M E M O R A N D U M

TO:                        Members of the Senate Budget and Appropriations Committee

FROM:                  Hilary Chebra, Manager, Government Affairs, CCSNJ

RE:                        Proposed FY2024 State Budget

DATE:                   March 21, 2023

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 1,100 member companies, of which 85 percent are small businesses that employ less than 50 people, as well as 130 nonprofit members. Thank you for the opportunity to comment on the FY2024 state budget as proposed by Governor Phil Murphy.

The CCSNJ is grateful to Governor Murphy for keeping his promise to sunset the 2.5 percent Corporate Business Tax (CBT) surcharge. This surcharge, imposed in 2018, was on top of the state’s already high CBT rate, which currently sits at nine percent. Though New Jersey has taken this step to alleviate the already high tax rates levied on businesses, the Tax Foundation again ranked New Jersey last in the 2023 State Business Tax Climate Index, citing the state’s highest in the nation property taxes, as well as our high individual income tax rates.

While New Jersey will no longer have the unwelcome distinction of having the nation’s highest corporate tax rate once the surcharge sunsets, the state will still remain uncompetitive compared to our neighbors, with Pennsylvania having reduced their corporate net income tax rate from 9.99 percent to 8.99 percent on at the start of this year. Additionally, each year the rate will decrease 0.5 percentage points until it reaches 4.99 percent at the beginning of 2031. The CCSNJ feels strongly that New Jersey should consider similar reforms in order to remain a competitive place to do business as compared to our neighbors.

While the CCSNJ was pleased to again see no new taxes or fees in the Governor’s FY2024 budget, additional tax relief is needed. Businesses are bracing for another Unemployment Insurance (UI) tax increase due to forced closures and layoffs as a result of the pandemic. The CCSNJ was grateful for the Legislature’s action last year on a bill that spread the $1 billon over 3 years instead of an automatic, one-time tax hike. However, additional support is needed and should be allocated to stop this tax increase. New Jersey received $6.2 billion from the American Rescue Plan’s State Fiscal Recovery Fund in 2021, which federal law requires to be obligated by the end of 2024 and expended by the end of 2026. To date, the Governor and the Legislature have allocated approximately $4.8 billion of that money. The CCSNJ feels strongly that New Jersey should follow the lead of thirty-six other states and use federal American Rescue Plan Act funds to fully or partially replenish the UI fund.

The Governor’s budget also proposes continuing the Affordable New Jersey Communities for Homeowners and Renters (ANCHOR) Property Tax Relief Program, which will provide property tax relief to homeowners and renters, but the program once again excludes businesses who pay fifty percent of the state’s property taxes. Though the program provides some relief for homeowners, it does not address long-term solutions to the state’s high property tax burden – a fact that was recently supported by a NJ Spotlight report stating that property taxes increased, once again, by 2 percent since last year.

The CCSNJ believes that New Jersey must consider fundamental and structural changes to the state’s property tax system. The state should do more to encourage the creation of K-12 regional and countywide school districts, the consolidation of which will assist in alleviating the high property tax burden. Additionally, consolidating municipal services in the state’s 564 municipalities will not only lead to tremendous cost savings, but streamline efficient services provided to taxpayers, as has been realized with the consolidation and creation of the Camden County Police Department.

Additionally, with economists and Governor Murphy both warning of a looming recession, it is more important than ever that the state takes steps to budget to address long term fiscal issues. The CCSNJ was pleased to see some measures taken in this budget to address long term fiscal issues, including the $7.1 billion pension payment, making this the third year that the annual obligation would be paid in full. The full pension payment, along with the additional $2.35 billion deposit in the Debt Defeasance and Prevention Fund are fiscally responsible actions that address the state’s enormous debt burden. The budget surplus also stands at $10 billion, which can also be tapped into should a recession hit or another health emergency occur.

Despite these actions, the CCSNJ is gravely concerned about the total spend of the FY2024 state budget. As proposed, a $53.1 billion budget is the largest budget in state history - a 50 percent increase since 2018. The CCSNJ’s fear is that to maintain this level of year-over-year growth in spending, New Jersey will inevitably have to raise taxes on its already overburdened residents and businesses.

And although the inclusion of $50 million to the Main Street Recovery Fund and $20 million for manufacturing initiatives are welcome news, more resources and financial assistance are still needed to assist the small business community. The CCSNJ strongly believes that further resources towards several programs, including the Main Street Recovery Fund, would go a long way in assisting the small business community’s continued recovery. NJEDA’s programs continue to be vital to recovering small businesses, which often have less access to resources. Additional funds to support NJEDA’s programs will assist the agency’s mission of growing the state’s economy and increases equitable access to opportunity.

Another issue facing Garden State employers is a limited skilled and trained workforce. The CCSNJ is grateful for the increase of $5 million, to $27.5 million, to the Workforce Development Partnership Fund (WDPF). Continued investment in apprenticeships, pre-apprenticeships, on-the-job training will increase access to good paying jobs and ensure there is a skilled workforce. Additionally, the proposed increase to the Child Tax Credit, so that families with young children can receive up to $1,000 per child, will alleviate some of the cost of childcare for working families, enabling caretakers to return to jobs they may have had to leave due to the high cost of childcare.

Additionally, the CCSNJ is proud to support the $100 million Boardwalk Fund, as proposed by the Governor. The Jersey Shore is an economic engine for the state with yearly visitors flocking to our pristine beaches and boardwalks are essential infrastructure for shore towns to thrive as tourist destinations. According to the most recent report on the Economic Impact of Tourism from the New Jersey from the NJ Division of Tourism and Gaming, tourism supported over 430,000 New Jersey jobs and nearly $20 billion in state gross domestic product (GDP) in 2021, representing 2.8 percent of the state economy. The $100 million for New Jersey boardwalks will go a long want to assuring our statewide tourism industry remains robust.

The CCSNJ also looks forward to learning more about the proposed Urban Investment Fund. The pandemic changed how many live and work and ensuring that our Main Streets are able to adjust to the new remote work reality is vital to preserving vibrant downtowns. The CCSNJ is also interested in reviewing additional details on the proposed set-aside for Atlantic City. Gaming and the City’s entertainment and convention business continues to be critical for the region that is still recovering from the pandemic. We look forward to examining these details once they become available. 

In addition, CCSNJ supports the continuation of a $1.5 million appropriation for Samaritan’s “Expanded Access to Palliative Care Program”. Originally included in the FY22 State Budget, Samaritan received a $1.5 million grant-in-aid to this program to fund the healthcare professionals required to expand the delivery of palliative care; to educate and train healthcare providers on the provision of palliative care; and to educate community and faith-based leaders, public agencies and consumers on this care.

With the same appropriation contained in the FY23 State budget, Samaritan continues to expand access to palliative care, increasing the number of patients served in the first half of the fiscal year by 18.4% and providing more patient consults – 12.2% -- over the same period in last fiscal year. We urge the Legislature to continue supporting this worthy appropriation of $1.5 million, which Governor Murphy included in his FY ‘24 proposed budget.

In conclusion, the CCSNJ remains extremely concerned about the massive increase in spending over recent fiscal years. Though steps have been taken to address the state’s fiscal health, long-term reforms must be considered to help address New Jersey’s affordability problem, particularly with the threat of a looming recession. 

The CCSNJ looks forward to continuing to review the details of Governor Murphy’s FY2024 state budget and encourages the Legislature to think creatively about how to how to address systemic fiscal issues, which will put the state on a more sustainable financial path. Thank you for the opportunity to present our position on Governor Murphy’s proposed Fiscal Year 2024 state budget.