February kicks off the annual state budget process, traditionally an unpleasant time for the business community – or any taxpayer. Most years, the governor prepares to deliver a state spending proposal and taxpayers gird themselves for a hit on their wallets when the new fiscal year starts July 1.
But this year should be different. No one expects bad news about revenue collections or talk of higher taxes. By all accounts, our state is in a better cash position than we have been in years. We have billions of dollars in unspent federal COVID-relief aid. We have billions in extra cash because the state over-borrowed when leaders worried about the pandemic’s impact on state tax collections. And we potentially have billions from the repeated under-projection and over-performance of state revenues.
On top of that, Gov. Phil Murphy pledged in his recent gubernatorial campaign that there would be no new taxes in his second term. So, while concerns about bad news in the FY23 budget proposal are allayed, that doesn’t mean we should simply coast through a less stressful budget process. NJBIA will be proactive to make sure New Jersey takes advantage of this rare budget opportunity to make our state more business-friendly and competitive.
Much of this surplus is one-time revenue, so it should be carefully used for one-time investments that stimulate the economy and protect the health of the budget in future years. Any new spending or investments should be focused on the three pro-growth areas that drive New Jersey’s economy: workforce development, infrastructure and innovation.
We are experiencing a workforce crisis, so directing dollars toward reskilling or upskilling workers is a sound short-term and long-term investment. Expanded investments in infrastructure – roads and bridges, ports, broadband and improved water systems – are needed to power our future economy. And, by investing in research and development, higher education, and startups, we will build on New Jersey’s history as the Innovation State.
Lastly, dare I say it, we must talk about tax cuts – something that might shock any of you who pay attention to New Jersey tax news. In this better cash position, policymakers should explore targeted tax relief to stimulate job growth and attract capital investment to our state.
New Jersey is a tax policy outlier. With the highest corporate tax rate in the nation, the highest property taxes, and income tax rates that are among the highest in the US, taxpayers need targeted relief so that startups can launch here, corporations can grow here, and developers can build here.
NJBIA looks forward to a more proactive budget discussion with policymakers to make New Jersey a better place for business.
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