You know the old saying: In for a dime, in for a (billion) dollars.
The phrase may be the most accurate way to describe the Corporate Transit “Fee” that is part of the record $56.7 billion Fiscal 2025 state budget that Gov. Phil Murphy signed Friday.
Of course, everyone knows the “fee” is actually a 2.5% tax on the most profitable companies in the state to make up the billion-dollar or so shortfall that New Jersey Transit is facing in coming years.
The fee supposedly will “sunset” in five years — but no one actually believes that. Especially after the governor and Legislature backpedaled on the whole “a deal is a deal” chant during the sunsetting of the Corporate Business Tax surcharge, a surcharge the state extended past its original sunset date.
All of this is fine. Seriously. State officials have the right to vote on and sign any budget they want, just as voters have a right to reelect them or kick them out of office.
But, couldn’t the whole process come with a little more transparency?
This goes beyond the idea that the 373-page budget was voted on hours after it was finished (and hours before it was available to the public). It speaks more to the Jersey gusto we all claim to have.
How about we just say this:
- We are a high-tax state that regularly turns to the business community to fill revenue gaps;
- We feel the benefits of having a company in New Jersey offset the tax structure;
- We won’t raise the sales tax (even if no one would actually notice — see the 25-cent gas tax hike) because it makes more political sense to tax big business.
Doesn’t that sound more in-your-face Jersey than this outdated (and insulting) phrase: We want to make companies pay their “fair share.”
There’s an old line in an old film with Robin Williams, where he’s talking with someone who is struggling to quit smoking. He says: “There are smokers and there are nonsmokers; decide which one you are and embrace it.”
It’s straightforward and simple. Just like this:
There are high-tax states for businesses and low-tax states for business. We’ve decided which one we are, so let’s embrace it.
Other thoughts on the budget, most of which pertain to the business community:
All-in on AI
The state is putting money behind the governor’s AI Moonshot initiative through an AI Hub in Princeton, including:
- $4 million to establish an innovation challenge to reward innovators for solving public-facing problems with state data;
- $400,000 to fund the artificial intelligence-focused Global Entrepreneurs-in-Residence pilot program to help international students at New Jersey universities launch cutting-edge businesses;
- $1.5 million to fund AI education in K-12 classrooms and develop new career and technical education programs targeted to AI;
- $2 million to help budding entrepreneurs build out startups related to general artificial intelligence and connect with the AI innovation hub.
This is smart funding that could lead to economic growth and jobs.
All-in on the World Cup
The budget includes $30 million for the Sports and Exposition Authority to be used for “international events.” You know, like the World Cup, which is coming in 2026.
This won’t cover all of the logistics costs that come from hosting a global event, but, as the currently-being-played COPA America tournament has shown, top international soccer brings international visitors.
This is money well spent.
Not so all-in on EVs
There’s an added bonus to the unrealistic timeline push to have everyone buying electric vehicles in the coming years. The state is phasing in a sales tax on EVs: 3.3% likely this year and 6.625% by July 2025. It will be interesting to see how much this impacts sales, which already are far lower than what is needed.
Speaking of needs, the state also will allocate $40 million to provide the match for a federal electric grid modernization program to help upgrade the energy infrastructure to meet our climate goals. And, while it’s a start, experts say $40 million is not even remotely close to what is needed.
All-in (maybe) on education funding
The budget restores the $20 million cut from county colleges (a nonsensical idea in the governor’s original budget). It also includes an additional $124 million for pre-K education, with $20 million for expansion into new districts to create over 1,000 new seats.
The biggest news is that the budget completes the seven-year phase-in of the school aid formula by providing the single-largest investment into the state’s public education system in history, with an increase from last year of more than $900 million in direct K-12 aid for public schools, for a total of almost $12 billion.
The budget also allocates over $15 million to teacher training programs and an additional $30 million to provide free school meals.
These are all positives in the effort to help support the next-generation workforce.
So, what’s not to like? Ask the school districts who don’t feel the funding system accurately reflects needs.
All-in on tax relief?
Lots of good news here, including:
- $3.6 billion in direct property tax relief for FY25 alone;
- $200 million to pre-fund the StayNJ property tax relief program that is expected to launch in Fiscal Year 2026 (we’ll debate where the money will come from next summer);
- The continuation of recent expansions of the earned income tax credit, the child and dependent care tax credit and the child tax credit, which enables families with young children to receive up to $1,000 per child;
- $82 million to maintain expanded eligibility for the popular Pharmaceutical Assistance for the Aged and Disabled and Senior Gold programs to further cut costs of prescription drugs.
This is all good. But, it begs a question: If we continually provide all this “tax relief” why is “taxes/high cost of living here” always at the top of list of complaints of residents?
And, finally, all-in on paying down debt
The state is making a $7.1 billion payment into the state pension fund system, the fourth consecutive year it has made a full payment. And, while it’s not even close to funding a system that was gutted by both parties for decades, it’s a start. Murphy has made this a key initiative — and it’s one that few would question as a positive move. Good move there.
The budget also has a surplus of $6.1 billion and utilizes the debt defeasance and prevention fund to provide $120 million to finish the state police training center and $70 million to support state parks, including Liberty State Park and the Garden State Greenway.
These are good things, too.
And, while Democrats celebrated all the good things they found in the budget, they do so while knowing that the state has more fiscal challenges than just “fixing” NJ Transit looming.
No worries, as the kids say. We got this. We’ll just make our leading job creators pay their “fair share.”
And we’ll do so while hoping it won’t be an example of another old phrase: “Going to the well once too often.”
