Business Leaders Say Find Fixes for NJ’s Financial Woes Before It’s Too Late

Pointing to recent lack of substantive legislation, members of business community argue that high taxes and underfunded pension system aren’t taking a summer break

Members of Opportunity New Jersey, a nonprofit organization led by the state's top business leaders, speak about the need to address the state's biggest economic and fiscal problems yesterday.
New Jersey’s business leaders are concerned the state is approaching a crisis point precipitated by its notoriously high taxes and severely underfunded public-employee pension system. And they want to help lead a statewide discussion of possible fixes that could be enacted before it’s too late.

The call to action was aired yesterday by the leaders of the New Jersey Chamber of Commerce, New Jersey Business & Industry Association, and other organizations, and it comes just as voters are getting ready to elect a new governor to replace the term-limited Chris Christie. All 120 seats in the state Legislature are also on the ballot in the fall.

The business groups say they are hoping to rekindle some of the success they’ve attributed to a similar public-awareness effort that was launched in 2015, when lawmakers and the governor were largely ignoring what was then the looming expiration of the multibillion-dollar New Jersey Transportation Trust Fund. The Republican Christie and Democratic legislative leaders ultimately came together in 2016 to renew the trust fund for another eight years.

This year, the business leaders have their work cut out for them, as lawmakers have largely taken the summer off in the wake of an ugly state government shutdown that occurred earlier this year after Christie and legislative leaders were deadlocked for several days on a new state budget. Epitomizing the summer’s lack of substantive activity was last month’s introduction of new legislation seeking to rewrite how the state regulates bells attached to horse-drawn sleighs. The policy debate among the candidates running for governor this year hasn’t been much better, with Republican Kim Guadagno and Democrat Phil Murphy attacking each other in recent days on issues related to the Confederate flag and anti-Semitism.

An affordability summit

As part of the effort to turn political discussions in a more productive direction, the business leaders are organizing what they are calling an “affordability summit” for later this month in Somerset, with a series of speakers signed up to discuss the state’s biggest fiscal and economic issues. They’ve also invited lawmakers and the gubernatorial candidates to attend the event, and they’re hoping the discussion helps to set an agenda for Trenton to take on in 2018.

“We all are very invested in the state of New Jersey, and we want to see the state reach the potential that it should have, but has not yet, achieved,” said Tom Bracken, president and chief executive of the New Jersey Chamber of Commerce, during a news conference that was held in the State House yesterday.

Despite this summer’s lack of serious work on public policy, New Jersey still has some of the biggest fiscal and economic challenges of any state in the nation. New Jersey consistently lands among the worst-ranked states when it comes to high taxes, yet New Jersey isn’t flush with cash. Instead, it has one of the highest debt-burdens of any U.S. state, and one of the worst-funded public-employee pension systems. Those two problems have strained the state budget, and contributed to a series of costly credit-rating downgrades.

Skilled-worker shortage

The state economy has improved in recent years, but there are still job openings that remain unfilled because companies in New Jersey cannot find enough skilled workers. Personal-income growth has also remained largely stagnant in the wake of the Great Recession, even as the state’s unemployment rate has dropped below the national jobless average.

The new effort to address these problems is being led by the business leaders through the nonprofit Opportunity New Jersey organization, with a goal of bringing more attention to the broader issue of affordability. And just as the business leaders used a major conference to kick off the effort to renew the TTF in 2015, they are hoping this month’s event in Somerset will help to shift the focus among politicians to the affordability problem.

“We’ve been working very hard on bringing this together, and we know that, collectively, the voice that will come out of this is going to be one that is broad-reaching, it’s going to be very diverse in its representation, and it’s going to have an impact as we go forward,” said Michele Siekerka, president and chief executive of the New Jersey Business & Industry Association.

The keynote speaker at the affordability summit will be former Secretary of State DeForest Soaries, a finance author who currently serves as senior pastor at the First Baptist Church of Lincoln Gardens, which is where the event is being held on September 18.

Attendees will also hear from Steve Van Kuiken, a senior partner at international-management firm McKinsey & Co. who coauthored a recent in-depth analysis of New Jersey’s economy. Rutgers economist Jim Hughes, who is an expert on the state economy, will also address the conference, as will Tom Byrne, the leader of the New Jersey State Investment Council, a panel that sets investment policy for the pension system. The event will also feature “breakout discussions” on issues like taxes, workforce development, regulation and infrastructure, the organizers said.

The prior effort to generate a solution to the TTF-funding issue ultimately resulted in the adoption of a bipartisan compromise that involved a number of significant policy changes, including a 23-cent gas-tax hike and a series of targeted tax cuts, such as a reduction of the sales tax and phase out of the estate tax. Bracken, the chamber of commerce leader, said it’s time to once again “bring people together and unify people to a common cause.”

“We have a pending crisis facing us in the state of New Jersey,” Bracken said. “It’s a very unstable situation, the state is divided in many different ways (and) there’s very little civility in the discussion that’s happening, and very little constructive dialogue that’s going on.”