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Gov. Phil Murphy giving his first budget address in 2018.

Gov. Phil Murphy giving his first budget address in 2018.

Gov. Murphy proposes boost to education spending — and a new ‘millionaire’s tax’ to help pay for it

New Jersey Gov. Phil Murphy unveiled his latest spending plan Tuesday, calling for increases in school funding financed in part by a new “millionaire’s tax.”

Murphy’s plan would boost state aid for K-12 education by $206 million, and add $68 million to expand pre-kindergarten programs. He also vowed to continue investing in computer-science courses for high schoolers and tuition aid for community college students.

“This budget maintains this commitment to our kids and our public schools,” said Murphy, a Democrat elected in 2017, during his second annual budget address in Trenton. “These commitments mean we can continue to be a national leader in the delivery of high-quality public education.”

Last year, his proposal to raise taxes on residents earning over $1 million led to a showdown with the Democratic-controlled legislature that nearly shut down the state government. They agreed to a compromise — a tax hike on those making over $5 million.

Now, Murphy is trying again to push through a millionaire’s tax, which he says would raise $447 million in revenue. The state’s top lawmakers, Senate President Stephen Sweeney and Assembly Speaker Craig Coughlin, both Democrats, each released statements after Murphy’s speech rejecting the tax increase.

This time, Murphy is promising to match the new tax on high earners with $1.1 billion in savings, including a 16 percent reduction in spending on public-employee health benefits. State agencies would also cut costs by more than $200 million, Murphy said.

School spending will likely figure prominently in Murphy’s negotiations with the legislature, which must approve next year’s budget. The current budget expires June 30.

Last year, the state boosted education spending by about $351 million, ending years of flat funding under former Gov. Chris Christie, a Republican. The increase gave Newark schools an extra $37.5 million.

The governor last year also signed into law a plan to even out school aid across districts, with a focus on redirecting money to underfunded districts. The goal is that by 2025 all districts will receive the amount they are entitled to under the state’s school-funding formula, which is based on each district’s enrollment, demographics, and ability to fund schools with local taxes. The state has not fully funded the formula for nearly a decade.

The state will send districts estimates later this week telling them how much state aid to expect based on Murphy’s spending plan. Districts will use those estimates to craft budgets for next school year.

You can read Murphy’s speech here. His full budget plan is here.