Topic Category: Tax and Budget

Corporate Transit Fee Will Help Get NJ Transit Back on Track

Posted on by Nicole Rodriguez

Today, Politico New Jersey reported that Governor Murphy and legislative leaders have reached a budget deal that includes the proposed Corporate Transit Fee to fund NJ Transit. This would represent the first-ever source of dedicated state funding for the agency, which faces a looming shortfall of nearly $1 billion once federal pandemic aid expires. In response to the newly announced budget deal, New Jersey Policy Perspective (NJPP) releases the following statement.

Nicole Rodriguez, President, NJPP:

“The corporate transit fee included in the budget deal should have riders breathing a sigh of relief. This dedicated funding is a historic first for NJ Transit and will go a long way toward getting the agency out of the red and back on track. Mass transit is a cornerstone of the state’s economy, so it’s only fair to have the most profitable corporations in the world help fund the infrastructure they benefit from. And regardless of what business lobbyists say, this fee will only be paid by ultra-wealthy corporations like Amazon and Walmart, most of which are headquartered out of state.

“While this news is historic, so are the constant delays and cancellations riders have endured over the past week. NJ Transit has been underfunded for decades, and more support from state and federal lawmakers will be needed to upgrade our infrastructure. But make no mistake, this is a huge win for all of the riders, working families, and communities that rely on NJ Transit’s bus and rail service.”

Read NJPP’s analysis detailing which corporations would pay the Corporate Transit Fee.

Read NJPP’s report detailing the history of underfunding at NJ Transit.

# # #

StayNJ Task Force Report Fails To Fix Regressive Proposal

Posted on by Peter Chen

Earlier today, the StayNJ Task Force released a new report with recommendations on how to implement the StayNJ property tax credit for senior homeowners. This report focuses on the challenges of implementing another complex property tax credit on top of existing credits, but does not comment on the overall structure of the proposal or how the state could pay for it. In response to the new report, New Jersey Policy Perspective (NJPP) issues the following statement.

Peter Chen, Senior Policy Analyst, NJPP:

“The task force report does not change any of the underlying problems with the original StayNJ proposal, namely that it directs the biggest benefits to wealthy homeowners while providing little support for lower-income households and renters struggling to stay in their homes. The report also does not address how the state can realistically pay for the $2 billion program without cutting funding for other essential services and infrastructure.

“The data clearly shows that StayNJ would overwhelmingly go to the highest-income households, sending billions of dollars the state doesn’t have to the residents who need it the least. Because existing property tax relief programs count against the StayNJ benefits, the largest payments would go to homeowners with more than $250,000 in income who make too much to qualify for ANCHOR or the Senior Freeze. This kind of regressive spending program would widen the racial wealth gap and, ironically, make the state less affordable for many lower and middle-income families.

“However the program is administered, StayNJ’s stated goal of helping seniors stay in their homes is still undermined by its disproportionate benefits for high-income homeowners and its neglect of senior renters who are at higher risk of losing their homes.”

Read NJPP’s most recent report on StayNJ here.

Read NJPP’s testimony to the StayNJ Task Force here.

# # #

Very Big, Very Few, and Far Away: Majority of Companies That Would Pay the Corporate Transit Fee Are From Out-of-State

Posted on by Peter Chen

New Jersey’s economy relies on NJ Transit to move millions of residents to their jobs, schools, doctor’s appointments, and grocery stores. However, after decades of disinvestment and with federal pandemic aid about to expire, NJ Transit faces a nearly $800 million shortfall, even after the agency approved a 15 percent fare hike earlier this year.[i] To fully cover the budget deficit and get NJ Transit’s finances back on track, Governor Murphy has proposed the first-ever dedicated source of funding for the agency: a Corporate Transit Fee on the biggest and most profitable corporations in the world, the overwhelming majority of which are headquartered outside of New Jersey.[ii]

The proposed Corporate Transit Fee would generate approximately $1 billion in revenue and only apply to corporations with net profits exceeding $10 million, representing less than 1 percent of all corporate taxpayers in New Jersey.[iii] Because the tax applies to profits made in New Jersey and not just companies located in the state, more than 4 out of 5 of the corporations that would pay the fee are out-of-state and multinational companies.

