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 nearly 1,300 member companies, approximately 85 percent of which are small businesses that employ less than 50 people, as well as approximately 160 nonprofit members. Thank you for the opportunity to comment on the FY2027 state budget.

The Chamber recognizes that this budget reflects significant work by the Governor and Legislature to address New Jersey's fiscal challenges while maintaining investments in important priorities. We appreciate continued support for small business development, funding for the New Jersey Innovation Authority, investments in shared services, and support for NJ TRANSIT. These investments recognize that economic growth and infrastructure remain essential to New Jersey's future.

Additionally, the budget includes a full pension payment and establishes additional oversight initiatives, including the addition of staff within the Division of Pensions and Benefits to improve contract compliance and strengthen accountability. These steps represent important progress toward ensuring long-term fiscal responsibility.

Unfortunately, those positive investments are being overshadowed by a series of actions that, taken together, make New Jersey a less competitive and increasingly unfriendly place to do business.

Businesses do not evaluate a single budget provision or a single piece of legislation in isolation. They evaluate the overall business climate when deciding where to invest, expand operations, hire employees, or locate future projects. The cumulative impact of the policies advancing alongside this budget sends the wrong message to employers both inside and outside of New Jersey.

The FY2027 budget package includes legislation temporarily capping the use of Net Operating Loss (NOL) deductions and modifying the Alternative Business Calculation (ABC) adjustment for pass-through businesses. These proposals increase tax liability on employers that have experienced economic downturns, made significant capital investments, or continue reinvesting profits into growing their businesses.

Net Operating Loss deductions exist to ensure businesses are taxed based on long-term profitability rather than temporary fluctuations in income. Limiting these deductions undermines one of the fundamental principles of business taxation and discourages long-term investment. Likewise, modifying the Alternative Business Calculation adjustment will increase taxes on many pass-through entities, including numerous small and mid-sized businesses throughout New Jersey.

At the same time, the Legislature is advancing S4533, establishing an Employer Healthcare Assistance Contribution on employers whose employees or their dependents receive health coverage through NJ FamilyCare. CCSNJ continues to strongly oppose this proposal.

Eligibility for NJ FamilyCare is determined by household income and family circumstances, not solely by employer wages or the health benefits offered by an employer. Employees may qualify because of a spouse's employment status, changes in household income, family size, caregiving responsibilities, or other personal circumstances entirely outside of an employer's control. Many eligible individuals also voluntarily choose Medicaid because it offers coverage that better meets their family's needs. Employers should not be financially penalized for decisions or eligibility determinations over which they have no control.

This proposal is particularly concerning because it also applies to nonprofit organizations. Community health providers, youth organizations, social service agencies, and other nonprofits already operating under tight financial constraints would face significant new costs that ultimately divert resources away from programs serving New Jersey residents.

During this same legislative session, the Legislature is also advancing S2338, the "Polluters Pay to Make New Jersey More Affordable Act," which would establish an unprecedented retroactive liability framework on certain fossil fuel companies. While the bill is aimed at a specific industry, its economic consequences will not be limited to those companies. The legislation creates significant legal uncertainty, invites years of costly litigation, and establishes a new precedent for retroactive liability that undermines the predictability businesses rely upon when making long-term investment decisions. Moreover, the increased costs associated with compliance and litigation are likely to be passed through the supply chain, ultimately affecting businesses and consumers across New Jersey through higher energy, transportation, and operating costs.

Businesses considering whether to invest in New Jersey will view this legislation as another example of an increasingly uncertain regulatory environment. Combined with new employer assessments, business tax increases, and additional compliance requirements, it reinforces the perception that New Jersey continues to increase the cost and complexity of doing business.

Each of these measures may be debated on its own merits. However, businesses experience them collectively.

When employers look at New Jersey today, they do not see one tax increase, one regulatory proposal, or one new compliance requirement. They see higher taxes, additional employer assessments, expanded regulatory obligations, greater legal uncertainty, and increasing costs of doing business. That cumulative effect matters.

Every time New Jersey becomes more expensive or more difficult to operate in, neighboring states become comparatively more attractive. Companies considering where to build a new facility, expand operations, relocate employees, or make their next capital investment compare New Jersey against Pennsylvania, Delaware, North Carolina, Florida, Tennessee, and dozens of other states competing aggressively for private investment.

The CCSNJ remains committed to working with the Governor and Legislature to strengthen New Jersey's economy while maintaining fiscal responsibility. We recognize the difficult decisions involved in crafting a balanced budget, and we appreciate the investments included in this year's spending plan.

As the Legislature considers final passage of the FY2027 budget, we respectfully encourage consideration of the cumulative impact that this budget and the accompanying policy proposals will have on New Jersey's business climate. Taken together, the Employer Healthcare Assistance Contribution, the temporary cap on Net Operating Loss deductions, modifications to the Alternative Business Calculation adjustment, expanded regulatory requirements, and other new mandates create additional costs and uncertainty for employers.

New Jersey has tremendous strengths, including a talented workforce, a strategic location, and a diverse economy. Preserving those advantages requires continued attention to policies that encourage private investment, support job creation, and allow businesses of all sizes to grow and succeed.

The CCSNJ looks forward to continuing to work with the Governor and Legislature to advance policies that strengthen New Jersey's competitiveness while supporting long-term economic growth and opportunity for businesses, workers, and communities across our state.

Thank you for the opportunity to present the Chamber of Commerce Southern New Jersey's testimony on the FY2027 State Budget.