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♪ David: welcome to "Chat Box."

I'm David Cruz.

Governor Murphy's hour-long speech gave lawmakers a lot to chew on for the next few months.

In the second half of our show, we will talk about the budget process and what to look forward to with former Senate President, Steve Sweeney.

We start with the big headline, a new fee on big companies that would pay for NJ transit operations.

See how that is being greeted.

Our guests are Colleen Wilson, The Record / NorthJersey.com, and Alex Ambrose, policy analyst, New Jersey Policy Perspective.

Welcome to you both.

Alex, you people were relentless.

Is this the corporate transit fee, the surcharge thing you were hoping for?

Alex: yes, whatever you call it, this is revolutionary.

It is hard to overstate just how revolutionary this really is.

This will lay a foundation for the agency to finally get stable dedicated funding.

It is one of the only transit agencies in the country without that stable dedication.

This proposal falls short in some ways.

The clean energy is ongoing, the agency's raiding its own capital budget to pay for operations.

And we have double digit fare hikes coming down the road.

This will put the agency on track to provide frequent and reliable service for those who need it the most.

David: Colleen, the administration is calling this a tax cut.

Why?

Colleen: I guess because it is different from what sunset in December, the corporate business tax surcharge, which has affected 3100 companies in the state.

A good majority of those will not be subject to this new proposal, which will be issued as proposed on companies that turn over $10 million in profit.

David: it used to be a one million, that is why there were more companies affected?

Colleen: that is right, exactly.

There were 600 companies they estimate that earn over $10 million profit.

David: the devil is the details.

Do we know yet, Alex, how much this will raise?

Alex: yes, in the budgeting brief recently released, it looks like this proposal will raise about $800 one million every year, which more than covers the budget shortfall for this year and will help set the agency on a great track moving forward to help fulfill those budget shortfalls, and it is retroactive to this year, so they are bringing in almost a billion dollars in fiscal year 2025, which breathes life into this agency that was facing an unprecedented fiscal cliff.

David: how dedicated is this funding?

It is not automatic.

Does stuff have to happen before it is officially dedicated?

Colleen: that is the question, one of the big questions.

It comes down to what dedicated means and what is the best definition of that.

What the Murphy administration has said is anything can be undone.

The strictest form of dedication in terms of funding would be a change in the constitutional amendment, which would take place in the legislature and at the ballot box.

What the Murphy administration has proposed and what is within their ability to do is to make a statutory -- basically go through the normal process, which is what this would be.

Alex: dedication can look different in a lot of ways.

As we can see with this budget, fortunately we know this is an incredibly popular idea with voters.

The recent Dickinson poll that asked voters how they felt about using taxes on corporations to pay for NJ transit was overwhelmingly in favor.

If that does happen, things are looking good.

David: do you have any faith in either voters or the legislature to make sure this continues to be dedicated?

Alex: I think I need less faith and more looking at the numbers themselves.

It is clear lawmakers in Trenton have looked at the numbers and saw the desperate need for this funding.

For NJ transit and our budget as a whole, this idea has been touted in previous years by Former President Sweeney, and Majority Leader Weinberg, and this administrative leadership.

We saw an interview with you, the mayor and gubernatorial candidate have also spoken in favor of this.

We are hearing a huge shift in rhetoric from lawmakers.

David: how about the argument that you transit nerds or those transit nerds will drive business out of the state of New Jersey?

Any evidence the surcharge did that?

Colleen: the Murphy administration would say no, businesses are thriving.

It sounds like Governor Murphy called several companies to give them a heads up that this could be coming.

And to prepare.

He indicated there was positive or OK feedback from that.

However, we are seeing from the business community, the Chamber of Commerce, who are saying otherwise.

Republicans have communicated that as well.

People are concerned this was a promise, and as different as it may be, it is a backtrack on that, and concerned about how it will play out in the future.

David: that is the point of least resistance, right?

Amazon cannot vote, right?

Colleen: No, but something that really started to sink in with lawmakers going into this budget season is that New Jersey transit has expanded its bus routes in particular to warehouse is like this for Amazon or FedEx or other major companies that rely on the logistics opportunities, support, shipping in this region.

In order to get workers to those warehouses, New Jersey transit has taken it upon themselves to extend routes to expand service and have a more predictable and reliable service for those employees.

They are stepping up.

The idea is they should also step up too.

David: that is definitely an argument and position the administration has put forward.

Alex, you were in snarky post mode with companies that said the taxes would be a jobs killer.

You do not buy that either, right?

Alex: yes, so when we talk about these corporations, I want to be clear who we are talking about.

The proposal is for a fee on corporations that make over $10 million in profit.

These are giant megacorporations like some that Colleen mentioned, Amazon, Walmart, Exxon Mobil, Wells Fargo that benefit from being here in New Jersey, they benefit from our deep workforce, our transit system.

These companies should have a stake in this state and be reinvesting the profits they make into the state to make sure the state's survival in their own survival.

