NJBIA President & CEO Michele Siekerka issued the following statement on Tuesday regarding Gov. Mikie Sherrill’s inaugural State Budget address for FY27, a $60.7 billion proposal.

“Today the Sherrill administration proposed an attentive budget through a transparent process, as promised. There is intent with this budget to find efficiencies and the start of necessary, and yes, difficult, spending reductions to right our fiscal ship after years of unsustainable budgets by the previous administration.

“We appreciate that the budgetary challenges facing New Jersey are not exclusively being thrust upon our already beleaguered business community, which was too often the case in recent years. Rather, there is a better balance between spending cuts and the business tax changes being proposed.

“Among the positives in this proposal are $2 billion in spending cuts, a reduction in the structural deficit, some restructured property tax relief and a sixth consecutive full pension payment. We also appreciate the commitment to job growth within the state Department of Environmental Protection for the purpose of expediting permitting.

“Obviously, we are concerned about a new employer Medicaid assessment and technical changes to business tax policy that will negatively impact our job creators. (See Christopher Emigholz’ comments that follow). However, we already have ideas to bring to the administration and the Legislature that we believe can mitigate the impacts.

“We encourage the Sherrill administration and the Legislature to unequivocally apply discipline to avoid clandestine, add-on spending for local expenditures. These last-minute legislative earmarks violate the goals of transparency and have put New Jersey in a deeper hole than necessary.

“In fact, if the billions in earmarks from the past eight years never happened, our funding gaps would not be as great and New Jersey would be in a far better position than it is right now.

“Finally, given the challenges with this budget, our shrinking margins and the fiscal storm that looms next year, now is the time to finally embrace real reforms in New Jersey. Governor Sherrill has shown that she is serious about a good process. Let’s get that process toward reform started now.

“As we further assess the budget and details contained within it, we look forward to working with the Sherrill administration and Legislature to make this a fair budget and one that positively impacts affordability and regional competitiveness.”

NJBIA Chief Government Affairs Officer Christopher Emigholz provided the following comments on proposed business assessments and technical tax policy changes in the Sherrill administration’s FY27 budget proposal.

On the proposed per-employee fee on businesses with more than 50 employees using Medicaid:

“This is perhaps the most troubling part of the budget proposal for the business community.

“This establishes a situation where employers can be penalized even if they offer health coverage for their workers, which is already one of the largest expenses they absorb every year.

“The impact of the tax is difficult to calculate. Many employers don’t know how many of their employees are enrolled in Medicaid. There are industries with high turnover rates. Some employees actually choose not to work more hours so they can keep certain government benefits. And it creates a disincentive for businesses to employ part-time and seasonal workers.

“This assessment could be very challenging for those businesses in retail, hospitality, childcare, and home health industries – where affordability is already a concern. Our annual Business Outlook Survey always details the great challenges our employers face when it comes to healthcare costs, so we should be looking for ways to incentivize employers to provide these benefits, rather than penalizing them for their employees using government benefits out of their control.”

On temporary Net Operating Loss limit for next three years:

“NJBIA is disappointed that one of the successes of the CBT reforms that NJBIA recently negotiated with Treasury is being temporarily limited, but we are hopeful that we can find compromise on these deferred tax benefits to soften the impact on our job creators.”

On limiting the Alternative Business Calculation Deduction:

“While it may be well intentioned to better focus this tax program on smaller businesses, NJBIA is worried that the proposed threshold is too low because it excludes businesses with $1 million in gross revenue and could discourage entrepreneurial investment.”