NJBIA provided testimony on Monday in support of several bills advanced by the Senate Budget & Appropriations Committee that will help improve affordability in the state.
Of significant note, NJBIA supported bill S-330 (Singleton, D-7; Scutari, D-22), which would increase the amount of funding distributed to municipalities from the Energy Tax fund by $330 million over five years, starting in 2023.
The legislation, which was unanimously released by the committee, requires municipalities to use the new funds to reduce their property tax levy.
“Property taxes are a business issue, too,” NJBIA Vice President of Government Affairs Christopher Emigholz said in written testimony to the committee. “New Jersey’s property taxes are the highest in the nation and represent the largest state and local tax that businesses pay.”
Emigholz noted that New Jersey businesses pay $14.9 billion in property taxes, out of $31.7 billion in total state and local taxes.
“The $330 million distributed amounts to about a 1% reduction in total statewide levy of more than $31 billion,” he said.
Energy taxes were once collected by individual municipalities until the state began collecting those receipts for the convenience of the public utilities. The state would then pass those funds to local government. In 2008, however, those funds were diverted to the state’s general fund as part of a change in budget language.
The New Jersey State League of Municipalities estimates that approximately $14 billion in energy tax funds have been diverted from municipalities to the state’s budget since 2002.
NJBIA also testified in support of another bill released by the committee on Monday, S-676 (Bucco, R-25; Oroho, R-24), which indexes, for inflation, taxable income brackets under New Jersey’s gross income tax.
“Better aligning the state income tax brackets to natural wage increases is important to avoid unintended tax increases and to advance tax fairness and equity,” Emigholz said. “This is especially true when inflation runs rampant, as we are currently experiencing.
“Over time, this bill will provide relief to many taxpayers making New Jersey more affordable for families, retirees, young people early in their career and small businesses.
Emigholz also noted that the bill’s goal of preventing “bracket creep” has overall support from advocates that are fiscally conservative, supporting tax cuts, and fiscally progressive, supporting relief for lower income taxpayers.
“Almost half of the states in the country have some form of indexing for their state income taxes, and the federal government indexes their income tax brackets,” he said.
NJBIA also supported bills S-737 (Lagana, D-38; Gopal, D-11) and S-951 (Turner, D-15) which both provide tax relief in retirement planning in New Jersey. The panel combined the bills and unanimously released them as a Senate committee substitute.
“Outmigration of wealth has continued to hurt New Jersey’s economic growth and making it easier to retain wealth through retirement can help reverse some of that loss,” Emigholz said.