Nearly 60% of certified public accountants (CPAs) surveyed recently by the New Jersey Society of CPAs (NJCPA) said the governor’s proposed $53.1 billion budget for the 2024 fiscal year will leave the state’s economy worse over the long term.
When asked about the proposed budget’s impact on the state economy, 31% of the more than 275 CPAs surveyed said it would make it “significantly worse” and 27% said it would make it “marginally worse,” according to the survey results released on Thursday. Another 22% said the economy would stay the same, and 20% thought it would improve either marginally (15%) or significantly (5%).
Gov. Phil Murphy’s proposed budget, which is the highest on record for the state, allows the temporary 2.5% corporation business tax (CBT) surcharge to sunset as scheduled on Dec. 31. While that would cut the top rate from 11.5% to 9 percent, New Jersey would still have the fourth-highest corporate tax rate in the nation.
When asked what impact certain actions could have on strengthening the business environment in New Jersey, survey respondents said an additional reduction in the corporate business tax would have the largest impact. This was followed by providing state aid to offset the upcoming $300 million unemployment insurance increase and providing property tax relief for businesses.
The budget proposal includes no new taxes or tax increases, retains the $2 billion ANCHOR property tax relief program for homeowners and renters and doubles the state’s child tax credit. It calls for additional school funding, an expansion of universal preschool and an increase in income limits for seniors applying for a freeze on their property taxes. The proposed budget must be approved by the Legislature by June 30.
Other actions that respondents called for, in addition to lowering the CBT and reducing unemployment payroll taxes, were reducing the number of state employees, reforming pension and health benefits for government employees and using only recurring revenues in the budget, which would exclude the one-time federal funds received during the COVID pandemic. They also cited the need for a new school funding formula, not centered on property taxes.
“While there are many individual tax-saving benefits outlined in Governor Murphy’s proposed budget, we believe more needs to be done for small businesses,” said Ralph Albert Thomas, CPA (DC), CGMA, CEO and executive director at the NJCPA. “Particularly, the budget should offer relief to small businesses that face skyrocketing unemployment insurance increases caused by the COVID-19 pandemic.”