New Jersey Chamber of Commerce President and CEO Tom Bracken issued a stark warning last night to a panel of state legislators who were on the verge of voting on a $56.6 billion state budget. Bracken said the proposed budget, as it stands, is a stopgap measure that will harm New Jersey’s economy and damage its business reputation. The spending plan includes what Bracken labeled an “outrageous and punitive” 2.5% tax on the state’s largest employers – dubbed a Corporate Transit Fee.
“I have been very clear about our opposition to this budget – and the Corporate Transit Fee – and the extreme harm each will be doing to the state,” Bracken said.
A Spending Problem
Bracken also took aim at the state's structural deficit, in his testimony last night to the Assembly Budget Committee and Senate Budget and Appropriations Committee.
“Our state spends more than it generates in revenue – and it is getting worse,” Bracken said. “In business, if that condition persists for an extended period, it’s called bankruptcy.”
Lawmakers last night advanced a record $56.6 billion state budget (which includes the Corporate Transfer Fee) that is $727.9 million higher than Gov. Phil Murphy’s original $55.9 billion budget proposal back in March. It’s also $2.3 billion more than the fiscal year 2024 budget.
Bracken questioned the state's plan to use the estimated $1 billion annually raised by the Corporate Transit Fee to help close New Jersey’s budget gap in 2025, and, in subsequent years, use it to help cover NJ Transit’s budget gap.
This strategy is inherently flawed, he said.
“Where will we go in the future to balance the state’s growing budgets?” Bracken asked. “Let’s not forget that a $1 billion hole will be created in the general fund when the (Corporate Transit Fee revenue) is diverted to NJ Transit.”
N.J’s Business Reputation is Damaged
Bracken warned that the Corporation Transit Fee, the 2.5% tax on the state’s largest employers, will undoubtedly harm New Jersey’s business climate and hinder efforts to attract large companies to relocate and expand in the Garden State.
“What we are doing in the State of New Jersey is taking our largest customers – our largest, most profitable companies; our most philanthropic companies; some of our greatest corporate citizens – and we are penalizing them,” Bracken said.
“It’s very bad for our state – reputationally,” he added. “It’s going to hurt any kind of economic momentum we’ve been trying to build. And if this is the way we’re going to treat our biggest and best customers, in this case, these companies – shame on us.”
What is the Solution?
Bracken reiterated what credit rating agencies have reported to New Jersey: Organic revenue can only come from a growing, thriving state economy driven by a well-supported business community.
Following that advice requires the Murphy administration and legislative leaders to “reprioritize their focus to our economy and our business community,” Bracken said.
“New Jersey was beginning to make progress and gain momentum in both of those areas until this budget slammed the door on both,” Bracken added. “It is a devastating reversal.”
A Wake-Up Call
Bracken said the goal of his testimony was to “maybe, just maybe, spark a wake-up call to address the economic Armageddon that is quickly approaching.
“The business community has run out of patience, the state is running out of money, and our economy has no well-defined path forward,” Bracken said. “It is long past the time to address all those troubling issues.”