A message from President & CEO Tom Bracken
The nightmare might be coming true.
Back in March, when we first heard about the proposed budget, the Corporate Transit Fee (CTF) and the buck-a-truck tax, I called it a “nightmare” budget proposal that’s “a major step backwards” for the state.
Well, with less than one week before the fiscal 2025 state budget has to be signed by Governor Murphy, some disappointing news is emerging. Word on West State Street is Governor Murphy and our legislative leaders have agreed on a 2.5% CTF retroactive to Jan. 1, 2024, and lasting for five years, which means the original proposal by the governor is in full force for five years.
In these final days, we will continue to make our case that the CTF to “fund” New Jersey Transit – and fill the structural deficit in the budget - is bad for those 600 companies impacted, it is bad for our overall long-term economy and bad for our business and attraction efforts. It gives New Jersey the highest business tax rate in the nation – and effectively wipes out much of the progress and momentum our state has enjoyed. The budget also does nothing to solve New Jersey’s long-term structural budget deficits. We continue to spend more than we make.
The many business community members I have spoken with over the weekend are deeply disappointed by the possibility of the CTF actually being enacted. Many of them, and the State Chamber staff, have had constructive conversations with administration officials and legislative leaders, which has been an improvement from the past. They seemed to understand our serious concerns about how detrimental this would be to New Jersey. The talks were positive – and we had discussions on future economic initiatives that hopefully will come about. Still, if this is headed in the direction it seems, those talks had limited impact on the CTF.
If passed as we are hearing, the business community, at a time of continued uncertainty, will have received little support in this budget. In fact, it’s one of the worst state budgets in recent memory for the employer community. Yes, the new CTF under the agreement would expire in five years (a minor concession for business), but a lot can happen in that time. The next five years will be critical to the future direction of our economy. We can either begin to achieve greater prosperity or settle for mediocrity or face potential economic armageddon.
This proposed near-sighted approach to funding New Jersey Transit and addressing the budget deficit by taxing our largest, most profitable companies has potential negative consequences for our state. It introduces huge reputational risk, significantly sets back our economic momentum, makes us more expensive and less competitive and would be a huge disappointment to C-Suite executives working in our largest companies who are tasked with making decisions regarding their companies’ future strategies.
The State Chamber has been advocating for what every bond rating agency report states: New Jersey should be seeking long-term, stable organic sources of revenue to grow its economy. If not created, our economy runs risks of being downgraded. The most viable path to achieving economic prosperity is to develop and nurture a healthy growing state business climate. That’s how New Jersey will flourish and pay for state programs that help make it a great place to work and live. This budget does otherwise.
Our state cannot continually ignore its long-term economic needs in favor of quick fixes like CTF that address “today” issues. Many of our friends in the state legislature will be in office over these next five years; their votes on this budget will chart their own destiny. Time is running out for New Jersey. This week will say a lot about how serious New Jersey is about economic growth being a priority – or whether it is business as usual in Trenton.
