On February 27, Governor Phil Murphy delivered the FY2025 state budget to a joint session of the New Jersey Legislature. The Chamber of Commerce Southern New Jersey (CCSNJ) was in attendance during the address, which outlined his $55.9 billion proposal.

Over recent years, the CCSNJ has raised numerous concerns about the enormous total spend of Governor Murphy’s budget proposals. Specifically, we feared that in order to maintain this level of year-over-year growth in spending – a 60 percent increase since 2018 – New Jersey would inevitably have to raise taxes on its already overburdened residents and businesses, unless considerable cuts were made or new, reliable, long-term revenue sources were identified. In the FY2025 proposed budget, it seems the CCSNJ’s fears have come true in a way that unfairly impacts South Jersey companies.

To start, the Governor proposed a 2.5 percent Corporate Transit Fee on large corporations ($10 million or more in net profits) retroactive to January 1, 2024. The Administration believes this tax will raise over $800 million and will be dedicated to fund NJ Transit, which serves very little of the region and has an extremely limited ridership from South Jersey. In other words, South Jersey businesses that fall in this category will be forced to fund a transportation system they rarely use and have extremely limited access to. 

Additionally, this tax increase is disappointing given the recent sunset of the Corporation Business Tax (CBT) surcharge of 4 percent, which expired on January 1st. Today’s proposal undoes that sunset for New Jersey’s largest businesses, given the retroactive nature of the proposal, and will mandate that these businesses pay an extra 2.5 percent on top of the current 9 percent CBT rate - all at a time when Pennsylvania is lowering its CBT rate to 4.9 percent. While the Governor’s reversal on this tax is extremely disappointing, the CCSNJ will be advocating for other avenues to fund NJ Transit throughout the budget negations between now and June 30th.

Other proposals include:

$5 million for a Nursing Workforce Initiative to assist with the state’s nursing shortage.

$10 million to incentivize municipalities to invest in new housing initiatives.

RetireReady NJ, which will provide workers an option to invest in a retirement savings plan.

Fully funding the state’s public schools by $900 million.

Fully funding New Jersey’s pension system.

$6 billion surplus/rainy day fund.

$30 million to end veteran homelessness.

$5 million for New Jersey’s Teacher Loan Redemption program, to provide student loan debt relief to educators throughout the state.

$40 million to modernize the state’s energy grid.

$4.5 million AI innovation challenge to assist with the AI Moonshot program introduced during the State of the State Address.

Additionally, there was no mention of small business assistance in today's speech, which is of critical importance to the CCSNJ since 85 percent of our member companies classify themselves as small businesses.

Lastly, a rumored trucking/distribution tax on delivery trucks in New Jersey was not mentioned in the address. Should an initiative of this nature be proposed in the full budget, the CCSNJ will strongly oppose the measure.

As always, the CCSNJ looks forward to being actively engaged in the FY2025 budget process. Should you have any questions, please contact Christina Renna at crenna@chambersnj.com. 

To read the full FY2025 state budget address, click here.

To read the ROI-NJ article on the Corporate Transit Fee, click here.