Business groups say the new state budget represents a missed opportunity to bridge the gap between the COVID-19 recession and a robust economic recovery. The budget – which at the time of this writing had not been voted on by the full state Assembly and Senate – includes a record $46.4 billion of spending, $52 billion in revenue, more than $6 billion in federal aid and a $10 billion surplus.
It would cover expenses for the next 12 months, from July 1 to June 30, 2022. And it’s packed with hundreds of millions of dollars in projects benefiting individual towns and cities, widely known as “Christmas tree” items for lawmakers’ individual districts. That includes $24 million for an art museum in Jersey City, $15 million for demolitions in Camden, $300,000 for the Paramus library, $300,000 for a Little League field in Franklin Township, $350,000 for “re-turfing” a Metuchen public park, $250,000 for a “river trail” in Highland Park, and $500,000 for walking trails in North Brunswick.
“My favorite is $500,000 for the spotted lanternfly,” Assemblywoman Serena DiMaso, R-13th District, said with evident sarcasm during a budget hearing.
Democratic state lawmakers defended the spending, saying it’s no different than prior years, and pointed to vast sums of money going toward programs that would help residents.
For employers, the budget has $135 million in pandemic relief grants for businesses. And it has huge sums of money for job-training and college subsidies.
“I signed six bills yesterday totaling $235 million,” Gov. Phil Murphy said during a June 23 regular COVID-19 press briefing. “I’m going to look to the American Rescue Plan for even more money. So when you look at the broad tapestry, our small businesses need the help, and we’ve now impacted, I think, over 60-some thousand small business, and we are going to stay at it, and I promise folks that.”
Businesses have yet to fully recover from the pandemic, and the spending plan should include more funds to help them, said Tom Bracken, who heads the New Jersey Chamber of Commerce. “The business community still needs a lot of money. There is some for businesses, but nowhere near enough and way short of what we advocated for,” he said in an interview. “Getting people back to work, there’s not one nickel.”
Programs like the $14.5 billion New Jersey Economic Recovery Act and the many incentive programs are all fine, Bracken said. But this budget could have acted as a bridge to get businesses to a better place in the state’s economic trajectory.
“Companies are going to qualify for the tax incentives and the biggest thing they have to do is add jobs … but getting people to take those jobs is the issue, and there’s nothing in the budget that helps that issue,” he said.
Republican lawmakers and several state business groups, including the Chamber, suggested using $1 billion of the state’s federal COVID-19 relief for business grants.
Education and job-training
Murphy cited state subsidies for all four years of college education for some of the state’s lowest-income residents. Under the Community College Opportunity Grant, the state would cover tuition costs of two-year community college degrees for students from families that earn less than $65,000 a year. Another program will cover the cost of the remaining two years of tuition at any of the state’s 13 public colleges and universities. The program has an overall $50 million price tag.
The budget provides for tax deductions of up to $10,000 for money going toward in-state tuition or into the state-run NJ Better Education Savings Trusts, or NJBEST, 529 account, for families earning up to $200,000. That would cost the state roughly $83 million. Another $10 million would go toward matching payments of $750 for taxpayers earning less than $75,000 when they make a contribution to an NJBEST 529 account.
There’s $32.7 million for the New Jersey Workforce Development Partnership Fund, which is meant to offer job-training to transition workers from unemployment and back to work. Of that. $8.5 million is earmarked for a job-training program done in collaboration with the New Jersey Council of County Colleges’ Pathway and Skills Collaborative. The goal of the program is to connect the state Labor Department with county colleges, vocational schools, universities, labor unions, community organizations and the New Jersey Business and Industry Association to “improve the alignment of training and the needs of employers in New Jersey’s key industries, to develop new education and training programs aligned with the needs of employers, and to deliver education and training tied to the needs of employers in key industries.”
The budget also calls for more than $206 million in spending for the state’s unemployment fund. Republicans and several business groups suggested $2.5 billion of ARP funding over three years go toward refilling the fund, so that it would not fall on employers to cover those costs through tax increases. That would include $1.5 billion to replenish the trust fund, and $1 billion to repay loans the state took out last year to continue paying unemployment benefits.
In January, Murphy approved a bill that would have spread out the tax increases over a three-year period to reload the fund.
Legislative analysts estimated that without the bill, businesses would have needed to pay close to $1 billion in taxes to make up for the spent cash. A clean-up bill extended the three-year increases to nonprofits.
“It is concerning that this budget does not address the Unemployment Insurance Trust Fund taxes that are slated to increase greatly on July 1,” said Christopher Emigholz, vice president of government affairs at the New Jersey Business & Industry Association, in a June 23 statement. “It is critical that the enormous debt in our UI fund be addressed with federal [ARP] funding. Without it, businesses will be looking at higher and continued taxes on the jobs they provide – which is not good for the state’s economic recovery.”
The state budget includes just $17 million, of which $10 million would come from the ARP, for upgrading the 40-year-old unemployment computing systems, which buckled last year under the pressure of hundreds of thousands of jobless claims. Assembly Bill 4380 would have allocated $50 million for that purpose, and state Republicans floated half a billion dollars to upgrade the unemployment system, as well as the computer infrastructure for the Motor Vehicle Commission and 9-1-1 calls.
Retiring Senate Majority Leader Loretta Weinberg, D-37th District, blasted the plan for not including a recurring and dedicated source of funding for New Jersey Transit. “I am extremely disappointed,” she told reporters on June 21. “It is short-sighted, and it certainly doesn’t live up to the governor’s promise to fix NJ Transit.”
Weinberg had been a persistent advocate for a dedicated source of funding for the cash-strapped mass transit agency. Efforts to do so gained steam in February 2020 but were derailed by the COVID-19 pandemic. “So … everybody else has got a portion of this money, and to not [fund] NJ Transit is absolutely mind-blowing,” she said. “It’s bad government, bad politics, bad for our future.”
The agency is roughly $5.8 billion short of the funds it needs to deliver on the full roster of proposals under its five-year capital plan. To make up the shortfall, the agency can cut services or raise fares. The Murphy administration could also move funds from elsewhere in the budget.
Under the proposed spending plan, $360 million of NJ Transit’s capital funding – for long-term upgrades and maintenance – would instead be used for daily operations. Another $82 million would come out of the state fund for clean energy projects.
When pressed on June 23, Murphy did not directly address the lack of a dedicated source of funding, but nonetheless defended his track record with NJ Transit and the fact that this budget would appropriate approximately $2.65 billion to the agency. And, he continued, the ARP includes roughly $2 billion directly for NJ Transit. “It has the lowest capital to operating transfer in 15 years,” he said.
“We have aggressively used the pandemic period to accelerate the fixing of NJ Transit, everything from the customer experience to station improvements to communications, hiring more engineers,” he continued. “We just got here three and a half years ago, and I think that we made an enormous amount of progress. By the way, no rate hike during our time.”