Despite claims from corporate lobbyists that this fee could hurt New Jersey businesses, the state’s recent history suggests otherwise. Over the last six years, the same companies targeted by the 2.5 percent fee were already paying the same tax rate under the now-expired Corporation Business Tax surcharge, and they made record-breaking profits when the surcharge was in effect while tax revenues increased accordingly.

With the future of NJ Transit on the line, the Corporate Transit Fee would save the agency and ensure that the most profitable corporations in the world contribute their fair share to critical infrastructure that provides as many benefits to these companies as it does to the public.

The Corporate Transit Fee Targets the Top 1 Percent of Corporations

The Corporate Transit Fee is highly targeted to the most profitable corporations with the highest ability to pay. Out of more than 116,000 corporate filers in the state, the Corporate Transit Fee would only apply to approximately 600 companies, the top 0.5 percent.[iv] The fee would not apply to New Jersey’s mom-and-pop businesses, or even most of the state’s corporations, as more than 99 percent of corporate filers would not pay it.

With corporate profits skyrocketing and large multinational companies concentrating enormous wealth and power, the Corporate Transit Fee would help level the playing field by making the tax code more progressive. Currently, corporate filers in New Jersey pay the same tax rate whether they have $100,000 in annual profit or more than $100 million.[v] This holds New Jersey’s small, midsize, and even large corporations to the same standard as corporate behemoths like Amazon, Walmart, and Bank of America.

The Majority of Companies That Would Pay Are From Out-of-State

Business lobbyists often portray the Corporate Transit Fee as a tax exclusively on New Jersey companies, but the data tells a different story. Among the roughly 600 corporations that would pay the Corporate Transit Fee, more than 4 out of 5 — 81 percent — are headquartered outside New Jersey.[vi] This is a result of the fee’s design, its high annual profit threshold of $10 million, and broader economic realities like increasing corporate concentration and the proliferation of online shopping.

Like other corporate taxes, the Corporate Transit Fee is based on profits generated in New Jersey, regardless of where a company is headquartered. This means that corporations can be subject to the fee even if they do not have any physical presence in the state or employees working here, undermining the already unsubstantiated claims made by business lobbyists that the fee makes the state less attractive to businesses.

New Jersey will continue to collect corporate tax revenue as long as multinational corporations and out-of-state businesses continue to profit from sales to New Jersey consumers. Whether it’s Amazon delivering packages, Tesla selling vehicles, or Adobe selling Photoshop, the Corporate Transit Fee won’t stop them from doing business in New Jersey.

Corporations Make Record Profits Even With Corporate Taxes

There’s no need to speculate about the potential impact of the Corporate Transit Fee on corporate profits or New Jersey’s business community. Over the last six years, corporate profits and corporate tax collections both skyrocketed in New Jersey with an almost identical tax in place: the 2.5 percent Corporation Business Tax surcharge on corporations with more than $1 million in annual profit. Between 2017 and 2023, corporate tax revenue in New Jersey more than tripled from $1.7 billion to over $5.3 billion.[vii] At the same time, corporate after-tax profits reached record levels.[viii] This evidence shows that a modest and targeted tax on the world’s most profitable corporations does not stop them from making record-breaking profits, nor does it impede state tax collections.

Since 2017, New Jersey’s corporate tax collections have not only been record highs for the state but also far outpaced comparable states in the Northeast and Mid-Atlantic. During that period, New Jersey’s corporate tax collections increased by 310 percent, almost triple that of neighboring Pennsylvania, a state with lower corporate tax rates that business lobbyists often point to in their efforts to lower their own tax obligations.[ix] The suggestion that reducing the corporate tax rate is beneficial to anyone but those corporations is simply unfounded, and New Jersey’s experience with the corporate surcharge shows that large corporations can remain ultra-profitable even while paying a modest tax on their profits.

The Corporate Transit Fee Makes Fiscal and Common Sense

 Requiring the most profitable corporations in the world to help fund the infrastructure they benefit from makes fiscal and common sense. Companies like Amazon, Coca-Cola, and Walmart continue to generate record-breaking profits and can easily afford to pay the Corporate Transit Fee without it hurting their bottom line, and having a reliable mass transit system is in the best interest of riders, the business community, and the broader economy. By targeting very big, very profitable, and mostly out-of-state corporations, the Corporate Transit Fee is a necessary step to save NJ Transit and improve service without once again balancing the agency’s budget on the backs of riders.

