Budget analysts told lawmakers Monday state tax revenues are running an “unprecedented” $7.8 billion higher than the amount previously certified by the governor, prompting calls for greater tax relief for New Jersey residents and businesses.
Deputy State Treasurer Aaron Binder testified that very strong revenue collections in April and May from the Pass-Through Business Alternative Income Tax and the Gross Income Tax produced $6.2 billion of the $7.8 billion upward revision in total tax revenues over FY22 and FY23. Corporate business taxes are $541 million higher than expected and sales tax revenues are $394 million higher, among others.
“From a low of $38 billion in FY20 when the pandemic hit, state revenues have now soared to an estimated $51.4 billion in FY22 –– a stunning $13.4 billion jump, up 35.3% in only two years,” Binder said in his testimony to the Senate Budget & Appropriations Committee.
In light of this surge in tax revenues, Senate Republican Leader Steve Oroho questioned whether the state should move more quickly to sunset the 2.5% Corporation Business Tax surcharge now imposed on top of the regular 9% CBT rate, giving New Jersey the nation’s highest corporate business tax at 11.5%. Under current law, the surcharge, which has already been extended once before, is set to expire in the middle of the next state budget, Jan. 1, 2024.
NJBIA Vice President of Government Affairs Christopher Emigholz on Monday agreed it was time to reevaluate the CBT surcharge and to ensure it is lifted by the statutory deadline next year. One way this could be done is to maintain a healthy state budget surplus to protect against a future recession and the need for unnecessary future tax increases.
“We need to make decisions now for this budget to make sure that we can allow the CBT surtax to sunset next year,” Emigholz said. He said the strong growth in state revenues, which now exceed state spending, also warrants a closer examination of other parts of the proposed budget.
“A massive surplus is a good time to explore ending the many diversions throughout the budget, especially when some diversions impact our workforce in the middle of a workforce crisis, such as with occupational licensing boards,” Emigholz said.
“It is wrong for businesses to endure long delays when dealing with underfunded state licensing agencies because the licensing fees that they pay to the state are being diverted to other areas of the state budget,” Emigholz said.