As we close 2022 and head into a new year, New Jersey’s business community is hearing and reading mixed messages regarding the state of the state’s economy. Some are suggesting the business climate is fine, but that view is not matching the reality that businesses owners are experiencing.
Recent surveys by the New Jersey Chamber of Commerce, New Jersey Society of CPAs and the New Jersey Business & Industry Association of business owners, accountants and corporate executives tell the story of a business community that is struggling and facing uncertainty. The state’s businesses of all sizes are dealing with rising inflation, soaring energy costs, the difficulty of finding and keeping workers and the fear of a recession. The struggle is especially real for smaller companies that have thin margins and can only pass on so much cost to their customers.
Every day, I read about iconic New Jersey businesses, especially restaurants, that just cannot survive any more. Mastori’s, the landmark diner in Bordentown, shuttered for good. Bischoff’s, the iconic Teaneck ice cream shop, announced it will be closing after 80 years. Los Amigos, the highly regarded Mexican restaurant in Atlantic City, announced a closure “until further notice” following a 40-year run.
This past June, the state adopted a healthy $50.6 billion budget, helped by billions in federal aid. However, there is a difference between a healthy state budget and a healthy business climate. All you have to do is listen daily to CNBC and economist after economist and CEO after CEO will tell you the overall economy is most likely headed for a hard landing.
The state budget included the largest residential property tax relief program in over a decade, a full payment to the state’s public worker pension fund for the second year in a row and a surplus of more than $6 billion. It is accurate that Wall Street looked favorably upon the budget — New Jersey has received three credit rating upgrades and is currently on “positive” outlook with S&P, Fitch and KBRA.
But, there’s a catch. Fitch warned that downgrades could be in New Jersey’s future because the state’s budget continues to carry high costs that are not sustainable once the state’s billions of dollars in federal pandemic aid runs dry. Complicating matters is the very real prospect of a recession, or a hard landing, that would significantly lower state revenue.
Looking down New Jersey’s fiscal road, if we are to maintain the spending levels established by this budget, we need to make strategic investments in our businesses now so they can grow and the economy can grow with them. That could have happened in the current budget if the surplus revenue was used for direct capital infusions to businesses — and if there were tax credits for employers who were hit with payroll tax increases to replenish the state’s unemployment insurance fund.
Despite the state’s surplus and federal aid, no substantial new grants were budgeted for New Jersey’s business community outside of a comparatively small outlay for the Main Street Recovery fund ($50 million out of $50 billion, or one-tenth of 1% of the budget).
To create awareness on this issue, the New Jersey Chamber of Commerce has teamed with our partners at local and regional chambers of commerce statewide to appeal to our legislative leaders. And, to their credit, Senate President Nick Scutari (D-Clark), Assembly Speaker Craig Coughlin (D-Woodbridge), Senate Republican Leader Steve Oroho (R-Sparta) and Assembly Republican Leader John DiMaio (R-Hackettstown), plus several other Senate and Assembly members, have been open to our ideas, and have been meeting with us regularly.
We are seeing signs of progress: The Senate and Assembly are advancing a package of pro-business bills that we are supporting. And the New Jersey Economic Development Authority has taken steps to make its programs more accessible.
We will continue to press for more.
How can you help? You can attend our New Jersey Business Summit & Expo on March 14 and 15 at Harrah’s Resort Atlantic City. The two-day conference — open to business, nonprofit, government leaders and anyone who wants to attend throughout the state — will highlight New Jersey’s strengths, make recommendations to state leaders and provide information and tools to attendees that they can use to grow their bottom lines. There will be a business expo on March 14 where over 100 businesses will display their products and service. We’re going to examine opportunities and key economic issues. And, just as important, make the business community aware of all the state is already doing to help companies of all sizes.
Please mark your calendars. Strong attendance will demonstrate strong demand for improving the business climate in New Jersey.
Let’s collaborate — state government and business — on programs and policies that ensure New Jersey’s companies of all sizes can succeed, so the state of New Jersey can succeed.
Tom Bracken is CEO and president of the New Jersey Chamber of Commerce, a business advocacy organization based in Trenton.