Phil Murphy's tax hikes have many NJ Democrats fearing for their political future

This fall's Trump midterms? That's for New Jersey's congressional candidates to worry about.

New Jersey's Assembly Democrats, who hold the largest ruling majority in nearly 30 years, are already obsessing over another crucial date on the political calendar: the Phil Murphy midterms.

It may seem like an eternity away, but worries about the 2019 races could very much shape the budget debate over the next six weeks in Trenton.

Democratic lawmakers fear that their votes for Gov. Phil Murphy's $1.7 billion in tax hikes will come back to haunt them in 2019, when all 80 seats of the Assembly are up for grabs and at the top of the November ballot.

The anxiety reflects a collision between Murphy's lofty liberal goals and Assembly members' short-term priority of self-preservation. Murphy wants to make the state a laboratory of reform; Assembly Democrats are more worried about their political livelihoods.

Many are uneasy with the prospect of defending the tax hikes in a volatile, low-turnout election. Murphy's hikes — the linchpin of his $37.4 billion budget — include raising taxes on millionaires, restoring the sales tax from 6.625 percent to 7 percent, and taxing hospitality services like Airbnb and ride-sharing companies, such as Uber.

Murphy also wants to raise as much a s $60 million on the sales of legal marijuana, which is facing an uncertain fate in the Legislature.

Democrats say they fear the election could become a referendum on Murphy and his tax hikes. Already, some party analysts are fretting over a possible backlash in "tax-sensitive" suburban districts in Monmouth, Bergen and Middlesex counties that already have been hit hard by President Donald Trump's tax overhaul, which severely restricted deductions for state and local taxes.

They note that Murphy's plans to pump the proceeds into an ambitious, progressive overhaul — free community college tuition, expanded preschool programs, a revamping of a crumbling mass transit system — are too diffuse and not specifically linked to direct property tax relief, like rebates or tax credits.

Pledging to help homeowners defray annual property tax hikes has helped resolve some of the most contentious tax hike battles in state history, including the 1976 creation of the state income tax and the 2006 fight over a 1-cent increase in the state sales tax. Yet Murphy's plan offers no such relief for homeowners.

Meanwhile, Murphy, who commands the Trenton pulpit, has not made a sustained case to the public or privately to lawmakers about the tax hikes. Assemblyman Gordon Johnson, D-Englewood, said he met with Murphy last week, but the governor never brought up the tax hikes in their discussion. Murphy inquired about Johnson's legislative priorities.

Johnson is a lawmaker who sounds like he will need some persuading. He has some misgivings about supporting a plan to boost the taxes on millionaires. His district includes wealthy enclaves along the Hudson River.

"Anytime you want to increase taxes to plug a hole in the budget is a serious concern to me," Johnson said.

Nor have Assembly Democrats heard assurances that the governor — whose "I've got your back" is one of his favorite slogans — will truly have theirs when Republicans hammer them as tax-and-spend liberals in 2019.

"We will wear it, and we are the first ones onto the battlefield,'' said one veteran Democrat. "That is not the place you want to be. We want to go together."

Democrats are especially sensitive to restoring the sales tax to 7 percent, which was cut in 2016 as part of a deal with then-Gov. Chris Christie. Democrats agreed to the sales tax cut in exchange for Christie's agreement to raise the gasoline tax by 23 cents a gallon.

Murphy has derided that sales tax cut was a résumé-building "gimmick." Restoring it to 7 percent is estimated to cost average households an extra $85 a year in sales taxes — an investment that will bolster long-neglected services and programs.

But that kind of cost analysis offers no protection from the harsh realities of the 2019 campaign trail. Lawmakers fear that they will be blasted for voting for $1.7 billion in tax hikes — a figure that lends itself to a bumper-sticker attack.

Assembly Speaker Craig T. Coughlin, D-Middlesex, declined to comment last Friday, but in a recent appearance on WCTC-1450 AM in New Brunswick, he said, "I would prefer we do not" raise the sales tax.

"I recognize that probably in each transaction it's not a lot [of money]," he said. "But, cumulatively, that's a lot, and that affects people of all socioeconomic levels."

Mahen Gunaratna, Murphy's communications director, defended the plan and noted that the Fitch Ratings agency praised the sales tax plan as a positive step toward reviving New Jersey's fiscal health.

"Governor Murphy looks forward to continuing to work with the Legislature on enacting a Fiscal Year 2019 budget focused on building a stronger and fairer New Jersey,'' he said.

Murphy's legislative allies argue that the threat of a backlash is overblown and that some critics are posturing for negotiating advantage in the upcoming budget talks, an annual horse-trading extravaganza under the Statehouse dome. They note that the party can afford to take a risk with its 54-26-seat advantage over Republicans, the largest margin in more than three decades.

And others believe that the skittish will eventually become supporters once they realize that tax hikes will be necessary just to pay for basic, year-to-year obligations, like public school aid and government worker pensions.

"It’s reality. And I think that when the reality is before all the members ... there will be a decision to be made,'' said Assemblyman Jack McKeon, D-West Orange.

Supporters note that the Democratic Party's advantage in fundraising and voter registration will insulate most candidates from backlash. And they also point to 2006, when Gov. Jon S. Corzine's insistence on raising the sales tax to 7 percent led to a government shutdown. But the feared voter retaliation never came at the ballot box. Democrats maintained their firm control over both houses and picked up one Senate seat.

Still, some point to other underlying dangers for Democrats.

A Rutgers University/Eagleton Institute poll in March said the public supports raising taxes on millionaires and marijuana smokers, but opposes the sales tax hike. Voters have come to view the sales tax as a consolation prize after the historically low gas tax was dramatically hiked. Murphy's plan would be seen as taking away the "one last thing" voters can point to as relief, said Ashley Koenig, the Eagleton poll director.

Another challenge for Murphy is that he needs to point to proof that the tax hike investment will bear fruit.

Voters' expectation of Murphy is to deliver results quickly. "They want to get things done,'' Koenig said. "They are willing to pay for it if they get something in return for it.''

But Murphy also faces this challenge: Assembly Democrats may not be willing to risk paying a political price to help him out.

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