May 21, 2024
There has been significant discussion regarding the proposed 2.5% Corporate Transit Fee (CTF) on New Jersey’s largest employers. The New Jersey Chamber of Commerce, along with various trade associations, strongly opposes this proposal and advocates for its elimination.
Tom Bracken, President & CEO of the New Jersey Chamber of Commerce, stated: "Everyone agrees New Jersey 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 emphasized that policymakers should take time to thoroughly examine NJ Transit's financial position rather than rushing through a proposal during budget season.
The governor's budget address indicated that the CTF aims to resolve NJ Transit's fiscal challenges by dedicating all generated funds to the agency. However, Bracken argued that the fee would not provide a stable funding source due to its volatility as a Corporate Business Tax. "Gov. Phil Murphy’s administration estimates the fee would raise $1 billion," he noted, but highlighted concerns about predicting annual revenue due to economic fluctuations and corporate tax strategies.
Bracken questioned the urgency of implementing the CTF given NJ Transit's projected deficit of $119 million for the upcoming fiscal year. Additionally, he pointed out an inconsistency in the proposal: while large companies would face retroactive fees from January 1st, revenue allocation to NJ Transit would not commence until July 2025.
He suggested alternative measures for addressing NJ Transit's financial issues over the next year:
- A 15% fare increase implemented by NJ Transit.
- Funding from the state’s Transportation Trust Fund.
- Savings identified by a consultant hired by the administration.
Bracken warned that implementing the CTF could result in New Jersey having one of the highest Corporate Business Tax rates in the nation, potentially damaging its business reputation and undermining efforts to attract and retain businesses. He cited recent trade missions aimed at boosting business attraction as being jeopardized by this fee hike.
"We have appealed to state legislators to oppose this damaging fee hike," Bracken said. He mentioned support from 40 local and regional chambers of commerce representing many New Jersey employers who believe this proposal threatens future economic vitality.
Bracken concluded with recommendations if there is reluctance to eliminate the CTF entirely: postponing it until next year or modifying it by removing retroactive clauses and setting expiration dates for phased reductions. Such actions would demonstrate responsiveness to business community concerns and promote predictability essential for business planning.
"We implore the Legislature to eliminate, postpone or modify the CTF," Bracken urged, emphasizing that any of these strategies would yield better outcomes for both businesses and NJ Transit than proceeding with the current proposal.
