Business groups painted a grim picture for lawmakers during an open-ended joint committee hearing on strategies to grow the state economy and redesign its corporate tax break program. Tom Bracken, who heads New Jersey’s Chamber of Commerce, said the state’s fallen behind the competition.
“I know you’re all probably looking for some kind of magic elixir or silver bullet to solve our economic problems, but there are none,” he said. “The business community right now is not in a good place. The business community has been ignored, taken for granted, taxed at an increasing rate, overly-mandated and vilified without justification.”
Bracken, who’s also an NJTV board member, claimed thousands of smaller companies now struggling in New Jersey could successfully rebuild its economy — but not without lower taxes, an improved transportation infrastructure and a lot less regulation. As for tax incentives, Gov. Phil Murphy’s criticized the current programs managed by the Economic Development Authority as sloppy and ineffective, obligating the state to $11 billion in payouts. He’s promoting tax breaks aimed at smaller businesses and innovative startups, and capped at $400 million in 2020.
“So that we have a pretty firm sense of what the maximum exposure for the taxpayers might be, and I think that’s a prudent and smart component of a tax credit plan so you know exactly what, from a budgeting perspective, what the commitment is,” said Tim Sullivan, CEO of the Economic Development Authority.
“A soft cap is fine, to be able to review it at a certain level, but to cut it off at any point in time makes no sense to me. So that’s number one on the incentive program. Secondly, we have to broaden the reach of our incentive program,” Bracken said.
“You can’t get those smaller startups going without the incentives,” said New Jersey Institute of Technology President Joel Bloom.
Leaders from New Jersey’s public universities also told lawmakers that they need the state to invest more, and for business and industry to partner with them, create internships, share labs in order to educate the necessary workforce and to keep students from leaving Jersey.
“In fact every time one of those kids leaves the state, the price tag that goes with them is $275,000 that we have invested as a state in those K-12 students,” Bloom said.
“Higher education is no longer affordable to New Jersey students. It is not affordable,” said Dr. Susan Cole, president of Montclair State University. “We need a rational investment in public higher education.”
And, as an aside, Rutgers University Chancellor Christopher Mallow advised the state needs to do a better job of selling itself.
“I think the state actually hasn’t done a great marketing campaign since Gov. Kean was governor, and I think that’s a really important aspect of why the Amazons perhaps didn’t look twice at us, actually. So there’s lots of good things that we can do that don’t require a huge amount of tax incentives, although they certainly have helped,” said Malloy.
Lawmakers will consider the testimony as they work to forge and adopt a new tax incentive program before the old ones expires in July.