David: the governor said the new tax, he calls it a fee, along with the fare hikes and NJ transit cost savings would make the agency whole.

Does that math work?

Colleen: it can.

I think people want to see how these numbers shake out, and it brings up a good point I'm starting to focus on now, which is there is a huge fare proposal increase coming on board, and will be discussed next week in public hearings.

That is supposed to be voted on by the New Jersey transit board in April.

There are another two months after that as budget negotiations will go on.

The way in which a fair proposal increase will work -- fare proposal increase will work is going to be decided it seems in a disconnected way, even though they could or should be done together.

David: is that 15% just a starting point?

Or is it likely we will see less than 15%?

Colleen: that is up to the board.

They have the ability, as I understand it, to tweak the proposal if they do not agree with it.

In addition to the 15%, the critical piece is they are proposing a 3% annual increase indefinitely that will not have another public hearing process.

That is a really important part of this.

It is kind of an historic, unprecedented proposal.

David: as Prince sang, that means forever, that is a mighty long time.

Can transit be cost efficient?

Maybe you have a suggestion where they can find savings?

Alex: NJ transit is a public service and should be treated as such.

It is not a business that should subsist on its own revenue to survive.

This proposal more than covers the shortfall this year, and with the added revenue since it is retroactive will cover next year.

That takes away the argument for these drastic double-digit fare hikes.

We are not saying fare should never be raised but they should be done slowly in a predictable way so these riders who have more stringent financials than people who rely on cars can plan better for these increases in their budget.

David: the idea of virtual hearings, is that off the table?

Alex: right now for these fare hearings, they are in person, and they are during the day or the week day.

It will definitely be harder to get riders to these hearings to hear what they have to say.

One of the more concerning proposals is they plan to implement this 3% in perpetuity with no future hearings.

They claim they are not legally required to do it.

The question is not whether it should be legal but it is the right thing to do to hold hearings on any future increases.

David: how will this affect service?

Will we see more frequent trains and buses?

Colleen: the proposals on the table now are designed I believe to prevent service cuts, number one.

The question of service expansion is a good one.

That is expensive.

The agency is trying to right size its budget, so expanding the capital budget, that would be required in order to expand service, that is another conversation entirely.

That leads into another element of this, the state transportation trust fund is facing expiration.

There is no proposal yet on the table to renew that.

David: that will mean more taxes on somebody, yes?

Alex: yes, the transportation trust fund is how we pay for transportation in New Jersey, and part of that does go to NJ transit.

Like we have said, this takes away the argument that the capital budget needs to be rated to pay for operations, that the clean energy fund needs to be rated to pay for operations.

But this proposal is the foundation and needs to be improvements that you were talking about.

David: we will watch as this evolves, as budget season begins.

Colleen Wilson, Alex Ambrose, good to see you both.

Thank you for taking a few minutes with us.

Our next guest has seen his share of budgets and budget negotiations.

As a state senator for 20 years, 12 as Senate President, he stepped back from the Sweeney center to run for governor.

Senator Steve Sweeney joins us now.

Good to see you.

Steve: great to see you, David.

David: do you miss this time of year?

Steve: of course you do, when you have been involved in this before, budgets are important times of the year.

This is how we fund our government.

Just because I lost my election does not mean I do not pay attention.

David: I always wonder how much advance notice the Senate President and the speaker get.

Steve: not as much as you think.

The administration is trying to keep it secret until they make the announcement.

That is fair, not unreasonable.

Normally what we would experience, you would be running a story about the same time I would be hearing about it.

That is the way it works.

It is fair to the governor, it is his budget that he gives to the legislature.

He wants to keep it tight until he can make the announcement.

David: was it different under the previous governor?

Steve: not really.

It is pretty much the same with every governor I have dealt with.

This process, as you know, they will brief the press.

They embargo the stories until certain times.

As they are telling us, as we are being told what the budget contains, on my phone I see the stories popping up.

David: what happens generally?

Who looks at the numbers?

Does the assembly move things along first?

Do both houses work alongside simultaneously?

Steve: both houses will take this budget document and comb through it, see what they like and what they do not like, and once both houses get together, they will compare notes, see where they agree, and recognize where they do not agree, and they will get working together on it.

David: is this where the office of legislative services comes in?

The lawmakers represent a dozen different fields of expertise, but not a lot of accounts.

-- not a lot of accountants.

Is that where you get experts in?

Steve: you get experts from doing it.

They have been doing this for a long time, nobody knows the budget better than Paul.

Steve was another brilliant guy when it came to budgets.

They absolutely understand it.

My former colleague understood it.

It is a process.

It is an interesting process, and at the end of the day, you really do learn how to make it work.

None of us come there as experts but you learn it after a while.

David: I assume you watched on Tuesday.

What was your impression and what stood out in this budget?

Steve: I did watch.

I was actually very proud of some of the things that the governor highlighted, like getting to the full pension payment.

