in property tax rebates for moderate-income families. Those rebates translated to $202 a year in rebates for eligible homeowners in 2018.