The Chamber of Commerce Southern New Jersey (CCSNJ) 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 approximately 1,200 member companies, of which 82 percent are small businesses that employ less than 50 people, as well as 170 nonprofit members. Thank you for the opportunity to comment on the FY2026 state budget as proposed by Governor Phil Murphy.

Governor Murphy has proposed a $58.1 billion budget for FY2026, reflecting a $1.5 billion increase over the previous fiscal year. This proposal includes a $7.2 billion allocation to the state pension system, the Governor’s fifth full pension payment during his tenure, and a $6.3 billion surplus. While the CCSNJ appreciates the fiscally prudent pension payment and robust surplus, we remain deeply concerned about the proposed budget’s reliance on increased taxes and fees, which we believe will hinder business growth and the economic recovery in South Jersey.

Last year, the CCSNJ testified before this Committee in strong opposition to the Corporate Transit Fee, a 2.5 percent tax on businesses with net income in excess of $10 million. The money generated from this tax is dedicated to NJ Transit, which the CCSNJ argued was unfair to South Jersey-based businesses that have limited access to NJ Transit services - a fact that Senate Budget & Appropriations Chair Paul Sarlo publicly agreed with during the CCSNJ’s testimony. Since the Corporate Transit Fee’s passage and throughout FY2025, regional businesses have been taxed for mass transportation services that South Jersey desperately wants and needs but cannot access.

One year later, the New Jersey Department of Treasury estimates that NJ Transit will receive approximately $815.5 million from the Corporate Transit Fee as southern New Jersey continues to lack the transportation options or transportation infrastructure necessary to meet its needs. Therefore, the CCSNJ respectfully implores the Legislature to right the wrong enacted on South Jersey businesses in FY2025 by dedicating 15 percent of the $815.5 million generated from the Corporate Transit Fee to South Jersey-specific projects in FY2026.

This approximate $122 million dedication from the revenue generated from the Corporate Transit Fee would help ensure that the residents and businesses in South Jersey have greater access to employment opportunities, school, healthcare facilities, and other essential services. For example, a dedication this size could provide crucial investments for extra bus routes in the “Eds and Meds” corridors across all of South Jersey, extend bus hours, stand micro transit lines to assist in the first-and-last mile gap and add additional service upgrades on the River Line Light Rail, to name a few.

Additionally, the CCSNJ is disappointed that the proposed FY2026 budget introduces $1.1 billion in new taxes and fees, many of which disproportionately affect South Jersey’s economy. The budget proposes raising internet gaming and online sports wagering tax rates from 15 percent and 13 percent, respectively, to 25 percent. This move threatens to harm Atlantic City’s brick-and-mortar casinos, undermine one of the region’s largest economic drivers, and deter future investment in industry. Additionally, a new tax on certain drones, projected to generate $5 million in revenue, risks stifling innovation and hindering growth in a sector with significant potential. Specifically, Cape May County is a designated FAA Unmanned Aircraft System (UAS) test range and has significant collaborations with organizations like NJIT/NJII for drone delivery research.

Another new tax that impacts South Jersey is the proposed warehouse/truck fee, which imposes a $2 truck excise fee on warehouses throughout the state. Last year, the proposal of a $1 truck excise fee alone was enough for a CCSNJ member company to lose a warehouse project to another state. The re-introduction of a truck fee, at a higher level than it was proposed last year, will continue to make New Jersey a less favorable place to do business. Additionally, this tax will make all goods more expensive for residents across the state, as it will likely be passed on to the consumer. At a time when the South Jersey region needs new industries to take root and flourish, this new tax is another reason for businesses to look elsewhere.

Additionally, the expansion of the sales and use tax base will exacerbate the affordability crisis in the state. The proposal seeks to tax additional services and transactions, such as participatory sports (including youth sports), interior design, vehicle trade-ins, digital services, second-hand airplane sales, certain complimentary meals, rooms, and tickets, horse training, and the removal of the partial sales tax exemption and $20,000 cap on boat and vessel sales. This tax expansion would come at a time of record inflation for the residents and businesses of New Jersey, and as a result, a shortsighted proposal.

The Administration has also proposed a significant increase the Social Equity Excise Fee (SEEF) on adult use cannabis. The fee on cannabis sold by Class 1 license holders would rise from $2.50 per ounce to $15 per ounce, while a new $30 per ounce SEEF would be applied to intoxicating hemp products. Combined these increases are expected to generate an additional $70 million in revenue, but at the expense of an industry that is still finding its footing, particularly in South Jersey where the industry has been working to establish themselves as viable economic contributors.

In conclusion, the CCSNJ remains extremely concerned about the massive increase in spending over recent fiscal years and the increases in taxes that will make life less affordable for businesses and residents alike. We urge the Legislature to allocate dedicated funding to South Jersey for transportation projects, ensuring that the region receives equitable access to transportation resources.

Thank you for the opportunity to present our position on Governor Murphy’s proposed Fiscal Year 2026 state budget.