 End Notes

[i] New Jersey Transit Board of Directors, Meeting Minutes for March 12, 2024, Exhibit A, FY25 Operating Budget, p. 67426, https://content.njtransit.com/sites/default/files/board/meeting_minutes/2024_03_12_OpenSess.pdf. The budget anticipates $766.8 million in Corporate Transit Fee revenue to cover its shortfall from other revenue sources.

[ii] NJPP analysis of data from New Jersey Department of the Treasury.

[iii] Governor’s Budget in Brief FY25, p. 60.

[iv] NJPP analysis of data from New Jersey Department of the Treasury.

[v] N.J. Stat. 54:10A-5(c)(1). For a plain English explanation, see NJ Division of Taxation, Corporation Business Tax Overview, https://www.nj.gov/treasury/taxation/corp_over.shtml (2023).

[vi] New Jersey Office of Revenue and Economic Analysis review of tax year 2021 business registration data and reported headquarter address.

[vii] NJPP analysis of New Jersey state budgets for fiscal years 2011-25.

[viii] U.S. Bureau of Economic Analysis, Corporate Profits After Tax (without IVA and CCAdj) [CP], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/CP, May 3, 2024.

[ix] NJPP analysis of Federal Reserve state corporate income tax revenue data.

Dedicating Corporate Transit Fee Revenue to NJ Transit Makes Fiscal and Policy Sense

Posted on by Peter Chen

The Corporate Transit Fee is a critical investment for our state — making Big Business pay back some of its record profits in support of the New Jersey infrastructure that generated those profits in the first place.

But it also represents an important bulwark against the tide of eroding corporate taxes that have affected both federal and state governments. An increasingly concentrated group of the most profitable corporations now soak up an enormous percentage of the world’s economic production, with tax cuts and loopholes for corporations to reduce already-shrinking tax liability. If states are unable to pull back wealth from these sophisticated corporate actors, they will find themselves with less revenue to fund critical investments like schools, public health, and infrastructure, while placing more burden on in-state residents and institutions.

As NJPP noted in its recent report, this fee would affect less than 1% of New Jersey business tax filers, almost all of whom are located out of state. Rather than harming New Jersey businesses, this would help level the playing field between small and midsize businesses and corporate behemoths, ensuring that a business collecting $100,000 in profits does not pay the same tax rate as a business collecting $100,000,000.

The prior corporate surtax allowed New Jersey’s tax collections to grow proportionally with the record profits generated by businesses post-2020, while other states lagged behind. The Corporate Transit Fee will hopefully allow this trend to continue.

Dedicating the fee to NJ Transit makes both fiscal and policy sense. As you are well aware, NJ Transit faces an $850 million budget deficit starting in fiscal year 2026. Without the CTF, the trains and buses that form the backbone of New Jersey’s economic success would face immediate cutbacks and cancellations, with shuttered stations and riders left stranded. The most profitable businesses should pay their fair share for infrastructure that helps them generate their profits. NJ Transit needs sustainable dedicated funding to preserve its operations for years to come.

No Matter What You Call Them, Private School Vouchers Are Bad for New Jersey

Posted on by Mark Weber

New Jersey’s public schools are among the strongest in the nation, a direct result of robust state funding that supports districts and students in every corner of the state. This investment in public schools is now threatened by a sweeping new bill that would establish the first-ever school voucher program in New Jersey, providing tens of millions of dollars in public funds to students attending private schools.[1]

The bill text is careful not to include the word “voucher,” a tactic recommended by anti-public school organizations like the Cato Institute.[2] Instead, the bill uses coded terms like “scholarships” and “tax credits,” but the ultimate outcomes remain the same. With an annual cost of $37.5 million, this proposal would funnel scarce public dollars to unaccountable private schools, harming students, taxpayers, and the future of public education in New Jersey.

