TO:                      Members of the Assembly Budget Committee

FROM:                Christina M. Renna, President & CEO, CCSNJ

RE:                       New Jersey FY2022 State Budget

DATE:                  March 10, 2021

The Chamber of Commerce Southern New Jersey is the region’s largest and most influential business organization representing businesses in the seven most southern counties of New Jersey, as well as Greater Philadelphia and northern Delaware.  The CCSNJ has more than 1,100 member companies, approximately 85 percent of which are small businesses that employ less than 50 people.  Thank you for the opportunity to comment on the FY2022 State Budget as proposed by Governor Murphy.

The CCSNJ would like to voice our support for the Governor’s decision to not include any new taxes, tax increases or fees in the FY2022 budget. The citizens and businesses of New Jersey to struggle mightily with the challenges of operating in an extraordinarily high cost, high tax and heavily regulated state. As the business community continues to grapple with the impact of the COVID-19 pandemic, any increase in taxes would only add to the incredible burden placed upon business during this unprecedented time.

New Jersey has a true affordability crisis with the highest property taxes in the nation, highest Corporation Business Tax (CBT) in the nation, and the second highest top marginal personal income tax rate in the nation. In fact, the average New Jersey property tax bill rose above the $9,000 mark for the first time ever last year, according to a recent report by NJ Spotlight. With the passage of a $15 minimum wage in 2019, increased health insurance costs and a wide variety of other costly employer mandates over the course of the past three years, it is good to see Governor Murphy acknowledge that new taxes in FY2022 would be counterproductive to reinvigorating our economy and creating much needed job opportunities.

Obtaining feedback from CCSNJ members, and therefore allowing state government officials to hear directly from the New Jersey business community, is of paramount importance to the Chamber. An important gauge of our members’ attitudes toward doing business in the state is the CCSNJ’s Annual Member Satisfaction Survey, which is conducted every fall. The 2020 survey was more important than ever given members continued attempts to navigate the pandemic’s impact on operations and the economy. Tellingly, when asked “What do you believe are the most important issues facing the State of New Jersey?” the handling of the COVID-19 crisis was ranked second, only to the cost of living in New Jersey, which has historically ranked first for several years. Additionally when members were asked their thoughts on doing business in New Jersey, the responses ranged from “We are saddled with costs that similar companies in neighboring states do not incur,” to “the Governor has decimated small businesses.” These responses are unfortunate, but sadly not surprising.

It is well-documented that New Jersey’s high cost of living is causing young adults to move out of state. However, New Jersey is also losing the future workforce due to the rise of remote work, which allows many to work from anywhere, including more affordable states. According to an analysis of 2020 moving data by United Van Lines, New Jersey was the top “outbound” state in 2020 with 70 percent of the shipments handled by the moving service fleeing the state. Many of these young adults will not return, putting the state’s strong reputation of having a highly trained workforce at risk.

Additionally, the Tax Foundation has again listed New Jersey last in its 2021 State Business Tax Climate Index. With the move towards continued remote work, New Jersey should take advantage of its location between two major metro areas to try to attract businesses to New Jersey – a nearly impossible feat given our taxation levels. Some progress was made earlier this year with the passage of the Economic Recovery Act of 2020, which revamped the previous iterations of tax incentive programs used to attract, retain and expand businesses. However, businesses are still likely to consider states, including our neighbors in South Jersey, Delaware and Pennsylvania, which have more hospitable business climates and lower overall cost of living. Although the FY2022 State Budget holds the line on taxes, the CCSNJ would have preferred to see Governor Murphy include meaningful tax cuts to make New Jersey a more competitive place to do business.

The CCSNJ was pleased to see steps taken in this budget to address long term fiscal issues, including the state’s enormous pension obligation. The $6.4 billion pension payment marks the first time since 1996 that the annual obligation would be paid in full; however, the CCSNJ is disappointed that the payment is being made with borrowed money obtained last year with the passage of the “New Jersey COVID-19 Emergency Bond Act.” The CCSNJ opposed this borrowing arrangement arguing that the longstanding impact of any borrowing would only add to the state’s already enormous debt. When the Governor stated that borrowing was a “last resort” to survive the “historic fiscal crisis” created by the pandemic, it was expected – and also mandated by the New Jersey Supreme Court - that the monies would be used to help the state’s pandemic recovery. Although it is good to see the Administration make an effort to fulfill the annual pension obligation in full, its approach to doing so is misguided and fiscally irresponsible.

As the CCSNJ has for many years, we respectfully urge the Governor and Legislature to continue to consider the proposals contained in Senate President Sweeney’s Path To Progress report, specifically the shared-services initiatives on both the school and municipal level. Encouraging the creation of K-12 regional and countywide school districts will assist in alleviating the high property tax burden while improving efficiency of government. Additionally, consolidating services in New Jersey’s 565 municipalities will not only lead to tremendous cost savings, but streamline and provide for more efficient services for taxpayers. Should these savings be realized, the “need” to borrow money would be limited and the overall state budget dramatically improved.

Specific to South Jersey, the CCSNJ commends the inclusion of a $200 million appropriation to the New Jersey Wind Port. This is an important and sound investment as the Port is expected to support up to 1,500 permanent, high-quality manufacturing, assembly, and operations jobs and generate up to approximately $500 million in new economic activity every year. Once completed, the Port would be the nation’s first purpose-built port to manufacture and ship offshore wind-energy components. This will position the state, and specifically Salem County – one of the most economically depressed areas of the state - to become the East Coast hub of the wind power industry, one of the fastest growing in the United States.

The CCSNJ also supports the inclusion of a $269 million allocation in charity care funding, as well as the one year $10 million allocation to assist hospitals with pandemic-related costs. Hospitals remain at the forefront of the pandemic, having to vastly alter their operations in order to safely provide care to the influx of COVID-19 patients, as well as their non-COVID patients. The hospitals in the state rose to the challenge and it is important to ensure that they have the resources to be prepared for any future health crisis.  

Additionally, while the CCSNJ applauds the addition of another $50 million to the Main Street Recovery Fund, more resources are needed still to enable the small business community to recover. Previous New Jersey Economic Development Authority (NJEDA) programs to assist businesses were immediately oversubscribed, cutting many small businesses out of the process.  With 30 percent of New Jersey’s small businesses permanently closed, the state should not allow any business to be shut out of resources to assist in New Jersey’s economic recovery. But, New Jersey cannot afford to wait on aid from Washington D.C. to help our businesses and instead should identify different ways to invest in them in FY2022, which is why the CCSNJ is calling for the Legislature to act quickly on cost savings opportunities in government reforms.

Although pleased with some aspects of the budget proposal, it is unfortunate so much of the budget relies on borrowed money as revenue collections, while not stellar, continue to exceed expectations. The CCSNJ looks forward to continuing to review the details of Governor Murphy’s FY2022 state budget and encourages the Legislature to think creatively about how to put New Jersey on the best path toward its post-pandemic economic recovery.  

Thank you for the opportunity to present our position on Governor Murphy’s proposed Fiscal Year 2022 State Budget.