More details, reaction to NJ’s record $54.3 billion state budget

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With the ink from Gov. Phil Murphy’s signature drying on the $54.3 billion Fiscal Year 2024 state budget, reaction is pouring in from the great Garden State as constituents and stakeholders learn more specifics from the record spending plan.

While much of last week’s narrative turned to the chaotic, last-minute passage and signing of the measure, Assembly Bill 5669/Senate Bill 2024, just before a June 30 midnight deadline, there is certainly a lot in the budget to digest.

Over the coming days, weeks and months, NJBIZ will continue to go more in depth and analyze spending plan specifics.

For now, some of the toplines of the budget include:

• The sunset of the 2.5% corporate business tax (CBT) surcharge
• A surplus of $8.3 billion
• More than $2 billion in direct property tax relief for the second year of ANCHOR
• The phase-in of the just passed/signed StayNJ (A1/S1) senior property tax relief plan
• Expanded eligibility for the Senior Freeze property tax relief plan
• Doubling of the Child Tax Credit
• A record $11 billion in direct K-12 aid for public schools
• A third consecutive full pension payment of over $7 billion
• Another deposit in the Debt Defeasance and Prevention Fund, bringing the current available balance to $2 billion and the total allocation to the fund to $9.25 billion over the last two years
• Back-to-school sales tax holiday
• Waiving fees for the entrance into all state parks for another year
• No fare increase for NJ Transit commuters
• Providing $150 million in energy tax receipts-related payments to extend the Municipal Relief Fund
• $100 million for a new Boardwalk Fund

Murphy says that the budget builds on historic progress made over the last five years with new investments centered around increasing affordability, promoting fiscal responsibility, and creating world-class opportunities for everyone to succeed.

“When I first proposed this budget, I said it was a budget designed with a singular purpose – to continue building an economy where every family can afford to make their American Dream come true. Today we are delivering on that promise,” the governor said. “Over the last two years, we have committed over $6 billion in direct property tax relief, tackling one of the single greatest and longest standing affordability challenges our state faces. This budget will also lower prescription-drug costs for seniors, help hardworking families by expanding free pre-K for kids, create good-paying jobs and fights climate change by building a green economy, expanding mental health services for our kids, build and preserve affordable housing so everyone has a place they can call home, help first-generation homebuyers achieve the safety and security of owning a home, and so much more.”

Murphy added that this was all accomplished in a fiscally responsible way.

“This budget continues to fully deliver on our commitments to our pension payments and school funding, while also maintaining a healthy surplus,” he said.

“The budget signed into law will help make New Jersey more affordable for hardworking residents and families by boosting tax relief and investing in affordable housing, social services, and education,” said Lt. Gov. Sheila Oliver, who also serves as commissioner of the Department of Community Affairs. “This budget demonstrates that we remain steadfast in our commitment to providing New Jerseyans of all walks of life the opportunity and resources to thrive.”

“The budget signed by the governor continues our commitment to making the state a more affordable place to live, work, raise a family, and retire,” said State Treasurer Elizabeth Maher Muoio. “With unprecedented tax relief for our seniors and middle-class families, a third full pension payment in as many years, record funding of our best-in-the-nation schools and a budget surplus of approximately 15%, this budget maintains sound fiscal management that helps prepare for the Next New Jersey.”

The New Jersey State League of Municipalities applauded the $150 million appropriation of energy tax receipts funding to municipalities.

“For over a decade, municipalities have done more with less; over $300 million was diverted from local property taxpayers annually,” said League President Ray Heck, mayor of Millstone, in a statement. “Now, as local costs for health care, recycling, salaries and wages, and much more soar, this funding will provide critical relief for local taxpayers. Today, we build upon the first step to full restoration with a doubling of this appropriation over last year, funding that provides direct tax relief for our taxpayers.”

Businesses ‘still in need of substantial support’

The reaction from business groups around the Garden State has been mixed — welcoming the sunset of the CBT surcharge, the full pension payment, other tax reform measures and more, while bemoaning certain omissions from the budget and expressing concern about the sustainability of the record price tag.

“The New Jersey Chamber of Commerce thanks the governor and legislative leaders for including, in the Fiscal 2024 state budget, tax reform measures that make New Jersey more attractive to companies based in our state and companies considering relocating to our state,” said Tom Bracken, New Jersey Chamber of Commerce president and CEO, in a statement. “These reforms are good, but they are just the beginning. The business community of New Jersey, even with those changes, is still in need of substantial support.”

Examples of that support, Bracken says, include:

• Replenishing the state’s Unemployment Insurance (UI) Fund, as many states have done, instead of through business payroll tax increases;
• Creating a significant grant fund that would provide working capital to entrepreneurs and business owners dealing with a number of challenges;
• Re-energizing the state’s Government Efficiency and Regulatory Review (GEARR) Commission to identify inefficiencies and overly burdensome regulations that hurt businesses and stifle economic growth.

Bracken stressed that the state needs true tax reform to take advantage of its outstanding economic assets to attract more businesses here.

New Jersey Business & Industry Association (NJBIA) President and CEO Michele Siekerka said they are grateful for the governor’s leadership and fortitude and for his keeping his word regarding the sunset of the CBT surcharge – and for the Legislature for agreeing to end it – especially amid calls from advocacy groups to keep it in place.

“Our largest employers certainly deserve better than to be demonized daily for the apparent crime of earning profits against the fiscal headwinds often found in New Jersey. Rather, they should be appreciated for what they provide to our economy, our workers, our communities, and our nonprofits,” said Siekerka. “We also appreciate the fiscally responsible moves in the FY2024 budget, including a third consecutive full payment of more than $7 billion to our underfunded pension systems, another year of increased school aid and a healthy surplus. The decision to restore $150 million in energy tax receipts to municipalities will also help hold down local property taxes for all property taxpayers, including businesses.”

Siekerka noted that there is credible pro-growth spending to be found in the areas of innovation, workforce development and infrastructure that will greatly help businesses and the economy, which she says are appreciated by the business community.

“We are, however, again disappointed by the lack of comprehensive small business relief in this large budget,” she continued. “As is well documented, New Jersey businesses were hit with a more than $1 billion unemployment insurance tax increase due to the pandemic. There have no federal relief dollars applied to this major tax hit, as most states have utilized. And there has been no state budget relief on this tax on jobs, despite considerable surpluses. Additionally, businesses are excluded from the budget’s property tax relief programs, even though they pay nearly half of the property taxes in the state. Our small businesses certainly deserve better.”

Siekerka also expressed concerns about the sustainability of increasingly expanding budgets year-after-year.

“This FY24 budget is more than 7% higher than last year’s and is 56% higher than when Gov. Murphy took office in 2018,” said Siekerka. “We remain concerned that this rapid increase in spending will not be sustainable without future tax increases that would reverse any down payment toward competitiveness made in this budget.”

Bracken echoed those sentiments about the size of the spending plan.

“The healthy surplus realized in the Fiscal 2024 budget is largely aided by billions in federal pandemic aid. Forecasts warn that when that aid runs out in future budget seasons, New Jersey will again be in serious need of revenue, facing potential billion-dollar-deficits,” said Bracken. “And the only way to generate long-term, stable, organic sources of revenue is through a strong economy – which is led by business.

“When the business community thrives, state tax revenues rise, social programs are funded and the generous philanthropic giving of the business community grows,” he continued. “These are the hallmarks of a state with a solid economy. Let’s make it happen working with the governor and the state’s legislative leaders.”