We started that a long time ago, and to get to the full required pension payment, and for the fourth year in a row, it is very important to me, when we started , under a previous governor and finishing with this governor.

School funding is finally getting to the full formula that we spearheaded in 2018 to get to full funding.

What I'm really excited about is following through with something I wanted to do, you have to look at school funding every five years to make sure it is meeting all of its goals.

The commitment to New Jersey transit is something Senator Weinberg and I proposed in February 2020 before COVID hit.

It is exactly with the governor proposed.

It is the right thing we do.

We need to fund transit.

Businesses received a 40% tax cut at the expense -- 14% tax cut, and the elimination they did.

This is a big tax cut.

A lot of these blue states got a huge tax increase.

Asking the business community for some help -- by the way, they can deduct this on their taxes.

To finally, with the dedicated funding source.

We always talked about a dedicated funding source for New Jersey transit.

Governor Murphy coming up with a plan, and looking back to what Senator Weinberg and I proposed, and now it has been accepted.

It is great.

David: he is calling it a corporate transit fee, which is a less painful corporate business tax surcharge.

Is it fair to business considering the benefits they derive from reliable transit?

Steve: I think the business community is the one that benefits the most, because people can get to work.

Where I live you hear about transit deserts, there is not any.

You hear businesses complain they cannot get workers to work.

At the end of the day they can write this off.

It is a benefit to the industries to ensure they get the supply of workers they need to run their businesses.

David: let's get back to the school funding formula.

Others have said you will be funding a broken formula, it needs to be blown up.

Are they right?

Steve: no, not at all but it has to be readdressed.

Under Governor Corzine's formula -- the one thing we do not need to do more of is revisit laws we passed to make sure they are doing what we said they would do.

It does not need to be blown up or redone.

This funding formula was approved by the courts.

There was a lot of hard work to get there.

We need to reevaluate the funding formula every five years.

David: what happens now?

Lawmakers will mark the budget up during and after a series of hearings.

Is there anything that will face some resistance from lawmakers?

Steve: there always is, David.

Every line has a priority to a legislator or constituency group, but the reality is the money is just not there like it was before.

If you do not have it, you cannot spend it.

We are spending down surplus by a couple billion dollars, and you have to be careful doing that.

David: he also told lawmakers to cool their jets when it comes to Christmas tree items.

He zeroed out a lot of Christmas tree items past late in June last year.

Are you one of the people who says get rid of the Christmas tree items are put your name on them when you propose them?

Steve: number one, you should put your name on them.

That is with the budget of resolutions is is supposed to do to start with.

You only spend money that you have.

They are cutting into surplus to continue to do what they are doing.

We have great programs but you cannot spend money you do not have.

We are not the federal government that can print more money.

Tell the mint to print more money.

We have to live within our means, and we have to look at a lot of this in what we are funding and how we are funding it.

Our tax relief programs are critically important to the people in the state of New Jersey.

We have different programs, trying to make them more organized or consistent or easier to understand is something that is important.

David: let me get to some politics.

What do you make of this primary for the U.S. Senate?

Is there a rebellion underway against the party bosses?

Steve: I do not think there is a rebellion at all.

I think this is a process that will take place County by County.

A lot of people want to tag the chair as a county boss about the last time I checked, they ran for the office, put their names on the ballots, they vote on who they want to support.

It is not that hard, you just have to get a couple of people to run in each county.

People are like no one can get account, that is total bull.

You have to do some work.

There will be a bunch of people running on the Democrat side for governor.

On the Republican side we are hearing of a few.

It is not that hard, just go to work.

David: we have heard a lot about the county line system under attack.

Now two suits trying to get it torn down.

I take it you are not with Steve Philip and others who say they will run without the party line even if they get the party line.

Steve: this is way early.

There will be counties where I will not get the county line, does not mean I will have a County line.

The advantage that they claim is not really an advantage because I will have a column too.

The governor will be the highest office on that line.

It is not what they make it out to be.

Can it be an advantage?

Of course, but the people in that county have voted, have run for office, got elected, voted for their leadership.

It is not like there is not democracy.

It is some people do not want to do the work of getting the signatures to get candidates to run with you in order to have a County line.

David: Steve Sweeney, good to see you, thank you for coming on.

Steve: good to see you again, I look forward to seeing you more often.

David: that is "Chat Box" for this week.

Thanks also to Alex Ambrose and Colleen Wilson.

You can find more content and full episodes when you scan the QR code on your screen.

I'm David Cruz.

For all the crew here at Gateway Center in downtown Newark, thank you for watching.

See you next week.

Announcer: Major funding for "Chat Box with David Cruz" is provided by the members of the New Jersey education Association, making public schools great for every child.

Promotional support is provided by Insider NJ, a political intelligence network dedicated to New Jersey's political news.

Insider NJ is committed to giving serious political players an interactive forum for ideas, discussion, and insight.

Online at insiderNJ.com.