Against the backdrop of a new Governor next month and a year-old US presidency, a panel of three experts addressed economic-related concerns during the first morning session of the New Jersey Business & Industry Association’s (NJBIA’s) Impact Symposium, held at the Hamilton Manor, Hamilton, with approximately 100 people in attendance.
NJBIA President and CEO Michele Siekerka opened the event by reviewing the organization’s 59th Annual Business Outlook Survey (click here for a link to the article in NEW JERSEY BUSINESS magazine), before turning the podium over to moderator Richard T. Thigpen, vice president of state governmental affairs at PSEG Services Corporation, for the “Economic Outlook Panel.”
Panelist Robert Garrett, president and co-CEO of Hackensack Meridian Health underscored the broader healthcare landscape, in which a fee-based paradigm is, in effect, moving toward one with improved, measurable patient-care quality, as it strives in tandem to reduce healthcare costs and tap an array of innovations. Healthcare premiums are skyrocketing, and health insurers are offering plans with higher deductibles and more cost-sharing of prescription drugs. From Accountable Care Organizations (ACOs) to healthcare plans with higher deductibles, an emerging scenario continues to unfold.
He told the audience, “… I think the issue for healthcare is affordability. The answer is really to achieve a system that provides value to consumers, employers, providers and [also] to insurers. And we can get to the value equation through innovations in transforming how care is delivered.”
If a theme began to develop in the early morning, it might be described as exploring how New Jersey’s many attributes, such as proximity to Manhattan and Philadelphia, and our top-tier school systems weigh against our highest-in-the-nation property taxes and other high costs. For example, in Manhattan, which has its own dynamics, the housing rental market is has “tapped out” millennials, and they might spend 50 percent or more of their income on rent, according to panelist Frank Ferruggia, partner at the law firm of McCarter & English, LLP.
Ferruggia added, “In New Jersey, it depends on the submarket. You have markets like Summit, Short Hills, Montclair and Morristown, where the multi-family rental market is incredibly still hot. But, in some of the other markets that are not as ‘yuppified,’ shall we say, you are starting to get indications from the industry that rents have gone just about as high as they can, and that people are getting tapped out.”
Federal tax reform, meanwhile, may be a burden for New Jersey, since the IRS tax code would eliminate the deduction for property taxes under pending federal legislation – a deduction which is a crucial affordability tool for many New Jersey residents.
Ferruggia said, “Homeowners, I think, are going to be more focused on their tax bill, and you very well could see a flood of appeals come in from the homeowner community that feels that the burden is falling disproportionately on them. I agree with my colleagues here on the panel: I think New Jersey is going to be more disproportionately affected than other states, because we already have a high property tax burden, probably the highest in the country. That federal tax plan, I think, is going to have very real ramifications at the local level, in the tax court, in the county tax boards, and, as I said earlier, that is where the battle will be fought out.”
Meanwhile, of the millionaire’s tax, panelist Edward I. Guttenplan, managing shareholder, Wilkin & Guttenplan, P.C., said, “While it is a way to solve the budget problem, I think there are many [people] who are saying this is going to continue to have wealth flee New Jersey to other parts of the country, and is it going to have a negative impact. It would be great to solve the budget problem, but everybody is fearful [of] the end result.”
NJBIA’s Michele Siekerka concluded, “We heard themes, today, on what we call the road to affordability competitiveness, and we heard that resonate numerous times from all of our speakers this morning.”
EDITOR’S NOTE: Tomorrow’s NEW JERSEY BUSINESS TODAY will include additional coverage of the Impact Symposium.