New Jersey Cannot Afford School Vouchers, “Tax Credits,” or “Scholarships”

The proposed bill would grant tax credits to corporate and individual taxpayers who make contributions to “student support organizations.” After collecting their administrative fees, these groups would redistribute the funds to private school families. Proponents argue this is different than private school vouchers, which give state funds directly to parents or schools. But that’s a distinction without a difference.

Every public dollar in tax credits for private school scholarships is a dollar that has to be made up somewhere else, either in cuts to public programs or in higher taxes.[3] Given the state’s current fiscal situation, the last thing New Jersey needs right now is a multi-million-dollar giveaway to private schools.

In other states, wealthy individuals and businesses have used similar tax credit schemes to reduce their tax liability by more than the amount of their donation, essentially making money on private school vouchers.[4] The New Jersey bill, as proposed, would create incentives to do the same.

It’s worth noting that in other states, voucher programs started small, but grew enormously in a short time. Arizona’s voucher program, for example, totaled $57 million in 2012 and ballooned to $218 million by 2022.[5] It’s telling that the original version of the New Jersey bill set the total cost at $250 million; if it passes, it wouldn’t at all be surprising to see the bill reach this extremely high cost in the near future.

Most Funding Would Benefit Those Already Enrolled in Private School

The bill sets the income threshold for a family of five at $176,000 — nearly twice the median household income[6] — meaning families that can afford private schools on their own will now take money from the rest of the state’s taxpayers to subsidize their children’s private school education.[7]

Some argue voucher programs do not cost states school funding because the state doesn’t have to pay to educate students who would otherwise attend public school. This logic fails, however, up against the fact that large numbers of private school students wouldn’t attend public school under any circumstances. More than half of New Jersey’s private schools students, for example, attend religious schools; it is reasonable to assume many of their parents would always choose a religious education for them, no matter the availability of private school vouchers.[8]

In fact, data from other states confirm that similar programs subsidize large numbers of private school families whose children never attended public schools. In Florida, for example, 69 percent of students who enrolled in the state’s voucher scholarship program for the first time were already attending private schools.[9] Similarly, two-thirds of Iowa’s voucher students were already enrolled in private schools.[10] Other states have similar figures.[11]

New Jersey Already Gives Extensive Support to Private Schools

By law, New Jersey’s school districts must provide funding to private schools for textbooks, handicap services, nursing, technology, and other programs and services.[12] According to state data, public schools transferred nearly $80 million to private schools in the 2021-22 school year.[13] There is no public audit available showing how, exactly, this money was spent.

In addition, public schools must provide transportation to resident children attending private schools within a 20-mile radius.[14] How much this costs taxpayers is unclear; state data does not separate out transportation costs between public and private school students, further highlighting the state’s lack of oversight for its current private school subsidies.

The current bill doesn’t rescind this private school support; instead, it piles even more subsidies on top of an unfunded mandate, pulling even more money from public schools.

Private Schools Lack Oversight and Are Allowed to Discriminate

Despite receiving public funds, New Jersey’s private schools have little to no accountability to the state’s taxpayers. Private school students do not take state tests, so there is no way to determine if they are receiving an adequate education. Unlike public schools, the state doesn’t have a true monitoring and accountability system in place for private schools.[15]

Privatization advocates will often argue that parental “choice” is the only accountability taxpayers need. This is, of course, absurd. If taxpayers are going to foot the bill for private school education, they deserve a real oversight system to protect their interests. Such a system, however, requires significant resources — funding that could be used to improve public schools, which are open to all students.

The current bill has no provision for private schools to change their admissions policies, meaning schools receiving taxpayer funds could systematically exclude students with learning disabilities or students who are English Language Learners, concentrating these students — whose costs are greater — into public schools. As is the case in other states, religious schools that discriminate against LGBTQ+ students would also be eligible for public funding.[16]

Voucher Programs Lead to Worse Student Outcomes

Proponents of private school vouchers used to claim that private schools get better academic outcomes than public schools. Their claims were based on decades-old, small-scale studies that inadequately controlled for differences in student characteristics.

