A recent review by the nonpartisan Pew Charitable Trusts ranked New Jerseyamong all states — that is, it consistently fails to raise enough revenue annually to cover expenses. As all New Jersey residents know, the state’s budget challenges and poor fiscal performance are a near-constant problem and one that seems unlikely to improve in the near term.
Fortunately, there is a politically viable solution that would significantly improve our state and our fiscal situation: By investing in infrastructure of all kinds to catalyze economic growth, the state can raise revenue, improve quality of life, create jobs, and become a more desirable place to live and work while charting a course toward a balanced budget.
When politicians, business leaders, and experts tout infrastructure investment, it’s easy to think of the most visible manifestations of it — roads, rails, airports, and other transportation systems. Without a doubt, we must continue to prioritize these systems — including New Jersey Transit, the Gateway project, and improvements to our local roads — to improve growth and realize a return on our investment.
New Jersey also stands to benefit significantly by investing in its hidden, lesser-known infrastructure systems, which together form the backbone of the state’s economy. Energy systems, power generation, water infrastructure, and more are all essential to fostering economic growth. And in New Jersey, many of these systems are a ticking time bomb that risks hamstringing job creation, worsening quality of life, and making our state a less compelling place to do business.
Growing the economy is a win-win strategy to improve the budget deficit and increase collections. Infrastructure investment is safe, proven, and effective at boosting economic growth. Many nonpartisan economists estimate that each dollar of infrastructure spending returns anywhere from $2-$3 in economic activity, in addition to myriad other benefits like direct job creation.
In order to achieve the governor’s goal of a stronger and fairer economy, we need an affordable path for the working middle class to get ahead that makes our state a more cost-effective place to live. Without investments in natural gas infrastructure, for example, residents and businesses will be burdened by high energy costs. And saddling New Jerseyans with more expenses can only hurt economic growth.
Businesses of all kinds, from retail and leisure to industrial and manufacturing firms, depend on energy and water infrastructure to grow and thrive. We need to spend wisely on investments to stabilize our energy systems, provide a holistic mix of energy sources, ensure clean and safe water, and lower costs for consumers to help businesses grow, encourage consumers to spend, and make New Jersey more appealing overall.
The benefits of these investments extend far beyond the public sector. Aby the Economic Policy Institute, for example, found that each $100 spent on infrastructure increases private sector output by an average of $17 in the long run. Infrastructure funding doesn’t just directly create jobs; it jumpstarts productivity in the long term, which in turn increases revenue.
The Murphy administration and state policymakers at all levels can also do more to incentivize private investment in our infrastructure systems to increase economic growth. Public-private partnerships, when done properly, have a proven track record of success in expanding infrastructure capabilities and improving many types of infrastructure systems. Many private companies, especially in the heavily-regulated energy sector, are already championing smart projects that will increase our clean energy resources and provide the foundation our economy needs to expand — without depleting public coffers.
New Jersey’s fiscal woes are nothing new. It will take smart policymaking, substantial revenue improvements, and other strategies to improve the state’s consistent challenges. But legislators need to recognize that growing our economy is the best option to improve our state’s fiscal picture and improve the lives and well-being of New Jersey’s residents.
Doing so will make our state a more attractive place to invest, do business, and work. Infrastructure investment is a proven remedy to jump-start our economy. Governor Murphy and the Legislature have talked the talk on prioritizing infrastructure; now is the time to make that a reality.