You want to know what’s really happening in the state? Ask an accountant, said Ralph Thomas (a little more than slightly self-servingly).
But the CEO and executive director of the state’s largest accounting trade organization is right — these are individuals engaged with each and every constituency in New Jersey. And, right now, accountants have a view of bottom lines at a time when everyone can only speculate about how the economy might twist and turn during the pandemic roller coaster.
The New Jersey Society of Certified Public Accountants represents more than 14,000 of these in-the-know professionals. And being a helpful resource to all those accountants amid rapidly changing legislation and guidance on pandemic relief dollars exactly as busy as it sounds.
ROI-NJ spoke to Thomas in the days after Gov. Phil Murphy delivered his revised budget plan for fiscal year 2021. And Thomas had a lot to say about the proposed $1 billion in new taxes (spoiler: he’s not a fan), as well as the organization’s other priorities.
ROI-NJ: To start off, what was your main focus as an organization during the recent heights of the pandemic?
Ralph Thomas: We did a lot to help to keep people informed as the wheels were turning on the Paycheck Protection Program and other relief programs. The whole way, we were making sure we were front and center in getting information from down in Washington for our members to have the right guidance. At first, there wasn’t a lot of great guidance on it, so small firms struggled with what they needed to do. So, even our members were helping to navigate a lot of other firms through the process to help more people get the stimulus money. They also worked with the SBA on that and other relief money available, as well. Our members have been heavily involved, and working with clients every step of the way in positioning them to take advantage of the stimulus packages. At the same time, they’re helping a lot with business issues that are being encountered, such as business closures during the pandemic.
ROI: I know your attention has quickly turned to responding to the state’s budgetary process. Could you share some of your perspective on the current plan?
RT: What we’re really concerned with is the governor wanting to borrow $4 billion. And we’re also concerned that a lot will be used to pay a $4.9 billion contribution to the pension system, which is the largest pension payment that’s been made. We’re concerned about borrowing money in a situation like this, and we believe there are some other measures that could be taken to reduce costs. It’s a great time for the administration to take a step back and think about how we can be efficient and lower costs somewhat, as opposed to this much borrowing. So, that was our big issue; and we think bonding should be undertaken as a last resort. It should only be for critically important, one-time expenses, not deferrals of our well-documented spending imbalances. At the same time, the governor is looking to expand the millionaire’s tax, and also to reinstate a 2.5% surtax on corporations. In regards to that, we believe it’ll drive businesses and high-earning residents out of the state. We’ve had these issues in the past, so if this (comes to pass), we’re going to have more companies and individuals choosing not to be domiciled here anymore. And those thinking of coming here will be going in a different direction.
ROI: What else do you have your eye on at the state level?
RT: There’s also the cannabis legislation effort; and we’ve been supportive of it, even if there are some associated issues and concerns. A big one is its status as a federally banned substance. And, if there is going to be a constitutional amendment state, there should be a focus on establishing a commercial cannabis industry and not having a burdensome tax structure, which would just lead to the continued growth of the black market. We had a survey that had gone out to members last week that suggested that 60% believe commercial cannabis will help the state’s economy. At the same time, more than 62% say the push for this has to come with steps to mitigate negative impacts of federal banking and regulations on this industry. Other states have gone down this pathway. So, it’s a real opportunity if it gets done the right way — not overly taxed.
ROI: Anything else the NJCPAs is involved with right now that you’d like to highlight?
RT: Student loan debt is still a big area of focus for us. We had our emerging leaders task force meet with folks from the state to get a conversation going about what can be done to help college students with massive loan debt. From a society standpoint, we’re going to be launching a student loan debt relief program. It’s a lottery that helps CPAs with money to help against student debt. It’s an issue that New Jersey exports more high school seniors for colleges than other states. And 65% of those individuals don’t come back. If we don’t help alleviate the debt issue locally, we’re going to have a talent gap here. Students are leaving the state and not coming back to a high-cost living environment. And, if we don’t change that, we’re not going be a very attractive to set up shop if we don’t have the talent needed by companies to run their business. And we need to do something to address what could become a talent gap in the accounting profession in particular — if students aren’t coming back. So, we feel the need to take a lead in this and we’re hoping other organizations follow the lead we’re stepping out on. We’re seeing young people leaving college with six figures of student debt, and that’s tough to even comprehend, but it is happening in today’s environment.
ROI: One thing we’ve heard from business organizations such as the Statewide Hispanic Chamber of Commerce of New Jersey is that, as involved as you’ve been in helping local businesses secure PPP funding, you weren’t eligible for the dollars yourself — has that posed a challenge?
RT: Yes, and we are hoping that, down the road, when more of these relief funds are made available, that 501(c)(6) organizations like ours are able to access loans, too. You have had organizations forced to furlough individuals. Organizations like ours are much-needed in New Jersey and across the country to help constituencies we represent to survive. So, I’m hopeful that there will be additional support to help us to do what we need to do.