Although the proposed state budget expects a windfall during the current fiscal year from the increased corporate business tax, in a sit-down interview with NJBIZ on Wednesday, Democratic Gov. Phil Murphy was generally unenthusiastic about the high numbers – despite a planned “corporate responsibility fee” meant to entice employers to offer health plans to their workers.
Murphy said the state cannot “keep only going to the corporate well.”
“We have to be a fair state for not just individuals to live in, but businesses,” he stated.
The governor’s 2020 budget, unveiled Tuesday, calls for a $150 yearly “corporate responsibility fee,” levied against employers with at least 50 workers if any of those workers are enrolled in Medicaid.
Murphy feels the fee would entice employers to begin offering health plans to their workers, and if not, the charge would help finance the state’s Medicaid expenses. Although business advocate groups said they need to further scrutinize the proposal, they were generally wary of any new policy that calls for more taxes or fees.
“A fee is a fee, a tax is a tax, it’s money out of someone’s pocket,” Tom Bracken, president of the New Jersey Chamber of Commerce, told NJBIZ.
Under last year’s budget, the state increased the corporate business tax rate by 2.5 percent for two years, then 1.5 percent for another two years – all on top of the prior 9 percent base rate.
The state treasury increased how much it expects to earn from the CBT by the end of the year to $3.7 billion – up $662 million from the $3.05 billion lawmakers agreed upon when Murphy signed the budget last July.
“It was the right tax to go after,” Senate President Stephen Sweeney, D-3rd District – and main backer of the CBT during last year’s budget talks – said at a press conference immediately following the March 5 budget address.
Murphy believes the state did rather well financially because it tightens its belt with spending.
“We underspent on the expense side, almost to the dollar for dollar, so yeah there was more revenue but there was also a significant amount of aggressive underspending of our expenses,” Murphy said.
The 2020 budget lowers the CBT projection by $429 million to $3.2 billion. State Treasurer Elizabeth Maher Muoio attributed that to a number of “one-shot revenues” within the 2019 budget.
Those included $200 million from the repatriation fee, which was a one-time tax on money that companies brought back into New Jersey following the 2017 federal tax cuts.