Rethinking New Jersey: What's Good and What Needs Fixing
The NJCPA asked New Jersey legislators, lobbyists and state-focused organizations some tough questions about what makes New Jersey an attractive state to live and do business, what needs to be improved, and how can we stem the tide of young professionals and retired citizens from leaving the state. Here are their responses:
Why Do Businesses Choose to Operate in New Jersey? What Keeps Them Here?
“Businesses choose to locate in New Jersey because of our superior assets, including our human capital. We are located adjacent to two world-class cities and have great cities of our own. Because of this, we have unparalleled transportation infrastructure. There’s only one New Jersey Turnpike. We are also at the center of the universe for many important industries — particularly those related to life sciences. Those industries that need highly skilled workers come to New Jersey because we have a very well-educated workforce and elite research universities, like Princeton, Rutgers, Rowan and NJIT, churning out more high-skilled individuals each year. A few other states have some of these assets too, and we are constantly competing with them. That is why we need a robust business incentive program to attract businesses when we need to get them over the edge. It would be a mistake for the Governor not to extend the Grow NJ Assistance Program and the Economic Redevelopment and Growth (ERG) Program, especially after the New Jersey Economic Development Authority (EDA) has made the necessary improvements regarding oversight and compliance.”
— Senate President Stephen Sweeney
“What New Jersey is good at is creating wealth and exporting that to everyone else, but our total tax structure is not competitive. We need to do more on the small business tax-incentive front. We also need to get our state spending under control. Will there be another recession? We all know there will be another recession. How long? How deep? We don’t know. I was there in the Great Recession and the revenues went down by $3 billion. If that happens today, what kind of shape would we be in?”
— Senator Steven V. Oroho (R, District 24)
“The state benefits because of its physical assets and geographical location in the metropolitan area. Transportation, access to the financial markets and a vibrant port system all contribute to the state’s attractiveness. Most surveys suggest that the quality of life is a key factor to retention of businesses. Our location provides access to a diverse labor pool which can attract highly educated employees from a three-state area.”
— Dale Florio, Esq., Princeton Public Affairs Group
What's the Number-One Reason New Jersey-Based Companies Choose to Leave? What's Driving Them Out?
“New Jersey is not competitive in our region, let alone nationally. One of Garden State Initiative’s (GSI) research reports last year assessed New Jersey’s competitiveness in six key industries against five near-neighbor states. Our cost of doing business, our tax burden and the cost of living for employees drive our poor rating in nearly every circumstance. We’re not even on the field never mind putting up a fight. We rank at the bottom of every independent list when it comes to business competitiveness, cost of living and business environment. The reality is that other states are offering a better value proposition than New Jersey. We lack political leadership that understand how to grow our state’s economy and create and retain high-paying jobs.”
— Regina Egea, president, Garden State Initiative
“Taxes are an issue, no question. Mandates are an issue, paid sick leave, family leave, minimum wage, pay equality. All of the mandates saddled on business are a form of tax for employers, and there’s the fear of things to come. The lack of attention paid to the business community is a significant deterrent to businesses. We have a high cost of living, a high cost of labor force so the cost issue, the importability issue, is very problematic in some areas. There are many hurdles to overcome, and recently with all the turmoil between the Legislature and the Governor, the whole reputational issue and perception of discord in the state is not helping the situation at all. Just the sheer proposal of another tax — the millionaire’s tax — the sheer mention of that is starting to turn people off. Those are some of the things that turn people away, and in some cases, prompt them to look to leave the state.”
— Thomas Bracken, president and CEO, New Jersey State Chamber of Commerce
“I had a number of people come into my office in support of the millionaire’s tax and I would ask them why they think we need it. When they would say, ‘we need the programs that are being put out there,’ I would ask them, ‘what if we could hypothetically fund these without this tax?’ The answer universally came back, ‘no, we want the tax.’ The answer really gets into the fact that it’s not necessarily about the revenue; it’s economic or social justice that’s really driving this. It is a sentiment of a divide growing between the high earners and the middle class. That gap keeps getting wider, and this is about paring that back a bit. When you have those forces versus economic forces and math, now you are going into a completely different realm.”
— Assemblyman Roy Freiman (D, District 16)
What State or States Should New Jersey Emulate and Why? What Do They Have That New Jersey Lacks?
“New Jersey Business & Industry Association (NJBIA)’s 2019 Regional Business Climate analysis tracked six individual business costs and compared them to those of Connecticut, Delaware, Maryland, Massachusetts, New York and Pennsylvania. Overall, New Jersey ranked as the least competitive in the region, with the highest income tax rate, corporate tax rate, state sales tax rate and property taxes paid as a percentage of personal income. So, when you ask what other states have that New Jersey lacks, the answer is clear: lower taxes and a more competitive business climate. Our state leaders need to address the state’s structural budget deficiencies — high debt and an unsustainable public employee pension and benefits system — that lead to tax increases in each state budget and hinder New Jersey’s ability to make the investments in infrastructure and higher education that support a successful innovation economy. NJBIA’s vision is to see New Jersey reclaim its stature as an innovation leader. To that end, the state to emulate is Massachusetts. NJBIA’s Indicators of Innovation report found that the Boston area’s top-tier post-secondary institutions have been a magnet for creating an ecosystem of innovative startups that offer the well-paying jobs that attract young, educated people. In fact, Massachusetts has experienced a net gain of 200,000 adults aged 18 to 34 years old between 2007 and 2016, while New Jersey has had a net loss of nearly the same amount. Tellingly, as of June 2017, Massachusetts has invested more than $650 million in capital projects, company grants and loans, academic research, tax incentives, equipment and supplies, and other grants — much of which has been distributed in the Greater Boston region. Venture capital also has an enormous impact on expanding innovative concepts from startups to commercialization. Massachusetts received $12.27 billion in deal flow investments in 2017, while New Jersey received only $781 million, so clearly New Jersey needs to do better in this area.”
