Gov. Murphy and New Jersey lawmakers failed to reach a budget deal Thursday, setting up a showdown over taxes five months into the governor's term.
The Democratic-controlled Legislature on Thursday night passed a $36.5 billion budget that aligns closely with Murphy's spending priorities: more money for schools, public workers' pensions, pre-K programs, and NJ Transit, and a higher tax credit for the working poor.
But Murphy, a Democrat and political newcomer, said the plan depends on nonrecurring revenue and gimmicks, and has threatened to veto it.
"The people of New Jersey elected me to end business as usual. They had enough rosy scenarios that blew up in their faces, so-called solutions that just papered over our long-term problems," Murphy said at a news conference in Trenton following a meeting with Senate President Stephen Sweeney (D., Gloucester) and Assembly Speaker Craig Coughlin (D., Middlesex).
"Unfortunately, the Legislature seems intent on keeping the legacy of Chris Christie alive and well in Trenton," he said, referring to the former Republican governor, who oversaw 11 credit downgrades for the state.
Referring to the Legislature's projected revenue and savings, the governor added: "This is not Donald Trump's Washington. We do not work with alt-facts."
Failure to sign a budget into law by June 30 would trigger a shutdown of nonessential government services. Asked on Thursday whether he would veto the budget, Murphy said, "Everything is on the table."
The governor has the authority to veto the budget in whole or any line item, but he may not add to it.
Murphy has also said he won't sign Sweeney's prized school-funding reform legislation unless lawmakers send him a budget with reliable revenue.
In March, Murphy proposed a tax hike on millionaires and a slight increase in the sales tax, which had been cut by Christie as part of a deal to raise the gas tax. In total, he called for $1.6 billion in new taxes.
Legislative leaders countered with a two-year surcharge on certain corporations that would raise up to $800 million annually. It would increase the state's corporate tax rate from 9 percent to 13 percent on corporations earning more than $25 million, and to 11.5 percent on those earning between $1 million and $25 million.
The 13 percent rate would be the highest in the nation, according to the Tax Foundation; Iowa's is 12 percent.
"This is a fair and reasonable approach because it takes into consideration the windfall profits corporations are benefiting from the Trump tax law," Sweeney wrote in an email to supporters Thursday morning. "The economic landscape changed and we believe that a tax on corporations is better than a tax on people."
Republican leaders said they wouldn't support any tax increases.
The budget also includes a six-month tax amnesty program for delinquent taxpayers estimated to raise $75 million, which Murphy has criticized as a one-shot revenue source.