There has been significant discussion regarding the proposed 2.5% Corporate Transit Fee (CTF) on New Jersey’s largest employers. Many trade associations, including the New Jersey Chamber of Commerce, are opposed to it and seek its elimination. While there is consensus that NJ Transit needs financial reform, the employer community believes the CTF is not a viable solution.
Tom Bracken, President and CEO of the New Jersey Chamber of Commerce, stated: “Everyone agrees NJ Transit needs to get its fiscal house in order; however, the employer community stands firm that the CTF will never be a viable solution.” He suggests policymakers should use NJ Transit's increased funding sources to conduct a thorough analysis of the agency's financial position over the next year rather than rushing through a proposal with potential negative economic consequences.
Governor Phil Murphy indicated in his budget address that the CTF aims to solve NJ Transit's fiscal challenges by dedicating all collected dollars to the agency. However, Bracken argues this would not resolve these challenges due to the volatility of Corporation Business Tax revenues. The Murphy administration estimates $1 billion could be raised by this fee, but predicting annual revenue remains uncertain as it depends on economic conditions and corporate tax strategies.
Bracken also questions the urgency of implementing this fee given NJ Transit's projected deficit for the upcoming fiscal year is $119 million. Additionally, he finds it curious that while large companies would face retroactive tax increases from January 1, 2024, revenue from this fee wouldn't benefit NJ Transit until July 2025.
Instead of raising business taxes hastily, Bracken proposes using existing measures to improve NJ Transit's finances over the next year:
- A 15% fare increase implemented by NJ Transit.
- Funding from the state’s Transportation Trust Fund derived from gas taxes and new fees on electric vehicle owners.
- Savings identified by an administrative consultant amounting between $300 million and $600 million.
Bracken emphasizes that introducing this fee could result in New Jersey having one of the highest Corporation Business Tax rates for large companies in the nation. This could tarnish New Jersey's business reputation and undermine efforts to attract and retain businesses. He notes: “This fee hike would come just as the Administration has been spearheading an impressive business attraction campaign.”
Trade missions have been conducted across several states and countries to attract big companies capable of expanding New Jersey's tax base and creating jobs. However, Bracken warns that imposing such a fee might jeopardize these efforts.
The Chamber has appealed to state legislators to oppose this proposal alongside 40 local and regional chambers representing substantial portions of New Jersey employers. They argue that if implemented as designed, it would introduce reputational risks and hinder economic momentum without benefiting NJ Transit until mid-2025.
Bracken suggests either eliminating or postponing this decision or modifying it by removing retroactive clawbacks starting January 1, setting expiration dates for surcharges reasonably, reducing reliance on external support gradually through yearly step-down reductions in surcharges which encourages self-sufficiency within NJ Transit's fiscal structure.
He concludes: "By rejecting postponing or modifying proposals," legislators demonstrate they have listened evaluated arguments acted accordingly providing much-needed boosts toward increasing business-friendly images showing appreciation predictability vital businesses need planning opposed surprises forced making retroactive changes dictated current proposals."
Tom Bracken is president & CEO of New Jersey Chamber Commerce
