It’s been said that mixed messages often yield mixed feelings.
And the widespread ambiguity found in Gov. Phil Murphy’s FY26 State Budget proposal, and an Assembly Budget Committee’s reaction to it this week, proved that axiom true.
In written testimony to the committee, NJBIA Chief Government Affairs Officer Christopher Emigholz provided compelling examples of “schizophrenic budgeting,” without much in the way of planning.
But committee members also respectfully pushed back on NJBIA’s position that policymakers should work toward cuts instead of accepting the more than $1.2 billion in new and expanded taxes proposed by Murphy.
In an interview with NJ Spotlight News following the budget hearing, Emigholz told Senior Political Correspondent David Cruz that he understood the committee’s defensiveness because it “owns the budget process.”
“But where I would push back is that I don’t think anyone out there thinks we’re a low-taxed state or a low-spending state,” Emigholz said.
“In a state that has the highest property taxes in the nation, the highest corporate taxes in the nation, a very high income tax rate and a sales tax in the top third of the nation, to say that we need yet another $1.2 billion in new taxes is hard to justify.”
Here’s where Emigholz sees the mixed messages in this year’s budget proposal:
Investing in Manufacturing & Innovation or Not?
Emigholz expressed excitement about a new manufacturing tax credit proposal to incentivize next-generation manufacturers from around the world to come to New Jersey.
But then he noted how the budget also eliminates a $2 million line-item for the New Jersey Manufacturing Extension Program (NJMEP) and $10 million budget line-item for NJEDA’s wildly successful Manufacturing Voucher Program (MVP).
Additionally, there are innovation program cuts and dramatic cuts in higher education that support innovation and workforce development.
“If the Governor and Legislature are serious about supporting manufacturing and innovation, the funding for these two manufacturing line items should be restored to complement the proposed tax credit and not offset it,” Emigholz said. “The Legislature should seek to restore other AI innovation and higher education line items.”
Affordable Housing or Not?
Emigholz wrote that NJBIA strongly supports Gov. Murphy’s budget push for regulatory reforms to ease the building of more housing.
But at the same time, the budget proposes a massive increase in a tax on high-end housing transactions that “could chill the housing market leading to fewer sales and less building.”
“To truly prioritize greater housing affordability, NJBIA calls on the Legislature to reject Governor Murphy’s proposal to double and triple the realty transfer fee on homes over $1 and $2 million,” Emigholz said.
Tax Emerging Industries to Help Them Grow?
The growth of sports betting and online wagering has been a positive for New Jersey as has the rising cannabis industry, Emigholz said.
But now both industries are to be taxed much higher in the FY26 budget proposal.
“Taxing a fledgling industry is not the way to keep it growing,” Emigholz said.
“Both new markets were intentionally created with lower tax rates to keep them competitive, so let us keep that focus on growing these new industries and supporting the legal market instead of losing market share to other states or to the black market due to higher tax rates.”
Do We Care About Affordability or Not?
“Affordability has been a common bipartisan refrain in the Legislature in recent years, and Governor Murphy even ran on a pledge of no new taxes due to affordability concerns,” Emigholz said.
“Yet there was a $1 billion tax increase on our largest job creators last year, and now there is over $1.2 billion in new taxes on a variety of products and services that will impact every New Jerseyan. If we genuinely care about affordability, then all the proposed tax increases should be rejected.”
Is Paying Down Debt Still a Priority?
It was only four years ago when the state, flush with cash, created the Debt Defeasance and Prevention Fund – which was strongly supported by NJBIA to pay off debt or avoid future debt.
“Yet just four years later we have the second proposed budget in a row that uses hundreds of millions of dollars to help balance the budget instead of paying down and/or avoiding debt as it is statutorily required to do,” Emigholz noted.
“If we care about debt, NJBIA requests that the Debt Defeasance and Prevention Fund fully return to what it was rightly intended.”
Are Higher Education Investments the Best Way to Get to ‘Stronger and Fairer,’ Stimulate the Economy and Prepare the Future Workforce or Not?
A $20 million cut to New Jersey’s Community Colleges was a big topic at this week’s Assembly Budget Committee hearing, with school presidents and students alike providing thought-provoking, and sometimes emotional, testimony on the need to keep that aid.
Emigholz said higher education cuts strike a big blow to Murphy’s “Stronger and Fairer” mantra.
“Cuts like these negatively impact economic growth and lower-income residents, harming both our innovation ecosystem and workforce development pipeline,” he said. “Higher education should be prioritized and the needed funding to do so should be reinstated.”
