It has been a crazy month, one in which the budget process that usually takes four months was condensed into one. We do have a budget through June 30, 2021 on Governor Murphy’s desk that he is expected to sign. NJBIA does NOT like it, but we fought hard for you, the business community, over this past month to try to make it slightly less anti-business.
NJBIA opposed the budget that passed mostly along party lines because it included significant new taxes ($700 million tax increase), new spending ($1.7 billion more appropriations than last year) and borrowing for operating expenses ($4.5 billion borrowed to balance the budget).
You can see the votes and more in NJBIA’s Cap Memo story on the budget. You can also see NJBIA’s press release on the budget’s committee passage and the final floor votes in each house of the Legislature.
The bad news is:
- The budget relied on 3 tax increases totaling $700 million:
- temporary (through 12/31/23) CBT rate increase to 11.5% on corporations with incomes over $1 million that Governor Murphy estimated will cost taxpayers $210 million
- income tax rate increase on earnings between $1 and 5 million from 8.97% to 10.75% estimated by Governor Murphy to raises taxes by $390 million
- $100 million increase in HMO assessments
- The budget included an irresponsible $4.5 billion of borrowing for operating expenses, and what is worse is that the Legislature increased the borrowing amount by $500 million over Governor Murphy’s proposed $4 billion of borrowing.
- The proposed budget already spent too much unrelated to the COVID-19 crisis, increasing spending by $1.4 billion, but the final budget increased that by another $300 million, making it $1.7 billion over the prior year’s spending.
The sliver of good news that is hard to find in a bad budget like this is:
- NJBIA was able to successful lobby to keep the CBT increase temporary instead of the permanent increase that Governor Murphy had proposed.
- NJBIA was able to secure commitments by both houses of the Legislature to work in October on CBT technical correction language. These have been requested by many corporations around our state and are needed after the combined reporting law several years ago was drafted incorrectly.
- Originally Governor Murphy proposed about a billion dollars of new taxes, but after NJBIA lobbied about the impact on competitiveness, the Legislature removed most of the smaller tax increases resulting in $300 million less in new taxes and leaving just the Income tax, CBT and HMO assessment increases. The removed tax increases were on: qualified business income (QBI) deductions, cigarettes, opioids, boats, limos, guns and ammo.
- There was a restoration of some budget cuts proposed by Governor Murphy that might have hurt some large employers and the innovation and workforce development sides of our economy such as to higher education and hospitals.
NJBIA also wants to hear from you on the technical corrections bill that we will be working on over the next few weeks. After much lobbying by NJBIA throughout the budget process, Senate Budget Chairman Sarlo announced at the budget committee meeting that we would get this bill done in October. Please email me if you have any technical/reporting/compliance correction requests to improve the combined reporting law for your corporation. This will not include at this time any policy fixes that cost the state any revenue, but if there is something that can be done to make combined reporting easier to live with for your corporation, we have a chance to include that.
Please email me at firstname.lastname@example.org if you have any questions about the budget or have any thoughts on the technical corrections language needed in combined reporting.
Thank you and I look forward to working with you to continue to help your business in these challenging times.
–Christopher Emigholz – NJBIA, Vice President of Government Affairs