Talking incentives: In Trenton, quest for better business climate continues

By Anjalee Khemlani
Trenton | Mar 9, 2019 at 12:00 pm

A four-hour joint Senate and Assembly committee’s exploratory hearing Friday focused on the state’s current tax incentive structure — set to expire June 30 — and how to improve incentives for the future, if they should even be kept around.

Legislators asked university heads, business leaders, labor leaders and others for their opinions on the existing business climate in the state, and how the government’s role helps or hurts future economic growth.

The majority of responses favored incentives and state involvement, but who the beneficiaries should be varied greatly.

Some lobbied for incentives to apply across the board for small and large companies alike, while others suggested a focus on the startup, technology and academic space.

Here are some of the highlights from the hearing.

University heads discussed the idea of greater state investment in order to help lower tuition and make colleges more competitive and attractive for in-state students, and simultaneously called for the business community to invest more in the pipeline for its future labor market.

“We are incredibly efficient in this state, we are not just escalating costs,” said Sue Cole, president of Montclair State University.

“You can’t do it alone as the government, and business and industry can’t sit on the side and wring their hands on whether or not they have a labor force. We just need an organizing force to bring us together and look at the facts.”

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Ali Houshmand, president of Rowan, was one of those testifying.

Ali Houshmand, president of Rowan University, said the state’s universities play a significant role in economic growth for any area.

“Between 2011 and 2019, Rowan employment has gone from 1,600 to over 4,000 employees, and our operating budget (has gone from) roughly $200 million to $550 million,” he said.

“All of that has created tremendous amount of economic activities. Throughout the Rowan Boulevard project, which is a (public-private partnership), developers invested $400 million to develop the whole campus. That area used to be a bad housing situation that generated only $110,000 ratables for the borough of Glassboro. As a result of this development, it now generates $4 million of taxation for Glassboro.”

On the topic of whether or not New Jersey remains the medicine chest of the world, Rutgers University-New Brunswick Chancellor Christopher Molloy — who has previously worked in the pharmaceutical industry — said New Jersey very much remains a pharma center, despite losses to places like Massachusetts.

This, he said, paired with the state’s incentives, helps maintain the robust pharma industry in the state.

“Pharma isn’t leaving, they just listen to the McKinseys and Accentures that told them all about what Massachusetts is doing and put a lot of R&D up there next to Harvard, and it’s a bit of a herd mentality, quite frankly,” he said. “New Jersey, in some respects, is its own worst enemy in marketing the great stuff in the state. This state hasn’t done a great marketing campaign since Gov. (Tom) Kean was governor, and I think that’s a really important aspect of why the Amazons perhaps didn’t look twice.

“I know you’re all probably looking for some magic elixir or silver bullet to solving our economic problems, but there are none.” Tom Bracken, New Jersey chamber

“So, there’s a lot of things we can do that don’t require a huge amount of tax incentives, though they certainly have helped, and it helped the Accentures and McKinseys to coax companies to look again. Many of my pharmaceutical colleagues didn’t want to go to Massachusetts and started biotech companies here in New Jersey.”

And the anecdotes of who is leaving and who is staying are mixed.

There are still companies coming to the state, with or without incentives, and companies that are leaving for lower taxes or for a redeveloping city where they might have more impact.

New Jersey’s incentives have been harshly criticized for favoring a few cities rather than looking holistically at the state.

To that end, David Henderson at Roebling Lofts in Trenton said that was the right move. But, he said, companies are still not ready to commit to coming to the city because the state has done little more than designate the city a growth zone — and needs a stronger showing of commitment to the capital city’s future.

“For an emerging market like our capital city to really take advantage of the new economy where, due to millennials preferences to live, work and play in authentic, walkable urban areas, diverse areas, we need a very solid commitment on the part of the state,” he said.

“The growth that we saw in the ’80s in New Jersey suburbs is not happening again. You can talk about how Grow New Jersey favored cities; well, that’s probably OK, because that’s where the growth is happening.”

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New Jersey Chamber of Commerce CEO and President Tom Bracken was also among those who appeared.

Meanwhile, New Jersey Chamber of Commerce CEO and President Tom Bracken said there should be more diversity in the incentive offerings.

When asked what would happen if the state simply let the current incentives run out, Bracken said it would make the state less competitive.

“I know you’re all probably looking for some magic elixir or silver bullet to solving our economic problems, but there are none,” he said.

“It is important that the health of the business community is acknowledged and the health of the business community is nurtured. The business community right now is not in a good place. The business community has been ignored, taken for granted, taxed at an increased rate, overly mandated and vilified without justification, in many cases.”

One such example includes utilities, which are unable to invest in capital improvements due to regulations and other policy issues, he said.

If the state focuses on supporting the business community, the state can say something it hasn’t in years, Bracken said.

“This state is open for business. This state, right now, is not open for business.”

Anjalee Khemlani | akhemlani@roi-nj.com | AnjKhem