New Jersey Governor Phil Murphy is proposing a tax hike on the state's biggest businesses to support its struggling public transportation system, a move that would make its corporate levy the highest such rate in the country.
Murphy unveiled the so-called "Corporate Transit Fee" on Tuesday as part of his $55.9 billion budget proposal for the upcoming fiscal year that begins July 1. The charge will apply to corporations with net incomes greater than $10 million, according to the governor's office. His office estimates a budget surplus of $6.1 billion.
The New York Times reported that those businesses will be subject to a 2.5% charge on top of the 9% corporate tax rate. This would make New Jersey have the highest corporate levy at 11.5%, according to the
"I have a new proposal to support NJ Transit for years to come," Murphy said Tuesday. "And with our budget, we are going to build on our progress in fixing NJ Transit in a way that is consistent with our vision for a stronger and fairer New Jersey."
The plan comes as NJ Transit is staring down a $107 million budget deficit for the fiscal year beginning July 1 and is proposing a 15% fare increase.
Murphy is facing pressure from transit advocates to offer financial support to NJ Transit similar to what was instituted in New York for the Metropolitan Transportation Authority. New York Governor Kathy Hochul created a plan to help the MTA out of its financial hole with additional tax revenue.
Murphy, 66, is a Democrat serving his second term, which ends in January 2026. He is barred from seeking a third consecutive term. Candidates to replace him already are lining up on both sides of the aisle.
Transportation agencies across the U.S. are facing budget shortfalls as pandemic aid dries up and ridership struggles to come back. At the onset of the COVID-19 pandemic, ridership plummeted and left many systems without a recovery plan. Now, years after the initial lockdowns, agencies are experiencing a slow rebound as many people work hybrid schedules, returning to offices only part-time.
"It's hard to overstate how big of a deal this is for transit riders and the state as a whole," Alex Ambrose, policy analyst at New Jersey Policy Perspective, said in a statement, "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."
The move drew immediate backlash from the state's powerful lobbying arm for businesses, the New Jersey Business & Industry Association, which said Murphy was going back on his promise to lower the state's corporate tax burden.
"That Governor Murphy would re-commit to a new business tax at a time of a multibillion-dollar surplus to fund NJ Transit when there is no correlation between those impacted corps and public transportation — which he acknowledges himself — is nothing short of a punitive action against our largest job providers," NJBIA President and Chief Executive Officer Michele Siekerka said in a statement. "It is a punishment they do not deserve."
Murphy said he would be working with NJ Transit Presdent Kevin Corbett to "meaningfully lower administrative costs" while improving service. NJ Transit did not respond to a request for comment.
Murphy used his budget speech to subtly hit at Hochul's congestion pricing plan that would charge drivers entering much of Manhattan. "Unlike some states that demand that their neighbors solve their transit troubles, we are solving our challenges on our own," he said. Murphy has
In addition to the new transit funding, Murphy outlined other budget priorities including:
- $3.5 billion in direct property tax relief through the state's
ANCHOR program; - $50 million for an investment to boost New Jersey's housing supply and make homeownership more affordable including funds for down payment assistance;
An increase of $908 million in direct kindergarten through 12th grade aid for public schools totaling nearly $12 billion;
- An additional $124 million will be used to create more than 1,000 new pre-K seats;
- Fully funding the state's pension payment for the fourth year in a row amounting to $7.16 billion;
- A proposal to use the Debt Defeasance and Prevention Fund to provide $120 million to finish the State Police Training Center and $70 million to support state parks; including funding improvement to Liberty State Park and to break ground on the Garden State Greenway; and
- Nearly $20 million to expand New Jersey's home visitation program for new mothers from 2,200 families this year to 16,700 families in the next year.
