Summit Hears Call for Action on Transportation Woes, Gasoline-Tax Increase

Meir Rinde | September 18, 2015 | More Issues, Transportation
Other panels at state Chamber of Commerce gathering explore workforce development, regulation, corporate and individual taxes

transportation road work
The state’s transportation funding situation is so dire that transportation Commissioner Jamie Fox should start closing bridges to spur public concern and legislative action — or at least that was one panelist’s opinion at a wide-ranging conference yesterday on New Jersey’s economic and business struggles.

The discussions at the New Jersey Chamber of Commerce’s first-of-its-kind summit in Atlantic City also focused on workforce development, regulation, and taxes. A panel of top legislators is scheduled to speak this morning before the summit concludes. The transportation panel provoked some of the most passionate comments, including the remark from John Donnadio, executive director of the New Jersey Association of Counties.

“Commissioner Fox should close some more bridges. I think that would resonate with the local economy,” Donnadio said. “We saw it last year in Somerset County, and in Bergen County, and the effect that it had on those local and regional economies, and I think it would resonate with the public and get them to call their legislators and urge them, we don’t want this to happen to us.”

The discussion was part of an ongoing debate over how to replenish the state’s $1.6 billion Transportation Trust Fund. It is expected to run out of money for new projects sometime in the next year, unless its funding source, the state gas tax, is raised or another source of revenue is identified.

Robert Briant, CEO of the Utility and Transportation Contractors Association of New Jersey, describes the TTF as “beyond broke” because it is taking in $905 million a year while the state has about $1.3 billion in annual transportation-related debt, requiring an annual infusion from the state’s general fund. Covering that debt fully would require at least an 8-cent increase in the gas tax, while the new $20 billion trans-Hudson rail tunnel Gov. Chris Christie just committed to helping pay for will require at least another 10-cent increase, Briant said.

Such a combined 18-cent increase would still not cover any of the state’s other infrastructure needs, like highway maintenance, replacement of deficient bridges, mass transit or other projects, suggesting a much bigger hike is needed.

Senate President Stephen Sweeney (D-Gloucester), who is scheduled to speak at today’s session, and other Democrats have said a gas-tax increase is the only option, while some Republicans support a hike and others are ambivalent. Christie has not explicitly ruled out an increase, though he signed an anti-tax pledge recently as part of his presidential bid.

Chamber CEO Tom Bracken said at the outset of the summit that participants had pledged to avoid partisanship in the day’s discussion, and the transportation panelists did not mention Christie despite his central role in the TTF funding debate. But the speakers did ask the 400-plus attendees in the Borgata ballroom to talk up the importance of increasing TTF funding, in order to put pressure on legislators.

When legislators hear from transportation advocates, they think, “‘They’re not the people who are voting for me’,” said Cathleen Lewis, director of public affairs and governmental relations for AAA New Jersey. “So we need to take it back to our neighbors, our friends, our family, and explains to them how it saves them money, it makes them safer and it makes their lives better to make this investment now.”

The gas-tax hike “needs bipartisan support,” said Philip Beachem, president of New Jersey Alliance for Action, a coalition that promotes infrastructure investment. “The biggest problem we have with this issue is the fear that it’s going to be used against you when you run for reelection. We need bipartisan support so we take that political debate out of the question.”

[related]One questioner in the audience said residents thought of the TTF as a “slush fund,” given that the state’s transportation construction costs are much higher than in other states, and were not willing to support a higher gas tax. Briant said he was part of a group looking into ways to bring those costs down, while Lewis noted that 30 percent to 40 percent of gas taxes were paid by people from other states, unlike other taxes.

Part gripe session, part status update on the state’s business climate, the summit is being held to identify ways to improve the state’s economy and its competitive standing compared with other states, particularly Pennsylvania and New York. While unemployment is at its lowest rate since 2008 and tax collections are up, New Jersey has been ranked last among the 50 states for business-tax climate. Complaints about regulatory issues and high tax rates are common among business leaders.

In his introductory remarks Bracken quoted the song “Settlin’” by Sugarland, with its line, “I’ve had enough so-so for the rest of my life, Tired of shooting too low.”

“We are a state blessed with enormous resources and we have enormous potential. But we are in a so-so rut. We’re stuck in neutral,” Bracken said. “We need to raise the bar dramatically, both on short-term and long-term expectations, and we shouldn’t settle for anything less than achieving those new, high, realistic goals.”

The session on taxation also telegraphed a sense of alarm, though the speakers described tax policy as a complex issue. BLS & Co. executive managing director Jay Biggins, an expert on corporate relocation strategies, said, “There’s no single tax that’s the silver bullet” in terms of making the state more attractive to employers, and said taxes are only one factor for companies, along with workforce quality and other issues.

“In order for New Jersey to be taken seriously as a location, it has to be competitive across all of the other important decision variables. We’re working with companies on analyzing all the variables, whether infrastructure sufficiency or the fiscal reliability of the state. Always near the top of that list of decision variables is talent. Can find the talent that I need? That’s mission-critical,” Biggins said.

That means keeping down the cost of living for workers, including personal income taxes, should be a concern for policy makers, he said. Linda Bowden, New Jersey regional president for PNC Bank, said her priority was lowering the state’s so-called death taxes — the estate and inheritance taxes.

New Jersey and Maryland are the only states to have both, and New Jersey’s estate tax exemption is much lower than the federal threshold. Bowden lamented that she has sometimes had to counsel clients that their best wealth-preservation strategy was to relocate to Florida or another state.

Some state government initiatives designed to aid businesses drew praise from the speakers, especially the expanded use of tax breaks to retain and attract companies under the Economic Opportunity Act of 2013, which consolidated a number of incentive programs. Ted Zangari, a real estate lawyer with Sills, Cummis & Gross, said the incentives help close the “cost differential gap” for companies considering whether to locate in a lower-tax state like Pennsylvania.

New Jersey Policy Perspective has criticized the tax break arrangements, calling them “a string of needlessly risky deals that ultimately won’t do much to help New Jersey’s weak economy.” Joseph McNamara, a summit panelist and a board member at the Economic Development Authority, which grants the incentives, defended them as critical tool for leveling the playing field as companies decided where to settle.

“It’s not corporate welfare or a giveway,” McNamara said. “There has to be a net benefit for the state. These incentives are all performance-based. (The companies) have to generate the revenues. They have to make the capital investment that’s required. And they have to hire or retain the jobs that were in their proposal.”

The summit continues today with a business panel moderated by Michele Siekerka, president of the New Jersey Business and Industry Association, and a legislative leadership panel with Sweeney, Assembly Speaker Vincent Prieto (D-Hudson), Senate Minority Leader Tom Kean Jr. (R-Union), and Assembly Minority Leader Jon Bramnick (R-Union).