Last week, Gov. Phil Murphy announced to a room full of New Jersey’s political elite that he was releasing $112 million in CARES Act funding.
The governor said a significant portion of these grants would be targeted to help small businesses survive the ongoing COVID-19-related slowdown of the state’s economy.
In making the announcement, the governor expressed the correct sentiment, saying small business is vital to the state’s recovery.
In response, many business owners, while expressing appreciation for the governor’s action, declared the grants woefully insufficient to mitigate their survival concerns.
For instance, of the $112 million, $35 million is being allocated to help the food service industry — establishments described as “food service and drinking places.”
But the available grants range from only $10,000 to $20,000 per business, depending on the number of full-time employees.
Marilou Halvorsen, who heads the New Jersey Restaurant & Hospitality Association, was quoted as saying the grant “is not going to be enough to fix the problem,” and she estimated her industry would need more like “hundreds of millions of dollars” to survive the downturn.
Beyond the fact that the dollars are too low, these grants are saddled with inherent problems. The grants are sporadic. They provide only temporary relief to the businesses receiving them, leaving the many more businesses that do not get them frustrated and discouraged.
Also, the grants do not address the long-term issues of generating economic growth that must be solved if New Jersey’s economy is to restart and recover.
However, there are signals coming from Trenton that the business community’s voice is finally being heard and its concerns heeded.
The governor has said that the recent spike in COVID-19 cases in New Jersey can be traced to “community spread” and not to an increase in business activity (such as indoor dining) — an implicit acknowledgment that businesses can, and are, being responsible as they reopen, and they are following the recommended social distancing and masking guidelines.
Further, the governor signaled that raising the capacity on indoor dining will happen “sooner rather than later.” This is a welcome direction — especially with cold weather looming — as it is obvious that no food or drinking establishment can survive economically by filling only one seat out of every four.
Finally, the governor indicated last week that he and legislative leaders are moving toward a compromise that would reinstitute a tax incentive program to attract and keep businesses in New Jersey.
This incentive program inexcusably lapsed nearly 16 months ago, leaving New Jersey at a competitive disadvantage, as evidenced by our current competitive business ranking — New Jersey is 48th in the nation.
We hope that these statements by the governor means he is ready to partner with the business community. We welcome the opportunity.
We would first urge the governor to articulate a vision for New Jersey’s economic growth and formulate a realistic and rational economic plan that will benefit everyone in New Jersey. A vision and a plan of action to accomplish that vision is what leaders owe constituents; neither the vision nor the plan exist today.
In this plan, the governor must allow New Jersey businesses to reopen across the board and trust them to follow the masking and social distancing guidelines the way he has trusted essential businesses, schools, hospitals and other entities to do so for months — a strategy that has proven successful in fighting the COVID-19 medical crisis.
The plan must make adequate short- and long-term funding available to businesses, so they have the cash flow needed to get through a prolonged recovery. Access to these funding sources should be streamlined and must ensure that any business that qualifies can participate.
The plan must also provide adequate safeguards to protect employees returning to offices and customers returning to stores, but also protect a business from liability caused by frivolous COVID-related lawsuits.
We urge the governor to focus on a true economic plan and on a growth strategy now.
Periodic grants assist the select few who receive them and provide no certainty as to when further assistance will come. The ability to achieve revenue growth generated by reopening the economy creates the opportunity to help everyone. It also puts the future plans of businesses back in the hands of owners and operators and allows them to formulate their own plans for recovery.
That is why a plan that achieves both a strong reopening and robust revenue growth is so important.
Tom Bracken is CEO and president of the New Jersey Chamber of Commerce, headquartered in Trenton.