Gov. Phil Murphy and the Legislature have agreed on a deal to include the Corporate Transit Fee in the state budget, a source familiar with the negotiations confirmed.
The deal does not mean the budget negotiations are complete. Far from it.
Negotiations continue — including on the CTF, a 2.5% tax on companies with at least $10 million in profits. (The Governor’s Office has estimated it will impact approximately 600 companies.)
Politico New Jersey was the first to report the story.
The early word is that the tax will not be permanent, as many in the business community have feared, but instead will last only five years.
The tax, however, is expected to be retroactive to Jan. 1 of this year, effectively countering any promise to allow the Corporate Business Tax surcharge to sunset.
Restoring the state sales tax to 7%, another way the state could close its massive budget deficit with New Jersey Transit, no longer is being considered, sources said.
The state budget, by law, needs to be completed by June 30, but leaders have gone past the deadline in the past — something many fear could happen this year.
Michele Siekerka, the CEO of the New Jersey Business & Industry Association and a leader in the fight against the CTF, said her organization is in a “wait-and-see” mode.
“Obviously, a temporary tax is better than a permanent one,” she said in a statement.
“But, including that retroactivity of the tax going back to Jan. 1, after the governor’s yearlong promise to sunset the temporary CBT, is a major and impactful hit that borders on punitive — especially when you consider these impacted businesses will have to restate their financials for the first half of the year for taxes they’ve already paid.
Siekerka wasn’t shy about her distaste of the plan.
“If this is what it’s going to be, with no other meaningful concessions or structural spending reforms to make our budget more affordable, then it will be taken as a blatant disregard for the consequences and impacts that we have been sharing for months,” she said. “These are coming directly from our impacted job creators. It will also confirm that regional competitiveness means nothing to our policymakers.
“If this is the result, it will be a sad and defining moment for our business community, with broken promises and no regard for their input. It is a line in the sand that will have been crossed.”
Tom Bracken, the CEO of the New Jersey Chamber of Commerce, said his group will wait for more information before commenting.
Bracken, however, did offer one thought: “Maybe this means the budget will be finished by June 30.”
