What’s great about New Jersey? With the seemingly endless barrage of news from the Statehouse these days about legislation negatively impacting the business community, it’s easy to lose sight of the fact that New Jersey does have a lot to offer.
Full disclosure: NJBIA has been one of the loudest voices calling attention to New Jersey’s challenges. This is a state that is losing its competitive edge and losing too many residents and job-creators due to the high cost of living and doing business here. But making an effective case for change doesn’t mean we’ve effectively lost our bullishness about New Jersey. This state has tremendous assets, but in order for our businesses to capitalize on those assets and thrive, a course correction is required.
Companies need a healthy business climate that supports job growth and incentivizes investment. Unfortunately, New Jersey’s business climate now ranks last in the region when taxes are compared with seven neighboring states. New Jersey’s FY2019 budget approved last July increased the top income tax rate and imposed a corporation business tax surcharge that gave us a CBT that was not only the highest in the region – but the second-highest in the nation.
To make matters more challenging, the state recently embarked on an accelerated path toward a $15 minimum wage that, over the next 11 months, will result in a 35 percent cost increase to small New Jersey businesses due to the wage mandate and payroll taxes associated with it.
The breadth of these challenges make it easy to overlook the reasons why we made New Jersey the home for ourselves and our businesses in the first place. New Jersey offers an incredible quality of life with 130 miles of beautiful beaches, historical sites, professional sports teams, and world-class music, theater and entertainment venues. We have first-rate public schools, nationally ranked universities, world-class health institutions, and a highly diverse and educated workforce.
Our extensive transportation infrastructure of highways, railroads, port facilities and airports gives New Jersey businesses easy access to global markets. And we have the second-highest rate in the region of new entrepreneurs, whose high-tech startups will power this state’s 21st century innovation economy.
Yet New Jersey’s advantages are being undercut by a business climate becoming uncompetitive due to tax increases needed to support unsustainable spending in state budgets. Tellingly, during the 10-year period ending in 2017, state revenue grew 23 percent, spending increased 45 percent and debt ballooned 382 percent.
What’s worse is that much of this spending is unsustainable. For example, without reforms, public worker pensions and retiree health benefits will consume 26 percent of the state budget by 2022, hamstringing the state’s ability to invest in infrastructure, innovation, higher education and economic development – all essential for attracting and retaining businesses and the workers they employ.
The New Jersey Economic & Fiscal Policy Workgroup, comprised of economists, accountants and public finance experts, has studied how to fix the state’s long-term budget challenges and made a series of recommendations, including pension and healthcare reforms. This must be part of the conversation when Gov. Phil Murphy delivers his budget address March 5 to the Legislature and legislative hearings get underway.
During these budget negotiations, we hope that policymakers make the course correction that is needed so that this state’s entrepreneurs and long-established companies can fully realize the inherent advantages of doing business in New Jersey as we work to build a more competitive business climate here.
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