— Michele Siekerka, Esq., president and CEO, New Jersey Business & Industry Association
“It’s really not about what other states do to retain and attract businesses. All states have incentive programs for business purposes. Fundamentally, New Jersey needs to stay on a long-term pay-down of its unfunded pension liability and reform the health insurance plan for public employees. These two costs alone drive the annual budget discussions in Trenton every year and make it difficult for governors and legislators to consider other programs to keep New Jersey competitive.”
— Dale Florio, Esq.
How Do We Stem the Tide of Students and Young Professionals Leaving the State?
“The key to keeping New Jersey high school graduates here for college is investment. We need to increase operating aid to our state colleges and universities so that they can maintain affordable tuitions, and we need to provide additional capital funding so they can offer state-of-the-art facilities, labs, living quarters, etc. The Building Our Future Bond Act funded important projects like the new Rutgers Honors College that will help us retain our best and brightest. Unfortunately, because of our fiscal crisis, which is growing worse each year due to the escalating pension and health benefit payments, we cannot give our colleges the operating aid they deserve. We cannot issue a second round of “Building Our Future” higher education bonds because our credit rating is so poor. Only when we enact the Path to Progress reform will we be able to achieve fiscal sustainability and make the needed investments in higher education.”
— Senate President Stephen Sweeney
“Clearly New Jersey needs to do more to make college affordable, but the Post-Secondary Education Task Force has also made other recommendations related to skills building and career exploration, some of which have already started to be addressed. A higher education branding campaign is being undertaken by the New Jersey Presidents’ Council, and voters last year approved $350 million for the much-needed expansion of career and technical education at county vocational schools and $50 million for career and technical education projects at county colleges. The Legislature has also passed a 3-Plus-1 college affordability program allowing students to complete three years of study at a county college, followed by one year at a partnering four-year college to obtain a bachelor’s degree, as well as legislation to make apprenticeships more accessible for New Jersey residents in high-growth industries.”
— Michele Siekerka, Esq.
How Can We Keep Retirees Here?
“The cost of living in our state is exceedingly high, and we are working to make New Jersey more affordable for our retirees. That is why we passed legislation to increase the amount of retirement income that can be excluded for income tax purposes from $20,000 to $100,000 and why we fully funded the Homestead and Senior Freeze property tax relief programs for the current year.”
— Senate President Stephen Sweeney
“The affordability crisis for our seniors is a tragedy. MoneyWise
just ranked New Jersey second from the bottom of attractive states in which to retire. People who have built our communities are forced to sell their homes and leave behind children, grandchildren and relationships built over decades. New Jersey’s property taxes have doubled in the last 20 years — does anyone seriously believe that average retirement income has? Until there are honest-to-goodness property tax reductions driven by lower public spending, New Jersey will continue to lose retirees to not just Florida, but also our neighbors Delaware and Pennsylvania, where retirees do not have to completely sever their relationships with New Jersey family and friends and can enjoy a more hospitable tax climate.”
— Regina Egea
Michele Siekerka, President, NJ Business & Industry Association leads the nation’s largest employer association representing over 20,000 member companies and 1.1 million employees within the state. She brings a diverse background steeped in executive management and a reputation for effective leadership along with her understanding of business and government and how they can productively interact. A former Deputy Commissioner of the New Jersey Department of Environmental Protection, she has also served as president and CEO of the Mercer County Regional Chamber of Commerce, and as vice president and senior legal counsel for AAA.
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Regina M. Egea
Regina M. Egea, President of the Garden State Initiative (GSI), has held senior positions in both the private sector and public service. She served as Governor Chris Christie’s Chief of Staff from 2015 into 2016. This followed her prior roles in the Administration including as the NJ State Treasurer’s Chief of Staff in 2010 and 2011 and then for three years, in the Governor’s Office as his Director of the Authorities Unit beginning in 2012. Regina earned an M.B.A. in Marketing from Fordham University in NYC along with a B.A. from Montclair University in NJ. Regina previously completed the International Executive Program at the International Institute for Management in Lausanne, Switzerland and more recently completed Harvard University’s Women on Boards program in 2018.
Stephen M. Sweeney
Senator Stephen M. Sweeney (D) represents legislative district 3. He has served in the senate since 2002 and is currently the Senate President. Senator Sweeney is also the vice president of the International Assocaition of Iron Workers.
Senator Steve Oroho is currently serving his third term in the New Jersey State Senate. He represents the Twenty-Fourth Legislative District in the northwestern part of the state which comprises all of Sussex County, and parts of northern Warren and Morris counties.
Before entry into public office, Senator Oroho had extensive professional experience in the finance departments of top New York City firms, including work for Price Waterhouse, W.R. Grace and Company, as well as Young and Rubicam where he held the position of Senior Vice President of Finance. Senator Oroho is presently a certified financial planner with Stonebridge Capital Management.
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Thomas A. Bracken, President & CEO, New Jersey Chamber of Commerce spent four decades in the banking and financial services industry, serving previously as president of TriState Capital Bank's New Jersey operation. He is a former chair of the Economic Development Corporation of Trenton and of the New Jersey Bankers Association. In 2014, he was named chair of ForwardNJ, a statewide coalition promoting investment in the state’s transportation infrastructure.
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This article appeared in the September/October 2019 issue of New Jersey CPA magazine. Read the full issue.