While some attendees walked away tight-lipped from the governor’s first budget address, others were optimistic that Gov. Phil Murphy has taken a step in the right direction for the state.
The tax-heavy budget plan for fiscal year 2019 is a $2.7 billion increase from the previous year and includes some initiatives that could shock the economic system in the state.
“We need to ensure that the pathway (to a 21st century economy) is slow and steady and done in bite-size pieces, so New Jersey businesses and New Jersey residents can absorb that,” said Michele Siekerka, CEO and president of the New Jersey Business & Industry Association. “We cannot shock the economy and the businesses and the taxpayers in one fell swoop.”
Republican legislators and other officials representing the interests of the business community are also concerned by the number of taxes Murphy proposed to help fulfill some of his more controversial campaign promises, including legalized marijuana and the expansion of medical marijuana, as well as raising the minimum wage to $15 — including a jump to $11 per hour in the upcoming fiscal year.
“Bumping the minimum wage up by leaps and bounds could force small businesses, especially those that hire lower-skilled workers, to cut hours, cut jobs and possibly close their doors,” said Laurie Ehlbeck, New Jersey state director of the National Federation of Independent Business.
“The most recent research shows there is a tipping point, especially for companies on a slim profit margin who simply can’t afford the increased labor costs, and can’t competitively raise prices. The irony is, it actually hurts the workers it’s meant to help. The added cost of paid sick leave will exacerbate the danger of job losses.”
Siekerka echoed the comments, saying that the burden from a combination of legislation and the budget taxes will just keep piling up against businesses.
That includes the millionaires tax.
On its own, there may not be significant opposition to the tax, but in tandem with the other taxes, it becomes a burden — and may target some of the wrong individuals.
“We do the math on all these things, and we are unaffordable tomorrow,” Siekerka said. “A millionaires tax directly impacts small businesses that flow their income taxes through personal returns. Many of these business owners are not millionaires, but would be considered so under his proposal. New Jersey now has a net loss of nearly $25 billion in adjusted gross income over the last 12 years as businesses and residents gravitate to states that are more tax-friendly, such as Pennsylvania and New York, our top two outmigration states. To date, there has been no recognition by our policymakers of the cumulative impacts of these proposed costs to businesses, nor has there been any acknowledgment that these added costs will ultimately be handed down to the customers, ratepayers and residents of New Jersey.”
Also in the budget was a sales tax increase to 7 percent, which New Jersey Chamber of Commerce CEO and President Tom Bracken said will not have too broad of a negative impact.
The one announcement that no one opposed was a 172 percent increase in subsidies to New Jersey Transit — a sum of $242 million. That is near 2012 levels, before former Gov. Chris Christie gutted the agency with a drop to under $70 million in subsidies the following year.
Republicans outright opposed the budget altogether, and Democrats said the budget proposal was ambitious and appealing, but will require thorough review and consideration.
Bracken echoed the sentiments, saying cooperation among the branches of government was going to be necessary to achieve Murphy’s goals.
“If cooperation isn’t there, it’s going to be a long process.”