CCSNJ Opposes FY 2010 State Budget
Thursday, June 25, 2009

MEMORANDUM

TO: Members of New Jersey Senate

FROM: Christina M. Genovese, Manager, Government Relations

RE: FY2010 State Budget

DATE: June 25, 2009

The Chamber of Commerce Southern New Jersey would like to respectfully offer its comments on the FY2010 State Budget. As stated in our previous budget testimony, this is a most challenging and sobering year for us in the business community. We are all feeling the effects of the recession. The Chamber understands this fiscal crisis is also affecting the State. Budget deliberations have become challenging as revenue collections continue to decline, reflective of the economic climate.

To that end, the Chamber believes that the absolute worst “solution” is to raise taxes on the business community as a way to generate revenue in FY2010. Unfortunately, FY2010, as currently proposed, will increase taxes in several areas that will directly or indirectly impact business. The first is the expected increase needed to replenish the Unemployment Insurance Trust Fund – upwards of $100.00 per employee. However, we do want to note that we are appreciative of Governor’s Corzine’s commitment to keeping the dedicated $120 million infusion in the UI Fund, which will stave off an even higher tax increase than what we are destined to experience starting July 1.

Another tax we oppose would increase the insurance premium group health tax as outlined in S-2016 (Sweeney), which would raise this tax .3 percent. Although the Chamber is exceptionally pleased the original tax increases and the elimination of the 1/8 rule proposed by the Administration have been removed from consideration, the Chamber believes this .3 percent raise will fall squarely on the shoulders of New Jersey employers as insurers will be forced to raise their premium rates to recoup costs.

Additionally, the income tax increases outlined in S-2015 (Buono) are taxes that may not sound like a business tax increase, but indeed will certainly impact small businesses. Up to 90 percent of businesses file taxes as individuals and therefore pay personal income taxes rather than corporate income taxes. Many of these taxpayers are small businesses – those incorporated as Limited Liability Companies, General Partnerships, Limited Liability Partnerships, and S Corporations – who are hardest hit by the effects of the recession.

Lastly, there is the extension of the 4 percent surcharge on the Corporation Business Tax, S-2014 (Sweeney), which was due to expire this year, amounting to an additional $80 million bill to businesses.

The Chamber believes that the need to increase income taxes, the insurance premium group health tax, UI tax, or extend the Corporation Business Tax can be at least partially offset by seeking additional cuts to state spending. Our organization has sounded the alarm about the high cost of these benefits for many years and in the past five years we have issued nearly two dozen recommendations to reduce employee related expenses.

The Chamber urges you to reject theses tax increases and instead seek additional cuts to state spending. Thank you for the opportunity to weigh in on the FY2010 State Budget.