Local activists, mayors urge passage of new business tax to fund NJ Transit

Climate activist Stephanie Martinez appeared at a rally in Newark on June 13, 2024, to demand lawmakers support a proposed business tax to fund NJ Transit. (Sophie Nieto-Munoz | NJ Monitor)

Humberto Mendoza has taken NJ Transit’s 780 bus from his Passaic home to Hackensack daily for the last 26 years.

The bus rarely arrives on time, he said, but it’s his only way to get to work. W ith just a few weeks until the start of double-digit fare hikes , Mendoza said he’ll have to choose between paying more for inconsistent transit service or buying food to feed his family.

“It will be too much. We cannot take another increase in price,” said Mendoza, a member of immigrant rights group Make the Road New Jersey.

Local activists and mayors gathered in front of Newark Penn Station Thursday to demand legislative leaders include a new business tax in the upcoming budget to boost the financially struggling transit agency. They also plan to deliver a letter to top Trenton officials signed by dozens of mayors calling it “imperative” to fund public transportation.

“While our constituents face rising costs for transportation and basic necessities, it is unjustifiable that wealthy, multinational corporations continue to receive tax breaks that further exacerbate the financial burden on our towns and cities,” reads the letter, signed by mayors of Newark, Jersey City, Montclair, Trenton, Red Bank, and more.

The new tax was proposed by Gov. Phil Murphy as a transit tax to fill the $106.6 million budget gap that NJ Transit is facing in the fiscal year that begins July 1. Under the governor’s plan, there would be a 2.5% surtax imposed on businesses with more than $10 million in profit. It is expected to generate $800 million annually.

In April, the NJ Transit board approved fare hikes of up to 15% that will go into effect July 1, along with a 3% increase every year after. Without more revenue, NJ Transit could face major service cuts, agency officials have said.

Business groups oppose the new tax, saying it would make the state less competitive in attracting and retaining employers. The New Jersey Business and Industry Association released a list of 40 reasons why the transit tax would be “bad policy.”

The state Chamber of Commerce says the transit tax is just a veiled attempt to rebrand a previous business tax surtax that sunset in 2023 , one that placed a 2.5% surcharge on corporations with more than $1 million in annual profits. Tom Bracken, the chamber’s president and CEO, urged the Legislature to reject the proposed tax, saying there’s no way to predict how much money it would generate every year since it hinges on companies staying in New Jersey.

“One thing is for certain, implementing the fee would give the state the dubious distinction of having the nation’s highest Corporation Business Tax rate for large companies, which would tarnish New Jersey’s business reputation and undermine the governor’s own business attraction and retention efforts,” Bracken said.

Some activists worry officials might try to redirect some of the expected revenue to other projects in backdoor deals during the budget-writing process.

“What happens in Trenton in the next few weeks is going to be a litmus test for the state Legislature to make sure that we prioritize the people that elected them to serve in Trenton,” said Hoboken Mayor Ravi Bhalla.

Senate President Nicholas Scutari and Assembly Speaker Craig Coughlin have not said whether they support the proposed transit tax. Murphy must sign the budget before July 1 to avoid a state government shutdown.

Activists said on Thursday they would prefer to bring back the business tax surcharge that expired last year, which affected 3,000 businesses (the proposed transit tax will only hit 300 businesses). They also stressed that NJ Transit faces a budget gap next year that exceeds $700 million.

“Funding NJ Transit means we fund the local economy, where I can get to my local supermarket, access fresh foods, and live a healthy lifestyle. People can get to their jobs safely on time because the working class makes this world go around,” said climate activist Stephanie Martinez.

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