Gov. Phil Murphy’s controversial proposal to fund New Jersey Transit by levying a new fee on big corporations drew very different reactions. Murphy outlined the proposal when presenting his budget plan for fiscal year 2025 at the State House on Tuesday.
Transit advocates cheered. “It is hard to overstate how big a deal this is for Transit riders and for our state as a whole,” said Alex Ambrose of the New Jersey Policy Perspective think tank.
But business representatives did not applaud. “Let’s just be honest in what this is. Corporate transit fee is a tax on large business in the state of New Jersey,” said Michele Siekerka, president and CEO of the New Jersey Business & Industry Association.
Murphy wants to permanently fund NJ Transit by imposing a 2.5% corporate tax surcharge on some 600 companies that earn $10 million or more a year. The millions raised would be dedicated solely to NJ Transit.
“This really sets the foundation for a stable agency that year over year can depend on funding that comes from frankly the most equitable source in our state, which is mega corporations that are asked to pay a modest fee to see huge improvements to our public transit agency,” Ambrose said.
The new tax is projected to generate $859 million in fiscal year 2026, not enough to cover NJ Transit’s projected $917 million budget shortfall — the so-called fiscal cliff. But the 15% fare hikes planned for July could close that gap — or the 3% annual fare increases every year afterward.
“We should not be balancing New Jersey Transit’s budget on the backs of our riders,” said Doug O’Malley, president of Environment New Jersey. “The fare hike should be rolled back and we should end the raids of New Jersey Transit’s capital budget.”
Many in the business community point to Murphy’s repeated promises to let a surcharge on the corporate business tax sunset last year — which it did, on Dec. 31. Murphy’s new proposal would impact only corporate giants but it would be permanent.
“When a promise is made and a promise is broken, we cannot invest and we cannot predict to the future to make those investments,” Siekerka said. “So this is not just bad policy when you do an about-face — a 360 — on two weeks’ notice, it’s terrible policy.”
Tom Bracken, president of the New Jersey Chamber of Commerce called the proposal a “nightmare scenario” that “does long-term harm to the state’s reputation and the economy. There’s nothing good about it. Our positive momentum will immediately pay the price since we will have the highest business tax in the nation.”
The governor’s budget plan — including this proposal — now goes to the Legislature for consideration. Assembly Speaker Craig Coughlin already warned that “any discussion about increasing corporate taxes must be had with our state’s long-term fiscal health and a further commitment to reducing property taxes in mind.”
