N.J. governor's race: Can Murphy, Guadagno deliver on pension, tax promises?

New Jersey Governors Race
N.J. gubernatorial candidates Republican Lt. Gov. Kim Guadagno, and Democrat Phil Murphy during a debate at William Paterson University in Wayne.

The race between New Jersey’s major-party gubernatorial nominees has revolved largely around their respective ties to Trenton and Wall Street.

Democratic front-runner Phil Murphy, a former ambassador and investment banker, is betting that Republican Lt. Gov. Kim Guadagno’s tenure with the unpopular Gov. Christie will ensure his victory on Nov. 7. Guadagno, meanwhile, has characterized Murphy as a “Goldman Sachs millionaire.”

But both also are promising voters they will take on the fiscally troubled state’s entrenched problems, from the chronically underfunded public worker pension system to cash-strapped schools and high property-tax bills.

Can they deliver? The Inquirer and Daily News analyzed the most significant promises from both candidates. Here’s what we found, looking at Murphy first, then Guadagno.

Fully fund schools. Murphy has said he will “fully fund” the state’s public schools. While New Jersey has a formula to distribute aid to districts — with additional funding for students who are poor or have other needs — many don’t get as much as it dictates.

The state would need to spend about $1 billion more to fully fund the formula, according to the New Jersey Department of Education — or about 3 percent of the state’s $34.7 billion budget.

The formula, however, caps state aid to growing school districts. If the state accounted for enrollment growth, fully funding the formula would cost an additional $2 billion, Senate President Stephen Sweeney (D., Gloucester) has said.

In an interview with the Asbury Park Press editorial board on Tuesday, Murphy said full funding would require an additional $800 million to $1 billion.

How would Murphy pay for it? “It’s millionaires paying their fair share, it’s closing corporate loopholes, hedge fund loopholes, out of network, the big corporate loophole is combined reporting, which is allowing companies to leave profits in lower-tax states,” he told the Associated Press on Monday.

Murphy’s campaign has said the proposed tax changes would net an additional $1.3 billion, including $600 million from raising taxes on income over $1 million.

The estimates also assume $300 million a year from taxing marijuana, which Murphy supports legalizing in New Jersey.

Besides the tax changes, Murphy supports redistributing “some” school adjustment aid. That money — about $600 million — was first given to districts in 2008, intended to ensure no one lost aid under the then-new funding formula. Phasing it out has been controversial, and lawmakers battled before reaching a deal this year to shift $46 million to underfunded districts.

Murphy’s plan also hinges on economic growth, which he says will determine how quickly he can increase spending.

Schools aren’t all that Murphy is promising to spend more on.

Fully fund pensions. “We will fully fund our pension obligations, and we’ll get there as fast as we can,” Murphy said this month.

New Jersey’s public worker pension system is among the country’s worst-funded. While the current budget includes $2.5 billion for the system — the state’s largest-ever payment — that’s just half of what actuaries recommend.

Murphy told the Press that he would add $650 million to $700 million a year to the state’s payments until reaching full funding. But “I hope we can do it faster,” he said.

Murphy isn’t calling for making new workers pay more toward that tab, saying the state first needs “to meet our end of the bargain.”

Free community college. Compared with his other priorities, Murphy has dubbed this “the bargain.” His campaign has pegged the cost of offering free community college tuition — no means test required — at $200 million.

The cost estimate “comes from an analysis of actual enrollments and costs currently at all county colleges,” said Murphy spokesman Derek Roseman. He did not provide specifics on the estimate.

Revenue from tuition and fees exceeds $296 million at the eight of the state’s 19 community colleges with operating budgets online. At Camden County College, for example, 62 percent of the budget, or $41 million, comes from tuition and fees. State funding, in contrast, is 8 percent.

“There’s so little information, it’s hard to really break it down,” Camden County College president Don Borden said of Murphy’s proposal. He said the concept was good  philosophically, but added, “I really think you need to tie accountability to it. Accountability from the student end and accountability from the institution end. … So we’re not spending money and having students circle a drain.”

For her part, Guadagno has centered her campaign on one big promise.

Lowering property taxes. “If we do not in our first term lower property taxes in the state of New Jersey, I will not stand for reelection,” Guadagno said after winning the Republican primary in June.

She proposes to limit the school portion of  residents’ tax bills to 5 percent of household income, capping the benefit at $3,000. The state would then pay school districts the lost tax revenue.

This would cost $1.5 billion, Guadagno says. To pay for it, she proposes to draw on a number of sources, including “auditing Trenton.” She has projected that an audit of state government could save $250 million, citing one in 1983 by Republican Gov. Thomas H. Kean that saved $100 million.

Guadagno would also turn to schools, pledging to tap adjustment aid from “overfunded” districts. Sweeney has said it could take five years to phase out the $600 million.

Here, Guadagno has something in common with Murphy. She also hopes a growing economy will help pay for her plan.

Ban “sanctuary cities.” If elected, Guadagno on Monday pledged to pass a law that would “block politicians from adopting sanctuary city policies.”

Several states have passed laws barring localities from limiting cooperation with immigration officials. In Texas, a federal judge in August blocked enforcement of such a law, although an appeals court has since ruled that part of the law could take effect while it decides the case.

In New Jersey, Democrats control the Legislature. Political hurdles aside, whether states can enforce — and cities can resist — such bans is “not settled law,” said Muzaffar Chishti, director of the nonprofit Migration Policy Institute’s office at the New York University School of Law.

Guadagno’s campaign declined to answer how she would define “sanctuary” policies. “What you’re really asking is what Phil Murphy means by sanctuary state,” Guadagno spokesman Ricky Diaz said of Murphy’s remarks that he would make New Jersey a “sanctuary state” if President Trump and Congress fail to protect immigrants who came to the United States illegally as minors.

Guadagno isn’t proposing just to ban sanctuary policies: She also wants authority to withhold funding from sanctuary cities “harboring violent criminals.”

Depending on the aid program, a governor doesn’t necessarily have power to withhold money from select cities, said Marc Pfeiffer, assistant director at the Bloustein Local Government Research Center at Rutgers University.

There are also logistical considerations. “You are reducing property-tax relief, which would cause property taxes to go up,” Pfeiffer said.

Asked whether withholding aid would conflict with Guadagno’s promise to lower property taxes, Diaz called it a “ridiculous question,” saying Murphy would cause taxes to “skyrocket.”

Fix pension and health benefits. Guadagno lists the underfunded pension system among her top issues. But how exactly she will “fix” benefits, as her website proclaims, is an open question.

Guadagno lists a number of potential “solutions,” including “bringing public health insurance plans in line with private-sector offerings.” Christie supported that approach, which was recommended by a commission he formed to address public worker benefits.

But he couldn’t enact those changes. Public sector unions have sparred with Christie, including over the state’s failure to keep pace with scheduled pension payments prescribed in a 2011 law.

How would Guadagno succeed in negotiating where Christie failed? The answer is “really quite simple,” she told the Inquirer Editorial Board this year. “I won’t be yelling at anybody.”

Inquirer staff writers Andrew Seidman and Jonathan Lai contributed to this article.