As researchers at the University of Indiana point out, more recent studies with better methods paint a very different picture.[17] States that have implemented large-scale private school voucher systems have seen dramatic declines in student outcomes. In some studies, the effects have been larger than estimates of the learning loss from the COVID-19 pandemic.[18]

There Are Better Ways to Support Students

 Public school leaders across New Jersey have begged the Legislature to revise the state’s school funding formula, which has been shown to be inadequate in meeting the current needs of students.[19] Implementing a new scheme for funding private schools takes time and attention away from this important work. It also diverts funds away from public schools and toward private schools, which have no meaningful oversight and can pick and choose who they admit.

New Jersey’s students deserve better. The Legislature should drop this bill and get back to the work of ensuring that every student can attend a well-resourced public school.

End Notes

[1] https://www.njleg.state.nj.us/bill-search/2024/S3035

[2] https://www.cato.org/education-wiki/scholarship-tax-credits-vouchers

[3] https://networkforpubliceducation.org/wp-content/uploads/2019/01/Are-tax-credits-scholarships-a-voucher-by-a-different-nameƒ.pdf

[4] https://itep.org/tax-avoidance-fuels-school-vouchers-privatization-efforts/

[5] https://azdor.gov/sites/default/files/2023-05/REPORTS_CREDITS_2023_fy2022-private-school-tuition-org-credit-report.pdf

[6] https://data.census.gov/all?q=New+Jersey+Income+and+Poverty

[7] https://www.federalregister.gov/documents/2024/02/20/2024-03355/child-nutrition-programs-income-eligibility-guidelines#p-15

[8] https://nces.ed.gov/surveys/pss/

[9] https://www.wmfe.org/education/2023-09-14/florida-policy-institute-school-voucher-data-step-up-for-students

[10] https://educate.iowa.gov/press-release/2024-01-26/certified-enrollment-2023-24-holds-steady-16757-esa-participants-enrolled-iowa-accredited-nonpublic

[11] https://www.ncpecoalition.org/voucher-recipients

[12] https://www.nj.gov/education/nonpublic/

[13] https://www.nj.gov/education/finance/fp/ufb/

[14] https://www.nj.gov/education/genfo/faq/faq_transportation.shtml

[15] https://www.nj.gov/education/qsac/

[16] https://www.orlandosentinel.com/2020/01/23/anti-lgbt-florida-schools-getting-school-vouchers/

[17] https://ceep.indiana.edu/education-policy/policy-briefs/2023/research-on-school-vouchers.pdf

[18] https://www.brookings.edu/articles/research-on-school-vouchers-suggests-concerns-ahead-for-education-savings-accounts/

[19] https://www.njpp.org/publications/report/unlocking-academic-success-revitalizing-new-jerseys-school-funding-formula-for-student-achievement/

Giving Businesses Tax Credits for Hybrid Workers Undermines the Very Purpose of the Tax Credits

Posted on by Peter Chen

State lawmakers are fast-tracking a new bill (A4046) that would allow businesses to claim tax subsidies for hiring workers at New Jersey locations, even if they work a majority of the time from home. Similar legislation was fast-tracked during the recent lame duck session and failed to advance after lawmakers criticized the proposal as “counter-intuitive,” and warned that it would have unintended consequences. In response to the proposal, New Jersey Policy Perspective (NJPP) issues the following statement.

Peter Chen, Senior Policy Analyst, NJPP:

“Allowing companies to claim tax credits for employees that aren’t in the office undermines the very purpose of giving out these tax credits in the first place. In theory, the economic benefits are supposed to come from workers going out to buy lunch and spend money at other shops near the office, but this will never happen if employees are working at home instead. Corporate tax credits already have a weak return on investment for communities, and this will only weaken it further. There is no reason for the state and its taxpayers to prop up businesses with public dollars when they aren’t benefiting the broader public.

“A nominal contribution to affordable housing trust funds does not make up for the cost of handing out these tax credits. If this was really about creating more affordable housing, the state should do so directly rather than hand corporations a check only to get a fraction of it back.”

# # #

The FY2025 Budget Should Use Corporate Tax Revenue to Support Public Investments

Posted on by Peter Chen

Good Morning Chair Pintor Marin and members of the Committee. Thank you for the opportunity to testify today on the fiscal year 2025 budget.

