Business Fees In Sherrill’s First Budget Raise Concerns

Business organizations are raising concerns regarding Gov. Mikie Sherrill's proposed $60.7 billion spending plan, which could raise costs for employers with fees and tax changes.

On Tuesday, Sherrill outlined a two-pronged approach to attacking the budget gap: making spending cuts, and bringing in more cash.

READ MORE: Sherrill Looks To End Crisis: 5 Takeaways From NJ Budget Address

One way she proposed to gain more revenue is through a new fee targeting businesses.

It asks any company with 50 or more employees on Medicaid to cover their workers, or pay a fine.

The purpose is to offset rising Medicaid costs.

“Because Washington refused to extend Affordable Care Act credits, nearly half-a-million New Jerseyans will see their premiums triple this year,” Sherrill said. “And because his H.R.1 law makes people jump through hoops to stay on Medicaid, 300,000 more New Jerseyans will be kicked off. To prevent that, this budget invests in new technology to help people meet Trump's burdensome paperwork requirements.”

“But many families will still lose coverage – and the cost of insuring them directly would be billions of dollars,” she continued. “Instead of asking taxpayers to foot that bill, this budget looks to large employers.”

The fee was met with some praise.

“Her proposal to impose penalties on large employers who have been raking in profits while their employees are forced to rely on our state’s Medicaid program for health insurance is an important step to addressing the socio-economic imbalances troubling our state,” NJ Citizen Action's Director of Advocacy and Policy Maura Collinsgru said in a statement.

Some business groups are unhappy with this fee, along with a cut in corporate tax deductions.

“The impact of the tax is difficult to calculate,” said New Jersey Business & Industry Association (NJBIA) Chief Government Affairs Officer Christopher Emigholz.

Emigholz noted that health coverage is already one of the largest expenses for businesses.

“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,” Emigholz said.

The New Jersey Chamber of Commerce praised some of Sherrill's proposals.

“At the same time, we have concerns about several proposals that would increase costs for employers, many of whom are impacted by the Corporate Transit Fee. Policies such as these risk making New Jersey less competitive than other states, particularly for larger companies that provide significant employment and investment in our communities,” said Tom Bracken, president and CEO of the chamber.

The Corporate Transit Fee levies a 2.5 percent tax on NJ businesses that earn at least $10 million each year. The funds support NJ Transit.

Despite the new fees, the business community said they will work alongside Sherrill to find the best solution.

“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,” said NJBIA President and CEO Michele Siekerka.

This article contains additional reporting by Eric Kiefer.