During a Tuesday press conference at New Jersey Business & Industry Association (NJBIA) headquarters in Trenton, the New Jersey Business Coalition laid out its opposition to, and the potential impacts of, the proposed 2.5% Corporate Transit Fee from Gov. Phil Murphy’s Fiscal Year 2025 budget plan.

As NJBIZ has extensively reported, the issue has dominated New Jersey news and politics so far in 2024 while officials look for a dedicated funding source for NJ Transit. The agency faces an impending, more than $100 million fiscal cliff in 2025.

The CTF was introduced on the heels of the corporate business tax (CBT) surcharge’s sunset. Since then, business leaders and advocacy groups have vehemently opposed it.

The New Jersey Business Coalition includes more than 100 businesses, labor and nonprofit groups. The collective has urged the Legislature to nix the tax increase on the state’s most profitable corporations.

Long-term planning

NJBIA President and CEO Michele Siekerka stressed that this is an issue of competitiveness. She noted the CTF would impact some 600 of the state’s largest employers.

“When we talk about costs to New Jersey’s largest job creators, I want to make a very important distinction. Because what we hear consistently is ‘Well, they can afford it – so why not ask them to pay more? They should pay their fair share,’” said Siekerka. “Number one, this isn’t an issue of affordability. This is an issue of competitiveness.

“And when you are an extreme outlier, businesses have the opportunity to make decisions. When they make decisions on investment and reinvestment, they need predictability and certainty before they can make those investments,” she continued. “And when you have policies, particularly, tax policies that flip flop – it’s very difficult for a company to make an immediate short-term or long-term investment here in the State of New Jersey.”

Since the proposal was unveiled, Siekerka said she’s had a lot of dialogue with CEOs and C-suite executives about their concerns.

“It creates a culture here in New Jersey – where we have to be concerned about our ability to bank on the word of our policymakers,” said Siekerka. “And when that happens, unfortunately, it causes those investments to be frozen in their place. So, we need to ensure that a business can look – one year, three years, five years ahead when they are making long-term investments here in the State of New Jersey.”

Curtailing competitiveness

She continued by pointing to the competition the state faces. Regional neighbors and others across the country offer lower taxes, lower costs and less red tape to do business in those places, Siekerka said.

Some of these large employers might not leave immediately, she stressed. Maybe they keep a hub here. However, slowly, they may also be drawn to invest in these areas that offer more business-friendly conditions, instead of reinvesting in the Garden State.

“We see companies that have been here for a long time – that may not pick up all their toys and leave tomorrow. They want to keep a station in New Jersey. They want to keep a place here. This is a special place. This is an awesome place,” said Siekerka. “I’m the biggest cheerleader for New Jersey on any given day. I can spend an hour talking about its attributes. But we can’t ignore when we have a significant challenge like this facing us.”

I’m the biggest cheerleader for New Jersey on any given day. I can spend an hour talking about its attributes. But we can’t ignore when we have a significant challenge like this facing us.
– Michele Siekerka, NJBIA President and CEO 

Lori Roth is vice chair of the NJBIA board and global managing partner at accounting firm Prager Metis. She said the CTF would not only impact the largest employers paying the fee, but that it would also be felt across the board. According to her, it sends a strong, negative message to the business community writ large here in New Jersey.

“For those larger companies, they haven’t had the ability to plan for this properly,” said Roth.

She echoed the point on competitiveness and how it would not help attract businesses.

‘It all trickles down’

“There’s no reason for people to come in from outside,” said Roth. “And as Michele said – all these neighboring states become much more attractive to our New Jersey businesses – across the board.”

Chamber of Commerce of Southern New Jersey President and CEO Christina Renna said the proposal is especially tough for South Jersey businesses.

“It all trickles down. Consumers are going to feel this. And at a time where we are facing inflation at the rate we are, it’s not the time to be doing any kind of increase on tax on businesses across the board,” said Renna. “But it’s a little bit of a bitter pill to swallow in the southern portion of the state – where unfortunately we do not have the access to NJ Transit services that other areas of the state have.

“And its not for lack of wanting, and certainly, not for a lack of needing,” Renna said.

The coalition says it will continue to raise awareness through an education and advocacy campaign. The group will also continue discussions with the Legislature as the budget process plays. In an upcoming issue of NJBIZ, we’ll dig further into this hot-button issue.

“Let’s give our companies a reason to stay in New Jersey – and not a reason to take those calls or to consider their next reinvestment or location will be somewhere out of the State of New Jersey,” said Siekerka.