The state budget can and should support broad public investments that benefit all New Jerseyans, especially low- and moderate-income residents, while ensuring that sufficient revenue is raised from the wealthy and powerful with the highest ability to pay. These values live in the Governor’s proposal to provide long-needed dedicated funding to NJ Transit with a new fee on corporations earning over $10 million in profits.

Big corporations like Amazon and Walmart have soaked up record profits off of higher prices, while directing those profits to executives and shareholders. By contrast, NJ Transit, the cornerstone of New Jersey’s economic strength, faces a looming $1 billion shortfall in FY 2026 and has already proposed a double-digit fare hike on residents who can hardly afford it.

Yet even the Governor’s proposal is not enough to fill in the revenue the state needs to continue its strong investments in communities. The governor’s proposal would also have the state spending more than it collects in tax revenue for yet another year, further draining the surplus rather than preparing for the next economic downturn.

This is not the time to draw down the surplus: Neither the country nor state are in recession, with record stock prices and low unemployment. Instead, the state needs more revenues – starting with a full reinstatement of the corporation business tax surtax.

The state has seen austerity budgets before, with years of structural deficits and one-shot funding gimmicks that resulted in cuts to essential programs and an empty rainy day fund. There is simply no reason to return to the bad old days when the state is leaving money on the table.

NJPP continues to support a broad range of budgetary improvements that would help New Jerseyans afford the rising cost of living, costs which are especially high for low- and moderate-income households, which are detailed in the attached publication. These include:

  • Raising the benefit amount for Work First New Jersey,
  • Expanding the Earned Income Tax Credit and the Child Tax Credit,
  • Eliminating the cost of communications for people incarcerated and their families.

 

However, absent new revenues, this year’s budget will remain one of defending programs from cuts, rather than a broader vision for how the state can support economic opportunity for all. This scenario is exactly the one a state with the wealth of New Jersey should be avoiding – pitting program against program, department against department. Instead, broadening and deepening the state’s revenue sources can expand the resources available to help every family and individual thrive.

There is one obvious revenue source: reinstating the full Corporation Business Tax surtax on all corporations with over $1 million in profits. There’s no reason to leave $200 million on the table. But beyond that, the state must look at additional progressive revenues such as stronger corporate tax policies to address tax avoidance, taxes on accumulated wealth, and broadening and modernizing the sales tax.

The Corporate Transit Fee is a step in the right direction and embodies exactly the kind of revenue New Jersey should be generating – asking the corporations and individuals who have seen their wealth soar since the pandemic to pay for the investments that the state needs.

Evaluating Governor Murphy’s Budget Proposal for Fiscal Year 2025

Posted on by Peter Chen

With tax collections lower than projected and federal pandemic aid expiring, Governor Murphy found a way to maintain funding for New Jersey’s long-standing obligations and essential public services in his latest state budget proposal. At the center of the budget is a new tax targeted to the most profitable corporations to provide NJ Transit with its first-ever dedicated source of funding. The budget also includes another full pension payment and additional funding for public schools, health care, and affordable housing, in line with the governor’s vision for a stronger, fairer, and more affordable New Jersey.

However, while the governor’s proposal seemingly avoids dramatic cuts, the budget spends more than the state is projected to collect in revenue. This structural deficit, combined with a reduction in the state’s surplus, as well as NJ Transit’s intent to move forward with a double-digit fare increase, are clear signs that more revenue is needed beyond the new Corporate Transit Fee. There is also much that remains unknown about budget specifics — including the newly proposed Retire Ready NJ program, the future of costly property tax credit programs like StayNJ, and potential programmatic cuts — that will not be revealed until the full budget document becomes available.

Now that Governor Murphy has delivered his budget address for Fiscal Year (FY) 2025, here’s how it stacks up with the key benchmarks and priorities that NJPP identified last month.

Overall Fiscal Health

Bring Back the Corporate Surcharge on Big Businesses
Partially Included

Targeting corporations with more than $10 million in net profits, the newly proposed Corporate Transit Fee will go a long way to ensure that large multinational corporations pay for the infrastructure that helps fuel their success. The new 2.5 percent tax should generate more than $800 million in revenue from approximately 600 corporate filers, including the world’s most profitable businesses like Amazon and Walmart. Unlike the Corporate Business Tax surcharge, the tax would be permanent with no sunset date. To make up for revenue lost from the expiration of the original corporate surcharge, the new Corporate Transit Fee would be retroactive to January 1, 2024. This proposal, while historic, would raise additional revenue if it applied to corporations with at least $1 million in annual profits, as the original corporate surcharge did.

