On Tuesday, the New Jersey Senate and Assembly budget committees passed a $32.7 billion spending plan for New Jersey's 2021 fiscal year, and votes on the floor of both houses are scheduled for today. Below are seven reasons why the New Jersey Society of Certified Public Accountants (NJCPA) believes that the proposed budget is bad for the state:
- The $4.5 billion in proposed borrowing will be a terrible blow to New Jersey’s fiscal stability. This non-recurring infusion will create a $4.5 billion hole in next year’s budget. And New Jersey’s debt per capita is already fourth highest among U.S. states.
- The tax rate on income between $1 million and $5 million would be raised from 8.97 percent to 10.75 percent — the second-highest top rate in the nation — impacting a significant number of small business owners.
- A 2.5-percent surtax on corporations with more than $1 million in income that was being phased out would be extended for four years, giving New Jersey the highest CBT rate in the nation in 2021, at 11.5 percent.
- State government spending would increase by $1.4 billion, about 3.5-percent higher than the FY 2020 budget.
- No meaningful property tax relief is included.
- No meaningful new economic stimulus programs for small businesses are included. This budget ignores them, even though they have been devastated by the pandemic and employ hundreds of thousands of New Jerseyans.
- The Governor’s revenue estimates used to support the need for borrowing and tax increases are $1.4 billion too low, according to the independent Office of Legislative Services.
Now is the time for our lawmakers to make the difficult decisions that will put the state on sound financial footing and make the tough choices that have been avoided for so long. We urge the Governor and Legislature to accept that responsibility.