A Move in the Right Direction
For business leaders, the recently signed state budget provides some much-needed relief. But experts say more can be done to spur further economic growth.
Despite a frantic race to the finish line, Gov. Phil Murphy recently signed the Fiscal Year 2024 Appropriations Act into law ahead of the July 1 deadline. The passing of the budget was touted for providing record levels of direct property tax relief, making a third consecutive full pension payment and increasing school funding. But, some of the biggest winners are perhaps the many folks who conduct business in the Garden State.
While New Jersey has a somewhat notorious reputation for being hard on business owners, the recently signed budget offers several key areas designed to expand opportunities and create long-term economic growth.
Some of the highlights include:
• Allocating $80 million in federal American Rescue Plan funds to create an Urban
Investment Fund and Atlantic City Economic Foundations Fund to help spur economic activity in urban areas;
• Allocating $50 million to continue to support the Main Street Recovery Program, which provides financial assistance and more to the state’s small businesses; and
• An increase of $5 million for the Workforce Development Partnership Fund.
South Jersey Biz had the opportunity to speak with Michele Siekerka, president and CEO of the New Jersey Business & Industry Association, as well as Thomas Bracken, president and CEO of the New Jersey Chamber of Commerce, to get their thoughts on what this new budget means for the future of conducting business in New Jersey. While both were pleased with what was outlined in the budget, they both felt more can be accomplished, and so they remain steadfast that they will continue to fight for what’s in the best interest of the business community.
What were your first impressions of the new budget, and what gives you hope for what it could mean for the state of doing business in New Jersey?
MICHELLE SIEKERKA: Overall, it was probably the most pro-business budget we’ve seen from Gov. Murphy, both in terms of allowing for the sunset of the CBT (corporate business tax) surtax at the end of this year and legislation during the budget period, and now signed into law, that will make New Jersey more competitive with other states on how we take global intangible low-taxed income.
THOMAS BRACKEN: I’ve been on the record saying this is probably the most pro-business budget that the Murphy administration has passed, which it is.
It’s not everything we wanted by any stretch of the imagination, but I think we are going in the right direction. Obviously, a big event was the sunset of the CBT surcharge, which does have an impact in New Jersey business circles. Maybe not with some of the smaller- or medium-sized businesses, but with some of the larger companies. The psychological impact and the reputational impact of the state was positively impacted by that. I think that’s something we have to work on and that was a good step in the right direction.
What should business owners, both small and big, take away from this budget? Should they be hopeful or cautiously optimistic?
TB: I think they should be optimistic about the fact that there was more pro-business legislation passed this year during any time since the Murphy administration took over six years ago. The fact that the governor kept his word on the CBT is a pro-business move. The fact that the new CNBC rankings moved us up dramatically in business attractiveness around the country. Comparing state to state, the fact that we moved from 43 to 19 was a plus. We have some very positive things going on, but we have some categories we need to work on. Probably the most prominent of which is improving our business-friendly atmosphere.
MS: There were definitively positives for our larger employers. The sunset of the 2.5% CBT surcharge lowers our overall CBT rate from 11.5% to 9%. Put ranking-wise, we’re going from the highest rate in the nation to the fourth-highest in the nation.
We believe New Jersey can move even more toward the middle of the pack going forward, especially with the considerable data showing how the lowering of the CBT benefits both the overall economy and the salaries of workers.
Do you think the sunset of the corporate business tax can be a real game-changer for New Jersey? What kind of trickle-down effect can that have?
TB: It only affects about 2,500 large companies. For those companies, it will definitely have a large impact in keeping them here and allowing them to grow. We are still going to end up with a 9% CBT even after that sunset, which places us fourth-highest in the country. That is something we have to deal with.
But for medium- and small-sized businesses, the sunset may have limited direct impact, but it does have indirect impact. If large companies continue to stay here and grow and they add more employees, those employees will frequent the Main Streets, spend money at retail facilities; it does have that indirect impact.
How do you respond to the critics who say this was a bad move and rewarding the rich by making them richer?
MS: It was disingenuous at best. The progressive groups somehow framed going from the highest CBT rate in the nation to the fourth-highest rate in the nation as “unfair” and some kind of corporate giveaway, without ever acknowledging that the surtax was, by law, temporary, and without acknowledging just how much of an outlier New Jersey is in the nation for CBT and property taxes.
They also ignored the considerable amount of positive economic data that comes from states that have lowered their CBT rates.
Fortunately, despite the pushback, Gov. Murphy stuck to his guns and realized it was the right thing to do. As did the legislature. I think our policymakers as a whole understand it’s not a good look nationally to have the highest corporate business taxes in the nation by a wide margin.
Was there anything that you hoped would have been included in this budget that was not?
MS: Again, we feel like small businesses deserve some tax relief.
As of July 1, New Jersey businesses are paying another $700 million in unemployment insurance [UI] taxes, when there was no federal COVID relief used to replenish the state’s UI fund. We’ve said it many times over the years, this is a tax on jobs that has equated to more than additional $100 per employee for three years in a row now.
Most states used federal COVID relief dollars to replenish or offset their state UI trust funds. We will forever maintain that our smaller businesses, which are still struggling, deserve better than to be handed more than a $1 billion UI tax through no fault of their own.
Additionally, there has now been property tax relief for homeowners, renters and seniors, but none for businesses, even though they pay nearly half of the state’s property taxes. Some creative thinking on how smaller businesses can get some property relief would be greatly appreciated looking ahead.
TB: We didn’t get a bunch of things that we wanted. We did not get any relief from the unemployment trust replenishment. We did not get a significant amount of grant funding to help the business community with a working capital shortage that exists within those businesses.
Also in the budget, we wanted to see more controls on the regulatory environment. There was an initial proposal a few years ago of the GEARR Commission, which is the rebirth of Chris Christie’s Red Tape Commission, that would’ve helped eliminate duplicative regulations around the state. That was vetoed by the governor; we had hoped it would be reintroduced and it wasn’t. That is something we will continue to bang the drum about.
Overall, I would say it’s a better-than-normal business budget, not anywhere near what we would’ve liked to see. But if we can continue to make progress every year and improve upon the pro-business legislation that has recently been proposed and passed, that would be a plus. But this is a work in progress and the business community does need more help.
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Published (and copyrighted) in South Jersey Biz, Volume 13, Issue 8 (August 2023).
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To read the digital edition of South Jersey Biz, click here.
Published (and copyrighted) in South Jersey Biz, Volume 13, Issue 8 (August 2023).
For more info on South Jersey Biz, click here.
To subscribe to South Jersey Biz, click here.
To advertise in South Jersey Biz, click here.
