Michael Egenton, the longtime head of government affairs at the New Jersey Chamber of Commerce, said the brewing bank crisis — which has developed after Gov. Phil Murphy gave his budget address — should impact how the state moves forward.
Speaking at Ramapo College of New Jersey on Tuesday morning at a public hearing on the Fiscal Year 2024 budget, Egenton told Senate Budget and Appropriations Chair Paul Sarlo (D-Wood-Ridge) that the state needs to prepare for a recession — and that the $10 billion budget surplus should be reserved for business issues.
“Given the new economic uncertainty brought on by the banking crisis, the state chamber believes the $10 billion surplus should only be directed toward programs that directly shore up our state’s economy,” he said. “If the banking crisis worsens and financial institutions pull back on lending, which many leading economists predict could happen, our New Jersey companies, including many small businesses, will need assistance.”
Egenton said some economists have put the chance of recession this year at 65% — a significant increase from a few weeks before.
Egenton reiterated a longstanding desire for the state to replenish the Unemployment Insurance fund, something many states have done — a desire, he said, that only increases in the face of an economic downturn, which obviously will hurt the business community.
“The $10 billion surplus should be used for items such as replenishing the state’s Unemployment Insurance fund, which many states have done, instead of through business payroll tax increases,” he said. “The current payroll tax increase only adds to the business community’s economic stress and uncertainty.”
Egenton said the surplus could also be used to create a grant fund that would provide working capital to entrepreneurs and business owners in every industry and region, an idea the chamber has been proposing for quite some time.
“The state chamber is supportive of measures proposed by Gov. Murphy to assist business owners in urban areas hit hard by the pandemic, as well as programs that revitalize New Jersey’s main streets and downtowns,” Egenton said. “We back initiatives that support businesses in our Shore towns since they contribute so much to the state’s overall economy.”
Among other comments, Egenton said:
- “The state chamber particularly commends the governor for reiterating his promise to allow the Corporation Business Tax surcharge to sunset at the end of 2023. Now, it is up to the members of the state Legislature to do the right thing and pass this in June.”
- “We commend that NJ Transit fares will be held stable for a sixth straight year; however, the state needs to devise a stable source of funding for NJ Transit’s future operating budget.”
- “We applaud the governor’s announcement to provide parents with increased child care tax credits, which will enable many parents to get back to work and help ease the workforce shortage.”
- “We need to resolve how New Jersey treats Global Intangible Low-Taxed Income. There is legislation currently introduced that would make New Jersey more competitive. We welcome an offline conversation to discuss this in more detail with you and our member tax experts.”
Egenton ended his statements by reiterating his plea on the surplus.
“Once again, the New Jersey Chamber of Commerce calls for our leaders to consider using the $10 billion surplus judiciously — and only for programs that ensure our economy properly weathers the potentially worsening economic storm brought on by the banking crisis,” he said. “And, that our companies, especially small ones, are the beneficiaries of the surplus through programs and initiatives that come to their rescue.
“If we are to create a ‘next’ New Jersey, as Gov. Murphy noted in his budget address, simply doing more of the same as in previous budgets will make the change difficult. More aggressive actions are needed to improve our image and the way our citizens think about the state. Additional support for the business community will do just that.”
