NJ Committees Approve Budget, Move Business Tax And Child Credit Bills

By Devon Williams and Gianna Puglisi (NJ State House News Service)

TRENTON, N.J. – Lawmakers worked deep into the night Sunday, casting votes along partisan lines as the Senate and Assembly budget committees advanced a $60.7 billion budget bill that nearly no one had a chance to read.

The unusual Sunday votes tee up the budget legislation with just 48 hours remaining before floor votes on Tuesday, before the midnight deadline required by the state Constitution.

Senate Budget Committee Chair Paul Sarlo voiced support for the budget, noting its “record-setting property tax relief, full pension payment [and] full school funding.”

“I think it’s a pretty good budget in many ways,” added Sen. Linda Greenstein, a Democrat from Plainsboro.

But frustrated Republicans on both committees blasted the “last-minute” budget outlines provided Sunday night.

“No one who votes for it tonight is going to have read it, or really knows what’s in it,”  said Republican Budget Officer Sen. Declan O’Scanlon, of Little Silver. “It would not be hard at all, with a little bit of discipline, a little professionalism across the board, to have a budget sit for a week or two weeks, so the press can dissect it, and so we can all know what we’re voting for,”

“New Jersey deserves better than this,” complained Assembly Member Michael Inganamort, a Republican from Little Egg Harbor Township. “The governor specifically promised it would be different. She promised a more transparent budget process, and I believe she failed to deliver on that process.”

And Assembly Member Brian Rumpf, a Republican from Little Egg Harbor Township, said, “I can say with pretty much certainty that the process was not any better this year, but was worse. … I personally feel that that is unacceptable. It should not be the way we conduct business in New Jersey.”

Republicans also opposed a last-minute measure allocating $359 million in added spending across 13 areas into the current fiscal year, including $40 million in FIFA World Cup tournament support; $14.8 million to Cooper Medical School of Rowan University.

O’Scanlon called the maneuver a “shell game” designed to give the governor and Democrats a political win by adding the funds as supplemental spending in the current fiscal year, which ends Tuesday, instead of placing it in the next budget.

Companion budget framework bills pass

Lawmakers also voted along partisan lines Sunday to advance a series of related bills which would limit business tax deductions and impose a Medicaid-related fee on some large employers. Efforts to expand New Jersey’s Child Tax Credit unanimously passed out of the  budget committees. 

Gov. Sherrill, Senate President Nicholas Scutari and Assembly Speaker Craig Coughlin announced a $60.7 billion budget agreement on June 23, that claimed the preservation of state benefit programs and expanded K-12 public school aid. While the proposal spends more than revenue by tapping into the budget surplus, the plan slashes the state’s structural deficit. 

The agreement also preserves but reduces eligibility for senior property tax relief through StayNJ, according to resolution language released late Sunday. Income eligibility will be capped at $200,000 annually, down from the current $500,000 and a $250,000 cap proposed by Sherrill in March.

Healthcare fees on low-wage employers

Legislative budget committees Sunday approved a fee on large employers whose workers or dependents receive Medicaid coverage, with Democratic supporters framing this move as a way to offset public healthcare costs connected to low-wage employment.

Bill A5324 and S4533 sparked hot debate and party-line votes. 

“States have no choice but to consider innovative ways to raise revenue in order to protect the continuity of health care and services for our residents,” Laura Waddell of New Jersey Citizen Action testified. “The policy that is ultimately enacted must be one that raises needed revenue for health care and protects employees’ privacy and against employer retaliation.”

But Amirah Hussain of NJ Chamber of Commerce said,  “this bill doesn’t account for employers that offer really great benefits to their employees, and [an] employee may opt to enroll in Medicaid anyway for a variety of personal reasons.” 

Hussain also warned lawmakers of the state’s plan to collect data. “How will this information be accurately collected by employers, or will it be collected by the state when somebody applies for Medicaid?” 

Hillary Chebra of Chamber of Commerce Southern New Jersey added,  “And, if we are relying on self-reporting, how can we know that the information is accurate?” 

Both Hussain and Chebra said the bill had the potential to result in an “administrative nightmare.” 

Chris Emigholz, Chief Government Affairs Officer of the New Jersey Business and Industry Association, echoed this opposition. “At its core, this legislation is a fair share or pay-to-play health care mandate,” he said. 

Jennifer Spiegel of NJ Policy Perspective supported the sentiment of the bill but opposed the risks of its execution, saying, “public policy should encourage access to health care, not create new barriers or stigmatize people who use it.” 

In the face of such concerns, the bill still passed 10-4 in the Assembly Budget Committee and 7-4, with two abstentions, in the Senate Committee.

Business Taxes

Committees also passed a business tax measure, A5322 and companion S4536, which would place a $1 million cap on net operating loss deductions under the corporation tax for specific privilege periods. Businesses that build up losses in past years, therefore, would be limited in how much of those losses they can use to reduce current taxable income.

Emigholz warned both Assembly and Senate members that limiting net operating losses “undermines business confidence and stability and certainty” for companies deciding whether to invest or hire in New Jersey.

Republican Assembly members also called the deduction limits tax increases on businesses, arguing New Jersey is already too costly for employers.

Inganamort opposed the measure, saying, “Eliminating deductions is a tax on businesses in the state with the highest business taxes in America.”

This bill delays rather than eliminates those deductions, and the same witnesses and Assembly members who viewed the legislation as too strict also feared that its limit would be extended past the proposed 2030 timeframe. 

But Peter Chen, senior analyst of New Jersey Public Policy, oppositely suggested that these limitations should be permanent in both committees.

Chen said some profitable companies report “billions and billions of dollars in profit” to shareholders while using accumulated losses to reduce their state tax liability.

Many Assembly members voiced concerns that such limitations would be bad for business, repelling new companies from coming to the state while crippling those that pre-exist.

Committees also heard A5323 and S4537, which would change eligibility for the alternative business calculation adjustment under the gross income tax. 

The business-tax bills advanced on party-line or near party-line votes, the corporate loss cap passed the Assembly Budget Committee 11-3, and the alternative business deductions passed 10-4. On the Senate committee side, both measures passed 9-4.

Unanimous expansion of Child Tax Credit

Lawmakers unanimously moved forward a spending measure Sunday. A5329 and S5431 would expand the Child Tax Credit program for three years, providing a 25% tax credit increase for New Jerseyans earning up to $80,000. 

Chen supported this bill, stating the program “puts money back in families’ pockets for the cost of raising a child in New Jersey.” In the Senate hearing, he urged lawmakers to consider this expansion to be permanent as opposed to its current three-year lifespan. 

Earlier this spring, various legislators on both sides of the aisle proposed measures that would require budget proposals be published by June 1, but the initiatives did not get committee hearings.