State budget nightmare scenario might come true

- Russ DeSantis Photography and Video, LLC/New Jersey Chamber of Commerce

The nightmare might be coming true.

Back in March, when we first heard about the proposed budget, the Corporate Transit Fee and the “buck-a-truck” tax, I called it a “nightmare” budget proposal that’s “a major step backwards” for the state.

Well, with less than one week before the Fiscal Year 2025 state budget has to be signed by Gov. Phil Murphy, some disappointing news is emerging. Word on West State Street is that Murphy and our legislative leaders have agreed on a the 2.5% CTF, retroactive to Jan. 1, and lasting for five years, which means the original proposal by the governor is in full force for five years.

In these final days, we will continue to make our case that the CTF to “fund” New Jersey Transit — and fill the structural deficit in the budget — is bad for those 600 companies impacted, it is bad for our overall long-term economy and bad for our business and attraction efforts. It gives New Jersey the highest business tax rate in the nation — and effectively wipes out much of the progress and momentum our state has enjoyed. The budget also does nothing to solve New Jersey’s long-term structural budget deficits. We continue to spend more than we make.

The many business community members I have spoken with over the weekend are deeply disappointed by the possibility of the CTF actually being enacted. Many of them, and the New Jersey Chamber of Commerce staff, have had constructive conversations with administration officials and legislative leaders, which has been an improvement from the past. They seemed to understand our serious concerns about how detrimental this would be to New Jersey. The talks were positive — and we had discussions on future economic initiatives that hopefully will come about. Still, if this is headed in the direction it seems, those talks had limited impact on the CTF.

If passed, as we are hearing, the business community, at a time of continued uncertainty, will have received little support in this budget. In fact, it’s one of the worst state budgets in recent memory for the employer community. Yes, the new CTF under the agreement would expire in five years (a minor concession for business), but a lot can happen in that time. The next five years will be critical to the future direction of our economy. We can either begin to achieve greater prosperity, we can settle for mediocrity or we can be faced with the potential for economic armageddon.

This proposed nearsighted approach to funding New Jersey Transit and the budget deficit by taxing our largest, most profitable companies has the potential to end in economic disaster for our state. It introduces huge reputational risk, significantly sets back our economic momentum, makes us more expensive and less competitive and, if implemented, it would be a huge disappointment to C-suite executives working in our largest companies who are tasked with making decisions regarding their companies’ future strategies.

The State Chamber has been advocating for what every bond rating agency report states. New Jersey should be seeking long-term, stable, organic sources of revenue to grow the New Jersey economy. If not created, our economy runs the risk of being downgraded. The most viable path to achieving economic prosperity is to develop and nurture a healthy, growing state business climate. That’s how New Jersey will flourish and pay for the state programs that help make it a great place to work and to live. This budget does the opposite.

Our state cannot continually ignore our long-term economic needs in favor of quick fixes, like the CTF, that address “today” issues. Many of our friends in the state Legislature will be in office over the next five years, and their votes on this budget will chart their own destiny. Time is running out for New Jersey. This week will say a lot about how serious New Jersey is about economic growth being a priority — or whether it is business as usual in Trenton.

Tom Bracken is CEO and president of the New Jersey Chamber of Commerce.