Fully Fund Pensions and Schools
Included

This budget marks the first time that the state has fully funded both its pensions obligation and school funding formula – a monumental achievement worth celebrating. After decades of lawmakers kicking the can down the road, Governor Murphy remained steadfast in his commitment to fix the state’s finances and fund its two biggest obligations, a move that will reflect well with credit rating agencies. However, despite fully funding the formula, many school districts will see less funding than the year prior, and the school funding formula remains long overdue for a constitutionally mandated update as learning standards and costs have changed significantly since 2008 when the formula was first adopted.

Maintain a Healthy Surplus
Partially Included

As with the current state budget, the budget proposed by the governor would once again run a structural deficit, spending more than it collects in revenue. As a result, the surplus will shrink to $6.1 billion from more than $8 billion a year ago. While this surplus remains higher than those of prior administrations, it remains lower than the national average and leaves little cushion to keep state government running in the event of an economic downturn. 

Family Affordability

Expand and Improve Tax Credits for Working Families
Not Included

The Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) remain funded at last year’s levels, without any expansion of eligibility or increase in benefit amounts for either program. Given the success of these programs in helping low- and moderate-income families keep up with rising costs, lawmakers should expand the CTC so children up to age 12 are eligible, as well as the EITC so taxpayers who file with an Individual Tax Identification Number (ITIN) can benefit.

Increase Benefits in WorkFirst NJ to Reduce Poverty
Not Included

WorkFirst NJ, the state’s anti-poverty cash assistance program for very low-income residents, saw no increase in funding and did not receive any mention in the governor’s address or preliminary budget documents. A budget focused on affordability for low-income residents must include expanding funding for this critical lifeline by increasing the monthly grant amount to today’s economic standards. For too long, the low benefit amount has left recipients in poverty and unable to meet the state’s high costs.

Health Care

Expand Affordable Health Insurance Options
Partially Included

The governor’s budget proposal includes $100 million in additional funding for Cover All Kids, which allows all children to enroll in state-subsidized health insurance through NJ FamilyCare, regardless of citizenship or immigration status. However, the preliminary budget documents do not specify whether this funding is simply to cover children enrolled in the existing program or whether it will fund the next phase of the program’s implementation. To ensure that no child is uninsured, the program must include coverage options for children who are not eligible for NJ FamilyCare and still excluded from the state health insurance marketplace.

Increase Outreach for NJ FamilyCare
Partially Included

The Budget-in-Brief references continued outreach for NJ FamilyCare through the Department of Human Services; however, no specific line item or funding amount is mentioned. Additional funding for outreach is needed to ensure families maintain continuous coverage instead of becoming uninsured.

Continue to Fund Harm Reduction Expansion
Included

Harm reduction services will receive the same level of state funding as last year, with roughly $12 million in additional funding provided through the opioid settlement fund. The opioid settlement fund includes proceeds from lawsuits against opioid manufacturers, distributors, and retailers for their role in opioid overdose deaths. These investments will allow the state to continue expanding harm reduction services to every corner of the state.

Environment and Transit

Fully Fund NJ Transit to Avoid Drastic Fare Hikes
Partially Included

The proposed Corporate Transit Fee will be dedicated to fund New Jersey Transit in Fiscal Year 2026 and beyond. Because the agency has never had dedicated funding, this revenue will stabilize an often volatile budget while allowing the agency to invest in the capital and operating expenses that would make its services more reliable and sustainable. However, even with this new revenue stream, the raids to the agency’s capital fund continue, and the agency is still moving forward with its proposed 15 percent fare increase set to begin on July 1, 2024. With a new source of dedicated funding, NJ Transit should reconsider this immediate, double-digit fare increase.

