Even as the state got good economic news last week, the unemployment rate’s holding at a 16-year low 4.1 percent. A McKinsey & Company study found New Jersey’s growth among key economic indicators — including gross domestic product and median household income — puts the state below the national average. A survey of the state’s number crunchers found they hold a dim view of the economy. Executive Director and CEO of the New Jersey Society of Certified Public Accountants Ralph Thomas spoke with NJTV News Financial Correspondent Rhonda Schaffler.
Schaffler: It’s good to talk numbers with a numbers guy, but the numbers in your latest survey are not that uplifting with most of your members thinking the state’s economic conditions will stay the same or worse. Ralph, what’s behind that?
Thomas: I think our members have taken a deep dive because when the results came out, we were surprised. Because, normally, the focus is on tax issues and things of that nature, but the fact that our members indicated the concern over the state’s debt rating and the downgrades were a little surprising to us in that regard. We probably think there are four issues that result in that fact. The number one issue would be the fact of budget and legislative challenges we have here in New Jersey. The fact that we’ve had the downgrades — 11 of them in total, some from multiple agencies. Also, the knee-jerk reactions the Legislature does when there are challenges and some of the things they consider or put into play, like a potential for a millionaires’ tax or things of that nature. National issues have come in.
Schaffler: Before we get to national, I do want to point out that the survey was conducted before the passing of the latest state legislative budget. I’m wondering if maybe members might feel better now that we have this budget it place?
Thomas: I still think there are concerns because the budget, while it was passed, doesn’t allow a lot for innovative things, if you will. It is, what I would call, a slenderized budget and because we have to balance the budget here. So I still think there is that concern. We’re going to find out because we will be doing a follow-up survey that’s going to be geared to finding out what our members would recommend to the next governor of the state.
Schaffler: You mentioned national issues, and I want to touch on that quickly because uncertainty on health care was one issue that resonated. If that is resolved, would that help CPAs feel better about the business climate?
Thomas: I think it depends on how it’s resolved. There are different variations from let’s repeal and wait and take some time to do that. That would be a big challenge or concern for New Jersey because folks who are left uncovered in New Jersey is about 700,000 from a possible Affordable Care Act repeal. They would revert back to the state of New Jersey. Currently, the budget hasn’t taken that into consideration.
Schaffler: In fact, some of the ideas your members have about stimulating the economy come down to money and taxes, property taxes. It’s an overwhelming concern. We know our gubernatorial candidates are talking about this. Do you sense there is a political will to reduce property taxes which members and others think will actually make a difference?
Thomas: I’m not sure of that, I think it depends on who wins out in January. The lieutenant governor has articulated that she won’t raise taxes. I think it’s fair to say that Ambassador Murphy has said all things are on the table. Those have been his answers, so certainly, that would be a concern to our members in terms of where they would go and pivot on taxes.
Schaffler: Why do you think this survey didn’t capture because there have been some positives, and I would be remiss not to bring those up. Employment continues to increase every month in New Jersey, not just here but nationally. Wages are squeezed so we’re not really seeing the wage growth, but obviously there are businesses hiring in the state.
Thomas: I think our members are being visionary of the future because one of the things that is our talent is that our members are trusted advisers for businesses. I think the uncertainty that came through the survey is the result of our members’ pulse read from our clients and for those who are in industry, the businesses that they work for. While employment has increased, we aren’t seeing the investment in New Jersey that we’ve seen in some of our surrounding states and border states in terms of businesses flocking here because, once again, the tax climate and uncertainty about the future.
Schaffler: Certainly does come down to taxes quite a bit. Ralph, thank you so much for your time and your insight.
Thomas: Okay, thank you. It’s been a pleasure.