Gov. Phil Murphy wants to tax New Jersey’s wealthiest corporations to create a dedicated fund for NJ Transit as it faces a looming fiscal cliff of nearly $1 billion.
The governor announced the new tax in his annual budget address on Tuesday, which unveiled his spending priorities for the fiscal year that begins in July. The new “corporate transit fee” would tax businesses that earn more than $10 million in profits.
Murphy had previously allowed a similar corporate income tax surcharge on businesses with $1 million in annual profits to expire this year. Like the former surcharge, the new one would raise the corporate tax rate to 11.5% from 9% for affected businesses.
NJ Transit, which runs commuter trains and buses throughout the state and to New York City, has a budget deficit projected to balloon to $1 billion in the fiscal year starting in July 2025. The original corporate tax surcharge raised about $1 billion a year, and the new one is expected to raise about $800 million, according to the state treasury department, which provided a preview of Murphy’s plan ahead of his budget address.
NJ Transit fares are already slated to increase by 15% starting July 1. Administration officials have said they don’t expect that to change despite the new source of funding. The agency plans to hold public hearings on the fare hikes before they go into effect.
Beginning with his last budget address, Murphy pledged to end the previous surcharge on wealthy companies’ taxes.
“We are top four in the country for corporate tax rate,” Murphy said on WNYC’s “Ask Governor Murphy” show in February. “So, we’re already a very expensive state.”
But a coalition of progressive organizations in the state fought to keep the corporate tax and use it to create a dedicated fund for NJ Transit.
The governor is proposing a $55.9 billion budget with a surplus of $6.1 billion. It now goes to the state Legislature, which has until June 30 to come to an agreement with Murphy on the details.
Affordability for New Jersey residents is another key theme the governor is highlighting this year.
He wants to invest $3.5 billion in tax relief, increasing spending on the ANCHOR property tax rebate and a senior tax freeze program. He’s also setting aside $100 million as part of a three-year investment in a future tax break for seniors called “StayNJ.”
Murphy is also pitching several measures to create more affordable housing, including a program for homeless veterans and an incentive fund for towns to build Accessory Dwelling Units, which are small apartments homeowners put on their properties.
This is a developing story and will be updated.
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