Could the NJ corporate business tax surcharge survive to fund NJ Transit?

Perhaps New Jersey's corporate business tax surcharge won't be dead on arrival this December after all.

New Jersey Senate President Nicholas Scutari, D-Linden, said keeping that extra fee — enacted five years ago on businesses that have profits over $1 million and set to sunset Dec. 31 — to help fund NJ Transit is something he "could support." Scutari expressed that view to NJ Spotlight in an interview at the League of Municipalities conference last week.

This puts Scutari at odds with Gov. Phil Murphy, also a Democrat, who has adamantly opposed reinstating the surcharge, saying "a deal is a deal" because the extra fee was intended to be temporary.

Caught up in negotiations

The future of the surcharge was among the items being negotiated in the months leading up to the state's new fiscal year, which started July 1, 2023, with Scutari saying in May that he thought it was a possibility that it could be restored.

The Senate president also floated in the spring the idea of using the surcharge to support Assembly Speaker Craig Coughlin's signature program, StayNJ, which provides property tax relief to seniors, though those benefits aren't expected until January 2026. While the StayNJ program was approved in the state's fiscal year 2024 budget, the CBT surcharge was not extended, and it's unclear how the program will be funded.

A number of transit advocates and legislators and Jersey City Mayor and gubernatorial candidate Steve Fulop have pushed the idea to direct dollars from the business tax to NJ Transit, which has never had a constitutionally dedicated source of funding, causing systemic fiscal challenges. The agency is facing historic shortfalls in the fallout from the pandemic, with a $120 million fiscal cliff predicted in 2024 and a nearly $1 billion shortfall the year after that.

Murphy's new chief of staff, Diane Gutierrez-Scaccetti, who is also the state transportation commissioner and chair of NJ Transit's board, announced that the agency would begin a "restructuring" process to address its financial problems, a process that could include fare hikes, service cuts, layoffs and other corporate cost-cutting. There has been no update on the status of that exercise.

Advocates press surcharge

Despite the Legislature's decision to let the CBT surcharge expire this year, transit advocates have continued pushing the issue this fall, with nonprofit think tank New Jersey Policy Perspective publishing a report on the topic in September.

Peter Chen, a senior policy analyst at New Jersey Policy Perspective, said tax collection figures released by the state Treasury Department on Friday show that revenues are lagging behind the amount collected this time last year.

“One commonsense way for lawmakers to plug this budget hole would be extending the corporate business tax surcharge on companies with over $1 million in annual profits," Chen said in a statement. "This revenue source is not only needed to balance the state budget, but also a fair and targeted tax on the world’s wealthiest corporations earning record profits.”

A lifeline for NJ Transit?: NJ pols promised to let business tax expire — but could it rerurn?

'Drastic needs in New Jersey'

Scutari said in the interview with NJ Spotlight that he supports the additional tax on the richest companies in the state.

"This small percentage ... they’re not hiring additional workers with that. That’s going to their bottom-line profit," Scutari said. "Everyone should make a profit, but there are drastic needs in New Jersey for tax revenue, and that’s one that won’t hurt the taxpayers."

This article originally appeared on NorthJersey.com: NJ Transit: Could NJ corporate business tax surcharge survive?