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I want to briefly update you all on some of the fiscal bills Gov. Phil Murphy signed and vetoed at the end of the 2020-2021 legislative session. The Governor signed the Business Alternative Income Tax (BAIT) for pass-through entities cleanup bill and film tax credit expansion, both of which NJBIA supported, but we were disappointed that Governor Murphy vetoed bills to provide some small business COVID tax relief. You can learn more about NJBIA’s perspective on the good and bad of the end of the legislation session here.
Speaking of the still relatively new BAIT law, NJBIA wants to encourage all pass-through entities to explore how it can reduce your federal taxes. Treasury created a great new graphic explaining the new BAIT law that I hope you check out.
As the state budget season is about to commence with Governor Murphy’s budget speech at the end of February, I wanted to share the latest revenue numbers from Treasury. You can also see the OLS analysis here, but regardless of what you read, there is a lot of good news for our state budget. Major revenues through December in the current FY22 state budget are 23.5% ahead of where were they through December last year, and that is on top of the FY22 budget expectations for major revenues being down 5.1%. That positive 28.6 percentage point swing portends billions in surplus in the current budget and even more of a cushion built off that for the yet-to-be proposed FY23 state budget. This includes significantly stronger revenue than expected in the big 3 state taxes: sales (+12% vs. expectations of only +1.3%), corporate business (29.1% up vs. expectation of 17.8% down) and gross income (+19.9% vs. -3.6%). Beyond the very rosy year-to-date numbers, December of 2021 is up 25.8% over December 2020.
Thinking big picture fiscal issues beyond just the current FY22 state budget and upcoming proposed FY23 state budget, a new bond disclosure statement was just released by Treasury on new TTF bonds they plan to release. The actual bonds are less interesting than some of the fiscal information the state has to disclose on our economy, revenues, appropriations and liabilities. There is nothing shocking or new here but confirms what NJBIA has been saying. We are in a better cash position than in recent years, but liabilities still remain a real worry that was exacerbated by the unnecessary COVID bonding.
As tax revenues remain strong, NJBIA has talked to some of you about tax relief to advocate for in 2022. For example, we are looking to address New Jersey’s outlier treatment of GILTI compared to other states, so please email me if you have questions or ideas to reduce GILTI or our other oppressive state taxes.
There is a new Treasury payroll service available to employers that I wanted to make sure you knew about for your business or clients. You should check out this simplified way for New Jersey employers to complete annual payroll tax filings with the State.
On the economic development side, I wanted to make you all aware that the new Aspire program, the NJEDA’s place-based economic development program replacing the old Economic Redevelopment and Growth Grant (ERG), has started accepting applications. This program is part of the NJBIA-supported Economic Recovery Act of 2020 that Governor Murphy signed into law a little over a year ago.
And finally, because workforce development is economic development, I wanted to promote -two community college programs with which NJBIA partners that are both great resources to improve the quality of your business’ workforce. The new Pathways program is a broad effort to better align the state’s workforce development strategies in key industries, and if your business is having or works with any business that is having trouble finding good employees, you should get involved. The NJBIA Basic Skills & Workplace Literacy Training Program is a free resource to improve the basic literacy skills of your current employees that has trained hundreds of thousands of employees at tens of thousands of businesses.
Please let me know if you have any questions about any of the matters listed above, and I look forward to working with you all in 2022 to try to make New Jersey a better state to do business.
— Christopher Emigholz, NJBIA Vice President of Government Affairs