CPAs Surveyed Show Support for Governor Sherrill’s Efforts to Reduce the State’s Operating Deficit but Cite Concerns Over Proposed $60.7B Budget

— Respondents Are More Positive About This Year’s Budget Than Last Year’s —

ROSELAND, N.J. – A survey of more than 330 certified public accountants (CPAs) by the New Jersey Society of Certified Public Accountants (NJCPA) in March showed support for Governor Sherrill’s efforts to reduce the state’s operating deficit, though they would like to see more cuts to some state programs under her proposed $60.7 billion budget for fiscal year 2027; to have senior tax credits preserved; and for government systems to be modernized for users and the general public.

The survey showed that 65% believe Governor Mikie Sherrill’s proposed budget will leave the state’s economy either marginally worse or significantly worse over the long term. Respondents viewed Governor Sherrill’s proposed budget as more favorable overall, however, compared to Governor Murphy’s current $58.8 billion budget.

When asked how much of an impact Governor Sherrill’s proposed Stay NJ property tax relief program’s reduction in eligibility from $500,000 to $250,000 and its cap of the maximum benefit at $4,000 would have on the ability of seniors to remain living in the state, 65% said it would be either significantly negative or somewhat negative. More than 30% said it would have little or no impact.

Survey respondents also expressed negative sentiment over the establishment of a $1 million cap on the corporate tax deduction for net operating losses (NOLs) and prior net operating losses (PNOLs), which primarily affect larger corporations that have carried forward their losses to offset taxable income. More than 75% of respondents said it would be either significantly negative or somewhat negative for the state’s business climate and corporate tax competitiveness.

Similarly, more than 80% of those surveyed had a negative response to the proposed reduction of the alternative business calculation (ABC) deduction. The proposal cuts the deduction to 25% from 50% for businesses, such as pass-through entities, that have gross income between $500,000 and $1 million, and for eliminating the deduction entirely for those businesses with gross income above $1 million.

Collectively, survey respondents recommended lowering corporate taxes to attract more companies to move to the state; saving taxpayers future costs by altering the state retirement plan to a defined contribution plan such as a 403(b) plan; and eliminating the process of providing medical benefits for life.  

To compensate for federal cuts to Medicaid and incorporate healthcare-related technology, Governor Sherrill’s proposed budget included a per-employee fee of $325 to $725 on employers with 50 or more employees enrolled in NJ FamilyCare (New Jersey’s Medicaid). Asked if respondents thought the measure would impact businesses from a cost or administration aspect, more than 80% thought it would be either significantly negative or somewhat negative.

“Our budget surveys are a realistic indicator of the business community’s sentiment towards legislation that could impact growth and hiring in New Jersey,” said Aiysha (AJ) Johnson, MA, IOM, CEO and executive director at the NJCPA. “Our members are a great resource and sounding board for the Legislature on many issues affecting individuals and businesses in the state.”

A final version of the budget has to be approved by the New Jersey Legislature and signed by Governor Sherrill by June 30 and would go into effect July 1.

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The New Jersey Society of Certified Public Accountants (NJCPA) represents the interests of more than 17,000 Garden State CPAs, as well as thousands of accounting and finance professionals and students. The NJCPA plays a leadership role in supporting the profession by providing members with educational resources, access to shared knowledge and a continuing effort to create and expand professional opportunities. Visit njcpa.org.