NJ businesses criticize newly signed state budget

After the new state budget was passed and signed during a marathon week in Trenton, criticism and frustration from the business community came swiftly, with many leaders calling it a missed opportunity. “The business community feels ignored,” Michele Siekerka, president of the New Jersey Business & Industry, said in response to the recently passed record $50.6 billion 2023 spending plan.

“Cash and working capital are what drive businesses and that’s the fuel for business,” Tom Bracken, New Jersey Chamber of Commerce president and CEO told NJBIZ. “And there’s not much available and there’s nothing that we can see that’s on the horizon. That’s why we keep asking: What is the plan for the economic recovery?”

The budget was negotiated between Gov. Phil Murphy and legislative leaders over the last few weeks and months before the 277-page document was hastily dropped in the statehouse’s respective budget committees, with virtually no time for review. The bill quickly cleared the panels and won final legislative approval two days before Murphy signed it in Cranford just before the July 1 deadline.

The headline numbers in the budget, which are centered on record revenue surpluses and excess American Rescue Fund dollars, include the $2 billion ANCHOR Property Tax Program, a record $6.8 billion surplus to guard against economic downturns, a $6.8 billion pension payment, $5.15 billion in debt defeasance and prevention, $50 million in Main Street Recovery Funds, and more.

“This budget both invests in New Jersey’s future while preparing for an uncertain global economy,” Murphy said. “We have wisely avoided using what may be temporary windfalls for long-term programs. At the same time, we are making significant investments in new capital projects that will make New Jersey a better state to live in while creating countless good-paying jobs. This budget continues to make New Jersey a stronger and more affordable state where opportunity can thrive.”

“The state’s $50.6 billion budget becomes law today and, as the New Jersey Chamber of Commerce pointed out yesterday, a meager $50 million (one tenth of 1%) is allocated [to] support the business community in response to our repeated pleas for the state to help small business,” Bracken said in a statement after the bill was signed.

“Our main takeaway is that business was left on the side of the road,” Siekerka told NJBIZ. “There’s no investment in the business community.”

Murphy has cited pandemic relief to highlight his administration’s support for small business. “We are incredibly proud to have worked with our legislative partners throughout the pandemic to prioritize small business recovery, including putting nearly $800 million into programs to assist small businesses,” Murphy spokesperson Alyana Alfaro told NJBIZ in a statement.

But Bracken and Siekerka said that was a different time, and New Jersey businesses need help now, especially as they combat rising costs and labor issues in the continued effort to bounce back from the pandemic.

“We’ve firmly appreciated everything that they’ve done with the $850 million in the past grants. But that doesn’t help things today,” said Bracken. “What we need is help today, and that’s what more grants in the budget would have done. That’s what eliminating the UI [Unemployment Insurance] tax increase would have done. It would have given businesses money right now.”

“Let’s remember that relief was in the peak of COVID,” said Siekerka. “It was a lifeline for businesses to hang on in a moment in time.”

While Siekerka said business leaders are thankful for that lifeline, she points out that New Jersey also had among the most stringent pandemic protocols, so the businesses truly need the help now.

Why not UI?

The governor’s office, though, believes the administration provided substantial assistance to the business community.

“The focus on economic growth and revitalization of our main streets is continued with historic investments in this budget,” said Alfaro. “This budget invests millions more into our Black and Latino Seed Fund, invests millions to support our manufacturers, puts over $50 million into the Main Street Recovery Program, and includes additional funding for the Neighborhood Preservation Program and Neighborhood Revitalization Tax Credit program.”

And Siekerka and Bracken acknowledge there is much good in this budget, including the programs Murphy touted, workforce development investments, infrastructure and higher education funding, child care dollars and more. But they believe there was a missed opportunity to do more for the business community at a time of unprecedented and historic surpluses. And at the center of that sentiment was the last-minute decision to scrap legislation that would have replenished the state’s Unemployment Insurance (UI) Trust Fund.

The issue has been closely watched since the drawdown of the fund set up a tax increase for businesses to restore the fund at the start of the fiscal year. The legislation had support in each house up until the last minute when it was scrapped. The decision drew the ire of the business community.

“And then at the 11th hour, it was yanked from the budget with no explanation,” said Bracken. “And to this day, I have not received a valid explanation why.”

“So, our businesses had to send everybody home and they went on unemployment. And as a result of the overdemands on unemployment, the bank broke,” said Siekerka. “We had to take a loan from the federal government. And the result is, the loan has to be repaid as well as the fund needs to be replenished.”

Siekerka said that businesses are stuck with the tab.

“And that’s highly inappropriate given what the business community has on their hands right now, especially when the state is flush with cash,” said Siekerka.

Murphy has been vague on the subject, saying he wants to look further to see how the state would get the most bang for its buck. Meanwhile, one of the bill’s sponsors, Sen. Vin Gopal, D-11, has indicated that he will push to bring it back to the table this fall, with plans to work on it further with the administration.

“But September is still two months away,” said Bracken. “And when you have many companies bleeding and fighting for survival, two months is an eternity.”

“Why does the business community have to wait for later when the business community could use the shot in the arm right now?” Siekerka asked. “They shouldn’t be left on the side of the road when the state is flush with cash, and everybody is getting their fair share by way of direct relief. And the business community isn’t getting that. It’s just not fair. They shouldn’t have to wait till the fall for some separate discussion.”

“And my point is, the biggest bang for your buck is the economic recovery, because that’s going to help the state long-term and help fund all the new programs that are in place that get us back to some level of prominence we deserve,” said Bracken. “So, to me, the biggest bang for the buck was absolutely replenishing that, taking that off the back of the business community. But it didn’t happen.”

They stressed that while lawmakers tout no new taxes in this budget, the business community absolutely views the lack of replenishment as a de facto tax hike.

“You can say no tax hikes but when you get whacked with it, like July 1, $300 million, I mean come on,” said Bracken. “If that’s not a tax hike, you can call it what you want. But there was an opportunity to eliminate that. And it was not done.”

As the budget season closed, some of the pandemic-era rifts between the administration and business leaders – many of whom felt New Jersey’s restrictions were too extreme – have been reopened. Businesses feel ignored at a time when they are getting hit from all sides with surplus cash sloshing around the state Treasury.

“Nothing has changed for them. No direct relief and no reform,” said Siekerka. “While residents and renters are going to get some cash, again next year, not this year when they need it most, the New Jersey business community isn’t going to get anything.”

“We’ve made our points very clear. We were making our points consistently for many, many months and never really got a lot of feedback from the administration,” said Bracken. “So, when you’re asking for help and you’re asking for comment. You’re asking for the ability to sit and talk about those things, and you don’t have that opportunity. I guess you can feel a little ignored.”

“Gov. Murphy looks forward to working with the Legislature in the coming months to further support our business community,” said Alfaro.