NJCPA Responds to Governor Murphy’s Proposed FY 2025 Budget Proposal
–
February 27, 2024
This afternoon, Governor Phil Murphy delivered his budget proposal for New Jersey’s 2025 fiscal year which begins July 1. After months of reassuring the state’s business community that he would let the 2.5% Corporation Business Tax (CBT) surcharge expire, he has proposed reinstating it and returning New Jersey to its status as an extreme outlier for business taxes.
The 13,000-plus members of the New Jersey Society of Certified Public Accountants (NJCPA) are disappointed to see the CBT surcharge included in the budget proposal. NJCPA members, who serve tens of thousands of businesses and individuals, already hear objections about New Jersey’s high taxes from clients who are looking to leave New Jersey. In member surveys, 75% said they have recommended to some clients that they move out of state.
Six years ago, following the Governor’s first budget address, the NJCPA asserted that hikes in business taxes, like the CBT hike, only serve to dampen economic growth and lead to job losses. Only with a strong business climate and satisfied residents will New Jersey be a viable place to live and do business.
The new CBT hike will again move New Jersey to the top of the list of states with the highest corporate tax rate, while our neighbor, Pennsylvania, is on a path to reducing its CBT rate to 4.99% by 2031, and 12 other states have reduced their CBT rates in the last five years. New Jersey should take the opportunity to slow down the outmigration of income-generating residents and businesses and strengthen the economy, which benefits all parties including lower-income residents and the middle class.
While the NJCPA applauds the Governor’s efforts to make New Jersey more affordable for families, taxing the business community to make up for a shortfall in the budget is not in the best long-term interest of the state.
A year after enacting the largest budget in state history, this budget plan must consider the potentially significant fiscal cliff that the Garden State faces over the next few years. We support a sustainable way to improve the future of the state. New Jersey can no longer sustain such a high rate of spending in the face of lower tax revenues, the absence of federal COVID relief funds, stubborn inflation, high interest rates and other economic headwinds.
According to a report from the Multi-Year Budget Workgroup, a bipartisan group founded at the Sweeney Center for Public Policy at Rowan University, “the gap between expected revenues and the projected costs of maintaining government services and funding state aid and major programs at promised levels is substantial.” The report added that “even under the most optimistic scenario, state revenues will fall $1.9 billion to $3.1 billion short annually.”
New Jersey’s budget has jumped from $35 billion in Gov. Chris Christie’s final year to $54.5 billion this year and a proposed $55.9 billion for 2025.. As reports from the Multi-Year Budget Workgroup and Garden State Initiative indicate, this level of spending is unsustainable.
The NJCPA would like the root causes of high property taxes to be addressed and believes that structural reform to public worker benefits is necessary to restore the state’s fiscal stability. We also believe that property tax relief should be extended to businesses which pay about half of the state’s property taxes.
The NJCPA strongly urges Gov. Murphy to reconsider this tax increase and to consider the impact on New Jersey’s business community. The NJCPA stands ready to be a resource to the Governor and the Legislature.