On behalf of our 20,000 member companies, the New Jersey Business and Industry Association (NJBIA) thanks Chairman Sarlo and the members of the Senate Budget & Appropriations Committee for allowing us to share the Association’s views on the FY 2018 State Budget as proposed by Governor Christie.
NJBIA is pleased to see that the FY 2018 budget proposal includes the bi-partisan tax reforms passed by the Legislature, and signed by the Governor in October. These reforms include a full elimination of the estate tax, an increase in the income tax exclusion for pension and retirement income, a reduction in the state sales tax, an increase in the earned income tax credit and an income tax deduction for veterans.
These reforms help to address New Jersey’s tax climate, while providing substantial investment in the state’s infrastructure by increasing the state’s gas tax. Specifically, the elimination of the estate tax and increase in the income tax exclusion for pension retirement income provide relief on two taxes that drive out family-owned businesses and retirees.
The proposal also includes the continuation of a number of positive tax cuts and reforms for businesses of all sizes, which reached the final year of their phase-in during FY 2016. NJBIA recognizes the work of both the Legislature and Administration to continue these bi-partisan reforms. The reforms include cutting the filing fee for S-Corporations by 25 percent, eliminating the energy tax known as TEFA, allowing smaller companies to offset certain losses with gains under the gross income tax, providing increased research and development tax credits and moving to a single sales factor.
These important changes to the tax code help small and large businesses alike. Perhaps most importantly, they send positive economic signals to the business community that New Jersey is a good place to do business. Ultimately, these types of tax changes, combined with the New Jersey Economic Opportunity Act, help to improve the state’s business climate and encourage companies to stay or relocate in New Jersey.
NJBIA is encouraged to see that there are no new taxes included in the proposed FY 2018 State Budget. Businesses in New Jersey have encountered difficult economic times over the past decade, but are on the road to recovery. The recession, Superstorm Sandy, unpredictable weather patterns and harsh winters have significantly impacted business. However, as the economy continues to improve, it is a positive sign to the business community that there are no new taxes levied against them.
And the economy is improving. New Jersey employers added more than 60,000 private sector jobs in 2016, while the state’s unemployment rate fell to 4.6 percent as of January 2017. These indicators show that the New Jersey economy continues to grow as employers are investing in their businesses and creating jobs. Additionally, these indicators reflect the feelings of cautious optimism expressed by our members in the annual NJBIA Business Outlook Survey.
Unfortunately, budget spending and revenue shortfalls have resulted in clean energy diversions under administrations of both parties and this year is no different with over $150 million being reallocated to other funds. For over a decade NJBIA has advocated that the BPU reduce the Societal Benefits Charge (SBC), which helps fund the Clean Energy program, to give ratepayers a reduction in cost. New Jersey business ratepayers pay government imposed taxes and surcharges that amount to close to 25 percent of their electric bill. We would encourage any clean energy surplus be returned to ratepayers instead of being used to balance the general fund.
As the Legislature works on the budget in the coming months, we would encourage you to maintain the bi-partisan tax cuts and reforms, and economic development incentive programs previously mentioned.
As the budget process continues through the spring and into the summer, we look forward to working with you to ensure that the final budget reflects positively on the business community in the state. As our work reflects on a daily basis, NJBIA recognizes that having a thriving economic environment is vital to the success of our members and businesses across the state.
Thank you and we appreciate your consideration of our views. Should you have any questions or need further information, please feel free to contact me at 609-858-9512.