New Jersey’s Economic Outlook for 2018 Is So-So, Accountants Say

John Reitmeyer | July 7, 2017 | More Issues
CPAs are worried about election-year uncertainties, property taxes, the state’s credit rating, budget problems, and federal healthcare changes

Ralph Albert Thomas
Despite New Jersey’s solid year of job growth in 2016, a recent survey of the state’s certified public accountants suggests few of them believe economic conditions will improve much by next year.

The results of the survey, released yesterday by the New Jersey Society of Certified Public Accountants, indicated just under 25 percent of those who responded to the organization’s member poll predicted economic conditions will get better by 2018.

Instead, the overwhelming majority of the accountants who responded said they believe that conditions here will either stay the same or get worse, the survey found.

The results of the NJCPA poll largely echo another recent survey of economic sentiment in the Garden State. Last week, Rutgers University’s Real Estate and Policy Research Consortium released the results of a poll of the state’s top business leaders that found 64 percent of those surveyed believed economic conditions in New Jersey would stay the same or get worse over the next year.

Meanwhile, the CPA survey released yesterday also spelled out the top recommendations and concerns of the state’s accountants. They included property taxes, New Jersey’s credit rating and perennial budget problems, and the potential implications of any healthcare changes that may be enacted at the federal level.

Election-year unpredictability

Ralph Albert Thomas, chief executive officer and executive director of the NJCPA, said he hopes this latest “pulse read” of the accountants can help inform the state’s public-policy debate as New Jersey gets ready to elect a new governor this fall. “That’s what our folks operate on, they operate on data and the numbers,” Thomas said yesterday during an interview with NJ Spotlight.

While New Jersey hasn’t had any setbacks to annual job growth since the recession officially ended in 2009, the state has been adding about 45,000 jobs each year, a pace that has lagged both the national recovery and the rate of growth experienced during the 1990s as New Jersey rebounded from a prior recession, according to figures tracked by Rutgers’ Bloustein School of Planning and Public Policy. But last year, the state added more than 60,000 private-sector jobs, its best showing since the recession ended.

Still, the NJCPA survey found nearly 33 percent of poll respondents expect the state’s economic conditions to get worse over the next year. Another 42.6 percent believe things will stay about the same, while just under 25 percent predicted conditions will be better a year from now.

Thomas said he believes the overall economic concern is rooted in the unpredictability of what will happen next in Trenton with Gov. Chris Christie, a second-term Republican, getting ready to leave office in early 2018 thanks to gubernatorial term limits set in the state constitution. Republican Kim Guadagno and Democrat Phil Murphy are currently vying to replace Christie, and both have begun to put forward their own ideas about how to guide the state economy, with Guadagno stressing a “no new taxes” and limited spending approach and Murphy calling for an increased minimum wage and more investment in technology and higher education. So far, early polls show Murphy as the frontrunner, but the campaign isn’t expected to heat up until after Labor Day.

“I think it’s that uncertainty factor,” Thomas said.

Property taxes

In addition to the economic-outlook question, the accountants were also asked in the survey to list their top three recommendations for creating economic growth in New Jersey. Nearly 80 percent listed reducing property taxes among their top three. High property taxes have long been a key concern in New Jersey, and the latest data from the state Department of Community Affairs indicates the average property tax bill increased by nearly $200 in 2016 to $8,549.

Other top recommendations for stimulating growth in New Jersey revealed in the CPA survey were cutting income taxes and providing additional tax incentives to businesses.

The CPAs were also asked to identify their greatest concern for those operating a business in New Jersey, and nearly 24 percent pointed to the state’s credit rating and ongoing budget problems. That was the highest response among the choices offered.

New Jersey has suffered through a series of credit-rating downgrades since Christie took office in 2010, with the latest coming earlier this year. That’s left New Jersey with one of the worst credit ratings of any U.S. state, and a low debt grade typically drives up costs ultimately covered by taxpayers that the state takes on when it borrows money for long-term capital projects.

The implications of federal healthcare reform and the unknown outcome of the 2017 gubernatorial election were also among the top concerns raised by the accountants in the survey.

Thomas said he’s now hoping that legislators, candidates and the general public will take a close look at the results of the survey, and give serious consideration to the issues raised by it as upcoming policy decisions are made in Trenton.

And while the group has no plans to take political positions or endorse any candidate, it is urging policymakers to adopt a long-term view as they take on the state’s biggest problems instead of enacting just short-term Band-Aids.

“That’s what our members want to see more of,” Thomas said. “It’s got to be something where we have a plan on how to restructure.”