Business and government leaders from across the state flocked to the Borgata in Atlantic City on September 17 and 18 for the New Jersey Chamber of Commerce’s Business Summit. The first-of-its-kind event, attended by more than 500 guests, highlighted four key issues: transportation and infrastructure, workforce readiness, taxes and regulations and mandates. The selected topics stem from the results of a survey conducted earlier this year of more than 400 New Jersey-based executives.
I had the privilege of moderating the tax panel on Day 1. The panelist were:
- Jay Biggins, Executive Managing Director, Biggins, Lacy, Shapiro & Company
- Linda Bowden, New Jersey Regional President, PNC Bank
- Peter Crowley, President and CEO, Princeton Regional Chamber of Commerce
- Joseph McNamara, Director of the New Jersey Laborers' Employers Cooperation and Education Trust and Vice Chairman of the Economic Development Authority
- Ted Zangari, Member, Sills, Cummis & Gross and Chair of its Real Estate Department
Linda Bowden kicked off the discussion with these interesting facts:
- In 2010, there were 87,630 fewer tax returns than in 2009
- NJ is one of just two states to have both a estate tax and an inheritance tax (Maryland is the other).
Reforming NJ’s estate and inheritance taxes would emerge on Day 2 as part of a compromise to address the state’s looming Transportation Trust Fund (TTF) crisis. More on that further down in this blog.
Several of the panelists remarked on how the state’s burdensome tax structure is chasing small- and medium-sized businesses out of the state or discouraging businesses from outside the state from setting up shop in NJ.
Ted Zangari delivered a little good news, bad news when it comes to businesses paying a premium to operate in New Jersey and the Northeast.
“The good news for the region is that companies are willing to pay a premium for being here,” he said. “I think most businesses are OK with paying a little extra — a premium — to be in this region.”
“The bad news is: Between New Jersey and our competing states around us, with the exception of New York City and its boroughs, everywhere else is less expensive.”
Joe McNamara maintains that incentives can help level the playing field of the cost of doing business in NJ. He stressed how much they mean, having been privy to all the information he sees on companies considering a move to New Jersey.
“Without it, we’re not in the game,” he said.
It seems that every major policy issue in NJ eventually leads back to taxes, and so it was during a discussion earlier on Day 1 on the state’s deteriorating infrastructure and the underfunded Transportation Trust Fund.
Utility and Transportation Contractors Association of New Jersey CEO Robert Briant began the discussion on New Jersey’s depleted Transportation Trust Fund, issuing a warning that the state is now “beyond broke” in terms of transportation infrastructure investment.
Cathleen Lewis, director of public affairs and government relations for AAA Northeast, said drivers are willing to accept a hike in the gas tax as long as it’s statutorily dedicated to funding infrastructure improvements.
Philip Beachem, president of the New Jersey Alliance for Action, reminded the summit that New Jersey has not had a gas tax increase since 1988, but has continued to fund infrastructure.
“We have not had a commensurate gas tax increase since that time; yet we continue to pay for a program by debt,” Beachem said. “We are now at the point where we no longer can continue to operate in the same fashion.”
He was later asked what it would take for a new dedicated funding source to be approved by the Legislature.
“Bipartisan support,” Beachem said.
Unfortunately, bipartisan cooperation was not evidenced on Day 2 when the Transportation Trust Fund crisis took center stage during a panel of state lawmakers.
Asked what his plan was, Assembly Republican Leader Jon Bramnick said, “I’m ready to vote for a tax increase on gas today — I’m ready to do that,” provided there is a commitment to lower the estate and inheritance tax. The NJCPA took a similar position in an Op Ed published earlier this year.
Assembly Speaker Vincent Prieto and Senate President Stephen Sweeney both said they were open to reforming the estate and inheritance tax system, but were adamant that it shouldn’t be linked to a TTF funding source. They also called for a more phased-in approach, noting that lowering those taxes in one fell swoop would result in a budget hole of nearly $500 million.
“It shouldn’t be either-or,” Sweeney said. “We agree the estate tax and the retirement income tax are a major problem. … I don’t think anyone disagrees, so you have a commitment on that.”
At the end of the two-day summit, panelists and attendees alike stressed the need for collaboration within the business community to address the state’s most pressing issues.
In the coming weeks and months, the NJCPA, Chamber, NJBIA and other business groups will look to pool resources and maximize their collective influence to advance key issues and public policy outcomes in Trenton.