NJBIA, Hudson County chamber join suit to strike down payroll tax

The Hudson County Chamber of Commerce and New Jersey Business and Industry Association announced Friday they would join several regional and statewide business advocacy groups, as well as real estate-developer Mack-Cali and some of its subsidiaries, in suing Jersey City and New Jersey to strike down a recent law allowing some cities to enact a one percent payroll tax.The Hudson County Chamber of Commerce and New Jersey Business and Industry Association announced Friday they would join several regional and statewide business advocacy groups, as well as real estate-developer Mack-Cali and some of its subsidiaries, in suing Jersey City and New Jersey to strike down a recent law allowing some cities to enact a one percent payroll tax.  

The 71 page, 15-count suit, filed in Hudson County Superior Court on Dec. 11, 2018, calls the tax, which the City Council adopted in November, a vague, slapdash and unconstitutional “house of cards.”

“Hundreds of Jersey City businesses are members of NJBIA and will be burdened with yet another tax, so we are going to do everything we can to stop it,” NJBIA President and CEO Michele Siekerka said in a statement.

“We fought against the state legislation that allows Jersey City to tax its employers and the local ordinance that imposed this tax because of the adverse impact it will have on our job-creators, who have already made significant investments in the city,” Siekerka added.

The employer payroll tax is outlined in Assembly Bill 4163, which Gov. Phil Murphy signed in July. It allows cities with a population above 200,000 residents to impose the tax and use the revenues for their school districts.

A4163 is meant to offset funding that school districts would lose as a result of school funding formula changes Senate President Stephen Sweeney, D-3rd District, pushed through in June.

Jersey City is expected to lose $150 million in funding over a five year period as a result of the change to the funding formula.

“It’s unfortunate that some of these organization [sic], consisting of corporations that have made millions of dollars in Jersey City would file this lawsuit,” Ashley Manz, a spokesperson for the city, said in a statement to NJBIZ.

“Jersey City has acted properly with the tools provided by the state of New Jersey to protect our schools and we intend to keep fighting on behalf of the schools,” Manz added.

A spokesperson for the state attorney general’s office declined to comment.

In the suit, Mack-Cali notes that it is part of a payment in lieu of taxes (or PILOT) agreement, whereby a developer submit payments to a town in lieu of property taxes even though the money is not earmarked towards the local school district.

But the city “refuses” to share any of the payments with the school district, reads the suit.

“If Jersey City used even a fraction of those payments for its schools, it would more than make up the cuts in state,” the suit continues.