CCSNJ Testimony on Proposed issuance of $4.5 Billion General Obligation Bonds
TO: Members of the Select Commission on Emergency COVID-19 Borrowing
FROM: Hilary Chebra, Manager, Government Affairs, CCSNJ
RE: Proposed issuance of $4.5 Billion General Obligation Bonds
DATE: September 28, 2020
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 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 provide our thoughts on the proposed issuance of $4.5 billion in General Obligation Bonds.
The CCSNJ is not naïve to the fact that some borrowing would be necessary to address the economic impact of the COVID-19 pandemic in New Jersey; however, it should be done so sparingly and with due consideration to the long-term impacts on the state’s fiscal health. The longstanding impact of any borrowing plan cannot be understated – adding to the state’s already enormous debt, which can only lead to higher taxes on an already overburdened residents and businesses.
New Jersey is already one of the most indebted states in the country, with the fourth highest debt ranking in the nation. Should $4.5 billion in borrowing be approved, it will come with extraordinarily high levels of interest that would take decades to pay off – all on the backs of New Jerseyans. It is also quite likely that this level of borrowing will cause New Jersey to receive a downgrade in credit rating and overall fiscal outlook.
CCSNJ members that are coping with the challenges presented from COVID-19 continue to struggle with operating in an extraordinarily high-cost, high tax and heavily regulated state. With the new budget comes the added increase of the rate of taxation on incomes in excess of $1 million from the current rate of 8.97 percent to 10.75 percent. Additionally, the fact remains that New Jersey has the highest property taxes in the nation, highest Corporation Business Tax in the nation and a slew of other taxes and fees that impact business operations. Borrowing will inevitably lead to higher taxes, which businesses can simply not sustain.
There are several options worth considering outside of borrowing – most obviously, cuts in state spending – but, it should be done on a short-term basis, not spread over many years adding enormous amounts of debt service to the state’s bottom line.
It is for these reasons that the CCSNJ asks that the members of the Select Commission on Emergency COVID-19 borrowing should vote no on the proposed issuance of $4.5 billion in General Obligation Bonds. Thank you for the opportunity to present our position.