Scutari mulls extension of CBT surcharge for property tax relief programs

TRENTON, N.J. — Senate President Nick Scutari said Monday that he is considering an extension of the corporate business tax surcharge to fund new property tax relief programs.

The Senate president’s remarks put him at odds with Gov. Phil Murphy, who has been unequivocal that the additional 2.5% tax for corporations with over $1 million in taxable income sunset by the end of the year.

The possible extension of the corporate business tax also comes as Assembly Speaker Craig Coughlin has pitched a new program for seniors — dubbed “StayNJ” — which he said in an op-ed published Monday would “effectively cut most seniors’ property taxes in half.” Scutari told reporters that he was working in tandem with Coughlin on property tax relief programs and that he would introduce legislation to do so.

When asked if an extension of the corporate business tax surcharge was considered to fund such a program, Scutari said it was a “possibility.”

“I don't know what the governor's thoughts are on that," he told reporters. "But in my thought process, obviously, we now have to have a stable funding source. And that's the first thing that kind of pops to your head and probably mine as well.”

When pressed more on it, Scutari would only say that he intends to speak in more detail with Murphy.

“I mean, the governor hasn't been consulted on that," he said.

The governor’s office declined to comment on Scutari’s remarks on possibly extending the CBT surcharge and referred to the governor’s prior comments.

”Temporary does not mean ‘permanent until otherwise noted.’ It means temporary,” Murphy said at an event with business leaders in March.

Rhonda Schaffler, a spokesperson for Coughlin, said that “It’s premature to say anything about funding” for the new proposed property tax relief program and that details around the speaker’s proposals were “being worked through.”

Ending the CBT surcharge has been strongly supported by business groups and gained support from some key Democratic lawmakers, like Senate Budget and Appropriations Chairman Paul Sarlo (D-Bergen). The Murphy administration's budget-in-brief for FY2024 estimated that the end of the surcharge will result in $322.5 million less revenue for the first half of 2024 and “roughly $1.0 billion” in FY2025.

Business groups have criticized the state’s tax rate for corporations, which can be as high as 11.5 percent when including the surcharge; according to business groups, that makes New Jersey the state with the highest corporate taxes.

“There's a contractual obligation to have this sunset,” Tom Bracken, president and CEO of the New Jersey Chamber of Commerce, said in an interview. “For the legislative leaders — any of them — to renege on this commitment would be absolutely catastrophic to the business reputation of New Jersey. When you have legislative leaders who renege on commitments, can you ever trust them when they say they’re going to do something?”

Bracken added that he has never gotten a clear position from Scutari on ending the corporate business tax surcharge.

“The Senate president has never affirmatively committed to it,” he added. “I think what he's saying is fairly consistent with his approach all along. It’s not a yes, it's not a no. But I hope at the end of the day it's a no.”

Michele Siekerka, President and CEO of the New Jersey Business & Industry Association, said in an interview that businesses need predictability in how they will be taxed. An extension of the surcharge, she said, will disrupt that predictability. Siekerka said her group is not opposed to property tax relief, but that changes should be systemic.

“What we are supportive of is property tax reform for everyone,” she said. “Writing checks is not sustainable. Reform is sustainable. How many times have we seen rebate checks come and go?”

Proponents of extending the surcharge on corporations — which include a coalition of progressive groups — welcomed the possibility of the CBT extension.

“It’s good news that lawmakers are reconsidering cutting the corporate tax rate, especially given looming revenue shortfalls in the coming months,” Peter Chen, a Senior Policy Analyst for the left-leaning New Jersey Policy Perspective think tank said in a statement.

“But those funds should go towards the investments that make New Jersey a great place to live and do business, investments that have long been underfunded like New Jersey Transit and public schools," he said. "Any dedicated funding should be targeted towards the New Jerseyans who need the most help, rather than already-wealthy residents. Two wrong giveaways to the wealthy won’t make a right.”