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Reaction to Gov. Phil Murphy’s Fiscal Year 2025 Budget Address is rolling in from around the Garden State.

During Tuesday’s speech, Murphy called for a record $55.9 billion spending plan that includes a $6.1 surplus.

Of course, the immediate reaction – and backlash – came from the business community regarding one particular item: the establishment of a Corporate Transit Fund. CTF would serve as a dedicated funding source for NJ Transit, which drew the ire of business leaders and beyond.

“I hope this is a nightmare that isn’t true,” said NJ Chamber of Commerce President and CEO Tom Bracken. “We have been preaching that New Jersey needs to become more affordable, more business friendly, and more competitive. Now we are shocked that there is talk of reinstituting higher taxes on businesses less than three months after the 2.5% corporation business tax (CBT) surcharge expired. If the Fiscal 2025 state budget is passed, as proposed, and the surcharge is reinstated, New Jersey will quickly go from being the CNBC ‘Most Improved State for Doing Business’ to being one where companies flee – and stay away.”

‘Simply bad form’

“That Gov. Murphy would re-commit to a new business tax at a time of a multibillion-dollar surplus to fund NJ Transit when there is no correlation between those impacted corps and public transportation – which he acknowledges himself – is nothing short of a punitive action against our largest job providers. It is a punishment they do not deserve,” said New Jersey Business & Industry Association President and CEO Michele Siekerka. “Simultaneously, our neighbors in Pennsylvania are lowering their top CBT rate to 4.9% – and funding its transportation system without using corporate taxes. Go figure.”

“Further, the governor’s sudden reversal on the surtax, with no forewarning, is simply bad form,” Siekerka added.

“After working with the business community and legislators on both sides of the aisle to reduce our highest-in-the-nation Corporate Business Tax (CBT), Gov. Murphy’s announcement today blindsides our state’s job creators and undermines whatever trust or goodwill that had developed,” said Regina Egea, president, Garden State Initiative (GSI). “We are already one of the most inhospitable places to do business in the country, and this will only make it worse.”

“After months of reassuring the state’s business community that he would let the 2.5% corporation business tax (CBT) surcharge expire, he has proposed reinstating it and returning New Jersey to its status as an extreme outlier for business taxes,” the New Jersey Society of Certified Public Accountants said in a statement. “The 13,000-plus members of the NJCPA are disappointed to see the CBT surcharge included in the budget proposal. NJCPA members, who serve tens of thousands of businesses and individuals, already hear objections about New Jersey’s high taxes from clients who are looking to leave New Jersey. In member surveys, 75% said they have recommended to some clients that they move out of state.”

“While there are many good initiatives and programs in the governor’s proposed budget, funding New Jersey Transit, through a new corporate transit tax, on the backs of our New Jersey businesses, at a time when costs of doing business continue to rise, will only increase the burden on our employers,” said Anthony Russo, president, Commerce & Industry Association of New Jersey. “CIANJ urges the governor, and ultimately the Legislature, to withdraw this proposal and instead allocate federal funds to such a purpose.”

Or, a big win

For the Many NJ, an advocacy group that has pushed for some sort of corporate surcharge restoration to fund NJ Transit applauded the CTF.

“This is a big win for the countless advocates, workers, and transit riders from across the state who have spent the last year calling on corporations to pay their fair share in taxes,” said Eric Benson, campaign director, For the Many NJ. “Corporations are making record-breaking profits, but as seen by their lobbying efforts, they think their bottom line isn’t big enough. We should know by now that trickle-down economics doesn’t work. While these ultra-profitable corporations were making more money than ever before, families were left struggling to keep up with rising costs.”

“The governor’s budget proposal rightly asks the world’s biggest corporations to pay for the infrastructure that helps generate their record-breaking profits,” said Nicole Rodriguez, president, New Jersey Policy Perspective (NJPP). “In this current era of rising inequality, if corporations are going to swallow a lion’s share of economic growth, they shouldn’t expect to pay less in taxes and have working families make up the difference. The new corporate transit fee is a testament to the tireless advocacy of workers, transit riders, advocates, and local elected officials in every corner of the state who fought for a fairer tax code.”

Addressing other issues

Top New Jersey groups also reacted to other parts of the FY2025 Budget Address with both applause and panning.

Trucking fees

“New Jersey Gov. Phil Murphy’s plan to impose a new fee on trucks delivering goods to all New Jersey warehouses will force residents to pay more for practically everything they buy,” said Dan Kennedy, CEO, NAIOP New Jersey. “The fee is a ‘tax on everything.’ The cost of this fee will be felt by all New Jerseyans, regardless of whether they shop online or in person. Practically everything bought in New Jersey is first stored in a warehouse in New Jersey. This fee will force prices for food, prescription medication, baby formula, diapers, clothes, books, school supplies, and more to climb even higher in our state.”

“In the next few months, the governor and Legislature will make critical decisions regarding transportation that will have a dramatic economic impact on NJ businesses, consumers, and families as it relates to the Transportation Trust Fund and New Jersey Transit,” said Eric DeGesero, lobbyist for the NJ Motor Truck Association and Fuel Merchants Association of NJ. “Everything we buy gets to the store or our front door via a truck, sometimes multiple trucks. And at some point, the things we buy wind up in a warehouse. The governor is proposing a $1 fee on trucks that use warehouses. This is one more fee that will be passed on to consumers.”

Affordable housing

“We’re eager to learn more about the budget proposals announced, especially the pilot program that would encourage the development of affordable accessory dwelling units which they could help address our severe affordable home shortage. We applaud this administration for its commitment to addressing our state’s housing crisis,” said Staci Berger, Housing and Community Development Network of New Jersey President and CEO, who noted that her organization was proud to be part of the coalition that called for the instatement of a corporate surcharge.

Retaining residents

“We appreciate the governor’s commitment to affordability and fiscal responsibility, as highlighted in the budget address,” said Dennis Hart, executive director of the Chemistry Council of New Jersey. “However, we are concerned by the introduction of another corporate business tax that further burdens the business community. This decision comes at a time when states like Pennsylvania are reducing their taxes to attract and retain businesses, adding another disincentive to staying and growing in New Jersey.”

“As companies look to reshore manufacturing operations in the US, New Jersey was a potential for future investment and expansion,” Hart added. “Now, we fear we will spend our time defending the businesses that are here now to ensure they can stay in New Jersey and not move their investments and products to another state.”

“We applaud Gov. Murphy for including a number of AARP New Jersey’s priorities in his Fiscal Year 2025 state budget proposal – like significant property tax relief, funding for affordable housing options, funding for RetireReady NJ and a full pension payment – which will help older adults remain in their homes and communities,” said AARP New Jersey State Director Chris Widelo.

A plan for the people

The immediate aftermath of Murphy’s address focuses on this new CTF. Especially, given the prevalence of the CBT surcharge as well as NJ Transit’s looming fiscal cliff.

Murphy stressed that this budget proposal is crafted for working- and middle-class New Jersey families. Additionally, he said, it will ensure the Garden State retains its reputation as the best place – anywhere – to raise a family.

“With this budget, we are maintaining fiscal responsibility while also remaining true to our values – from fully funding our public education system to proposing a new, dedicated funding stream to support NJ Transit,” said Murphy. “Together, we are building a New Jersey that is stronger and fairer than ever before.”

Look out for more analysis and budget particulars in the March 4 issue of NJBIZ, including early reaction from legislative leaders. Over the next few months, lawmakers will begin the review and hearing process.

Buckle up Trenton – and New Jersey.