- Associated Press - Wednesday, June 27, 2018

TRENTON, N.J. (AP) - New Jersey lawmakers on Wednesday delivered Democratic Gov. Phil Murphy a counteroffer in budget negotiations, including a proposal to levy a sales tax on short-term rental properties along the shore.

Democratic Senate President Steve Sweeney unveiled the proposal days ahead of Saturday’s budget deadline alongside other Democratic state senators in the statehouse. He said Democratic Assembly Speaker Craig Coughlin is behind the proposal. Murphy, a fellow Democrat, declined to comment, according to his office.

The proposal is the latest salvo in the freshman governor’s first budget negotiation as the prospects for a state government shutdown grow. Democrats are clashing over which taxes to raise to finance increases in transit, education and pension spending.

Sweeney’s latest proposal changes the Legislature’s expiration of a business tax hike from two year to four years, increases real estate transfer taxes on property over $1 million from 1 percent to 2 percent and levies a 6.625 percent sales tax on short-term rental property. Currently such rentals are untaxed.

The proposals are aimed at satisfying Murphy’s request for “sustainable” and long-term revenue. Sweeney also said he wants a long-term plan to address costs in state government.

“Honestly all these taxes, really, bother the hell out of me because what we’re not talking about is fixing New Jersey,” he said.

Murphy spoke earlier Wednesday in Newark, the state’s biggest city, alongside Mayor Ras Baraka and local and state officials. He reiterated the possibility that he could line-item veto spending out of the budget if there’s not enough tax revenue to support it.

“The lack of sustainable revenues necessary to ensure these promises means everything we want to do … will be put at risk,” Murphy said.

A failure to enact a balanced budget by the start of the fiscal year on Sunday would result in a state government shutdown. Murphy and legislators say they want to avoid that, but they’re clashing over taxes.

Specifically, Murphy said he rejects a $36.5 billion spending plan lawmakers sent him last week because it contains unstable tax revenue. Legislators sent him a tax hike from 9 percent to 11.5 percent on businesses earning from $1 million to $25 million. On companies that make over $25 million, the state would levy a 13 percent hike, putting New Jersey’s corporate tax at the top of the list nationwide, above Iowa’s at 12 percent.

Murphy said he doesn’t want New Jersey to be such an outlier.

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