Use the Clean Energy Fund on Clean Energy
Not Included

The budget proposal continues the longstanding practice of raiding the Clean Energy Fund to pay for NJ Transit, though at a lower level than prior years ($70 million, compared to $82 million in FY 2023). The budget does not include language that ensures that any diversion to NJ Transit is restricted to use on transitioning to clean energy and thus help New Jersey reach its clean energy goals. If diversions continue, these funds should be restricted to clean energy initiatives within the agency, such as helping fund the electrification of NJ Transit’s bus fleet.

Criminal Legal System

Eliminate the Cost of Communication for People Incarcerated
Not Included

The budget does not include any funding to eliminate the cost of communication for people incarcerated in state facilities. Currently, people who are incarcerated must pay private contractors for phone and video calls, and even short conversations can cost more than a day’s pay. For a relatively low cost to the state at roughly $10 million, lawmakers could follow in the footsteps of other states and alleviate this burden on people in incarceration and their loved ones.

Budget Proposal Rightly Asks Big Business To Pay for Critical Infrastructure, But More is Needed

Posted on by Nicole Rodriguez

Earlier today, Governor Murphy unveiled his budget proposal for Fiscal Year 2025. The proposal includes a new corporate transit fee on companies earning more than $10 million in annual profits and dedicates those funds to NJ Transit, which would be the first-ever dedicated source of funding in the agency’s history. The budget also includes another full pension payment and would fully fund the school funding formula for the first time in New Jersey history. However, the budget continues to dip into the state’s surplus to cover expenses, highlighting a need for new revenue sources. In response to the budget proposal, New Jersey Policy Perspective (NJPP) releases the following statement.

Nicole Rodriguez, President, NJPP:

“The governor’s budget proposal rightly asks the world’s biggest corporations to pay for the infrastructure that helps generate their record breaking profits. In this current era of rising inequality, if corporations are going to swallow a lion’s share of economic growth, they shouldn’t expect to pay less in taxes and have working families make up the difference. The new corporate transit fee is a testament to the tireless advocacy of workers, transit riders, advocates, and local elected officials in every corner of the state who fought for a fairer tax code.

“This budget proposal still has some red flags that lawmakers will have to address. Even with a strong commitment to long standing funding needs like pensions and schools, the budget proposal still erodes the state’s surplus to fund basic operations. Meanwhile, most programs that promote affordability for low- and moderate-income households like the Child Tax Credit and WorkFirst New Jersey received flat funding – a functional cut in a time of inflation. As New Jerseyans face down fare hikes and cost increases, the onus now shifts to the Legislature to commit to a full reinstatement of the corporate surcharge make the state affordable for all.”

Read NJPP’s latest budget analysis, What to Look for in the New Jersey Budget for Fiscal Year 2025.

# # #

Gov. Murphy’s NJ Transit Funding Proposal Would Put Agency Back on Track

Posted on by Alex Ambrose

Later today, Governor Murphy will announce the first-ever dedicated source of funding for NJ Transit: A new Corporate Transit Fee of 2.5 percent on corporations with more than $10 million in annual profit. The tax is a scaled-down version of the Corporation Business Tax surcharge on corporations with more than $1 million in annual profit. The new tax is estimated to generate $800 million in annual revenue. Last year, New Jersey Policy Perspective (NJPP) published a report on the benefits of using the corporate surcharge as a dedicated source of funding for NJ Transit, which remains the only transit agency of its kind without dedicated public funding. In response to the new proposal to fund NJ Transit, NJPP releases the following statement.

Alex Ambrose, Policy Analyst:

“It’s hard to overstate how big of a deal this is for transit riders and the state as a whole. The governor’s proposal would finally provide stable, dedicated funding to an agency that’s never had it, setting a strong foundation to protect NJ Transit now and in the future. This is exactly the type of thinking needed to get NJ Transit back on track, and it’s long past time that big corporations pay for the infrastructure that helps them generate their record-breaking profits. At the same time, we can’t forget that riders are staring down a potential double-digit fare hike, and the agency is still raiding its capital budget, so there’s a strong argument for bringing back the full corporate surcharge to spare commuters from shouldering that burden.”

Read NJPP’s report, Getting Back on Track: Fully Fund NJ Transit by Taxing Big Corporations.

###

«« Previous Posts∞Older Posts »»