Mike Egenton started his testimony Wednesday morning before the Assembly Budget Committee in the usual way — acknowledging the challenges the state faces in closing its $3 billion budget and applauding some of the proposed steps to address them.
But Egenton, the highly regarded executive vice president and government affairs lead at the State Chamber, has been down this budget road before. He can recognize which proposals have impact and which are for show. And he’s got a number of issues with this year’s proposed budget.
The biggest is this: They will have a huge impact on the business community (now and in the future) but little impact on raising revenue, which should be the driver behind all this.
Egenton, speaking in the first public hearing since Gov. Mikie Sherrill made her budget address on March 10, told Assembly Budget Chair Eliana Pintor Marin and the committee that several of the budget’s revenue‑raising proposals could do harm to the state’s competitiveness.
More specifically:
Net Operating Loss (NOL) Cap Modification
Projected revenue: ~$485 million
The testimony: This was Egenton’s most forceful objection of the day. He argued that $485 million, in the context of a nearly $60 billion budget, barely dents the state’s fiscal challenges — yet the change would dramatically destabilize corporate tax planning.
The NOL framework, he reminded lawmakers, was the product of careful negotiation among the business community, the Legislature, and the previous administration. To unwind that agreement just a few years later sends “a troubling signal” that New Jersey tax policy is unpredictable and subject to sudden shifts.
The impact on startups is particularly concerning. Firms that lose money in early years depend on NOLs to smooth out future earnings; limiting that tool could halt investment before it even starts, he said.
Employer Health Assistance Contribution
Projected revenue: Modest, but with outsized impact
The testimony: While described as a “fee,” Egenton said it operates as a new employer tax — one applied even when businesses already offer insurance. Egenton explained that many workers choose NJ FamilyCare because it is cheaper than commercial premiums, not because employers lack coverage options. Penalizing employers for a choice they cannot control, he warned, creates an unfair cost burden and significant compliance challenges, requiring companies to track and verify individual employee health‑coverage decisions.
Worse, he said, the policy would make employers think twice about offering part‑time positions, a move that would hit lower‑income workers hardest. To Egenton, this proposal amounts to using businesses as a revenue backstop for state healthcare spending at a time when companies are already facing heavy mandates.
Alternative Business Calculation adjustment change
Projected revenue: ~$120 million
The testimony: Here again, Egenton said lawmakers are being asked to accept a poor tradeoff: a relatively small amount of revenue in exchange for eroding New Jersey’s competitiveness. The adjustment undermines reforms enacted in 2011 to align the state with regional peers, he said.
Even more troubling, Egenton said, is the way the change defines “large businesses.” Companies with $500,000 to $1 million in revenue — modest by real‑world standards — are being treated as major enterprises, despite often being sole proprietorships, family operations or early‑stage innovators.
“These are the very individuals who start companies, create jobs, and drive innovation,” he said.
Discouraging their growth, Egenton argued, is counterproductive to any long‑term budget strategy.
Corporate Transit Fee
While not part of the new proposals, Egenton reminded lawmakers that employers still are adjusting to the Corporate Transit Fee enacted in 2024. Piling new costs on top of that policy could frustrate investment and hiring decisions just as companies are attempting to rebuild.
Let’s be clear, because Egenton was: He said the administration is taking several important steps in the right direction.
The State Chamber, he said, applauds the effort to slow spending growth to 1.6 percent, implement roughly $2 billion in cuts, and chip away at the state’s structural deficit — bringing it down from $3 billion to approximately $1.7 billion. Those moves, Egenton said, show a seriousness about fiscal discipline that business leaders have been waiting to see.
But as he made clear, discipline on one side of the ledger doesn’t erase the damage caused by punitive or unpredictable policy shifts on the other.
“Expense reductions must be paired with aggressive growth initiatives,” he said, emphasizing that long‑term economic strength requires sustainable, organic revenue from business expansion, not one‑off tax maneuvers that chase employers away.
Egenton is one of many critiquing the budget, as always is the process. Chris Emigholz, who fills a similar role at the N.J. Business & Industry Association, offered his assessment here.
