Governors may change, but the issues don’t for New Jersey’s business community. So, no matter who wins tomorrow’s election — Democrat Phil Murphy or Republican Lt. Gov. Kim Guadagno — the next governor must address these key economic challenges.
- No. 1 (without question): Transportation.
Mass transit in New Jersey is approaching Third World status. Outgoing Gov. Chris Christie has starved NJ Transit, forcing it to spend capital funds on operations. In 2010, Christie killed a project for a new rail tunnel into Manhattan. But the need for a new, modern rail link didn’t go away. The current tunnels are 100 years old and serve 200,000 commuters a day.
Now the Gateway tunnel, which could cost up to $30 billion, is on the drawing board. Both Murphy and Guadagno are for it, of course — but no one has a concrete mechanism to fund it. The next governor must bring a sense of urgency to this project.
- No. 2: The outmigration of young people.
New Jersey leads the nation in the number of students who choose to go elsewhere for their college educations. And most never return to the state. So, while New Jersey needs to be attracting millennials from other states in order to thrive, it can’t even hang on to its own.
The state’s institutions of higher education and Trenton must do a better job of retaining — and inspiring — New Jersey’s young people. Murphy has proposed free tuition at community colleges, an attractive idea. But it’s difficult to imagine how the state would possibly pay for it.
- Which brings us to issue No. 3: Affordability and taxes.
New Jersey’s tax burden and business climate are routinely ranked the worst in the nation. Murphy says we have to raise taxes more to fund New Jersey’s many needs. Guadagno says she’ll find the money the state needs by uncovering waste. Neither candidate is talking about serious, structural tax reform to make New Jersey more affordable — and, therefore, more competitive.
- The $50 billion elephant in the room is issue No. 4: Pensions for public employees.
New Jersey has the most underfunded pension system in the nation, with a $50 billion unfunded liability. This year’s budget makes a $2.5 billion payment to the pension system — the largest ever, but still approximately half of what actuaries say the state should be contributing.
This unfunded pension liability casts a shadow on every fiscal decision made in Trenton. And, while people can rail all they want about how we got here, this is money these workers are owed, and New Jersey will have to pay it. Murphy says he’ll fully fund the system. Guadagno wants to see a different pension system for new hires. Both are needed.
- Issue No. 5: The state’s tax incentive program.
Christie’s offer to Amazon of up to $7 billion in future tax credits has led to some criticism. Murphy is clearly not a fan. But these incentives are a crucial way to attract and retain economic growth in a state with a tax burden as high as New Jersey’s. The key is to make sure the process is unimpeachable and devoid of politics. That should be the next governor’s focus regarding tax incentives.