CIANJ Testimony to the Senate Select Committee on Economic Growth Strategies on Economic Incentive Programs
July 29th, 2019
Good afternoon, Chairman Smith and members of the Committee.
My name is Anthony Russo, president of the Commerce and Industry Association of New Jersey (CIANJ). CIANJ is a statewide business advocacy group, with offices in Rochelle Park and Trenton, representing the interests of more than 900 members from virtually every business sector (manufacturing, hospitality, financial, insurance, academia, healthcare, etc.). CIANJ prides itself in being a leading advocate for a free market economy, because we firmly believe it is through a free market economy that New Jersey thrives in terms of innovation, competition and the creation of private sector jobs.
I know we are here today to discuss New Jersey’s tax incentive programs and although they serve a critical role in strengthening and growing our economy, it should be stated that if New Jersey had a more equitable tax structure, the need for these incentives would be diminished. Our organization has always represented that the key to growing our economy is growing our tax base. We believe investment will go where it is welcomed and as we witnessed with Amazon in New York, new investment will not go where it meets resistance and/or uncertainty. Let us not be uncertain and resistant when it comes to business and investment, but rather, let us embrace new investment by reducing taxes and passing sensible laws and regulations. New Jersey should strive to attract entrepreneurs and investors who choose New Jersey as the place to bring their vision to life. When that happens, New Jersey will reap the benefits of new private sector jobs, new tax revenues and an improved quality of life.
In 2013, our organization supported the Economic Opportunity Act of 2013 (The Act), sponsored by former Senators Joe Kyrillos and Ray Lesniak, which created the GrowNJ and Economic Redevelopment Growth (ERG) grant programs. Their presence here today re-affirms their commitment to our State and sends a clear bi-partisan message of how critical these programs have been and are to our economy.
We all know New Jersey is plagued by its high cost-of-living and businesses struggle with it two-fold, as both residents of the State and as business owners. The Act has not only kept businesses from leaving New Jersey but it has helped create business as well. As we have watched large corporations leave our state for other lower cost areas, it is our other businesses and residents that are left to fill the void. We believe we do a disservice to our residents and employers when the rhetoric from Trenton is that these tax incentives are “corporate welfare” or that they are going to the wealthy and big corporations. We must appreciate the fact that these are tax credits and not handouts.
These companies are paying taxes, it’s just that the taxes are being “discounted” and in return for staying and growing their companies in New Jersey, the State will realize other benefits such as payroll taxes, property taxes, sales taxes and income taxes from the employees and owners who live and raise families in New Jersey. Additionally, when businesses choose to operate in New Jersey, local communities and charities benefit as well.
It is interesting to note that since this Legislature and the Governor took office in January 2018, the overwhelming number of bills enacted into law have not focused on growing our private sector economy. While the Governor and the Legislature should be lauded in promoting and passing legislation increasing the number of apprenticeship programs and tax credits for the digital media film industries, it has fallen short on assisting businesses in general. CIANJ believes economic and tax incentive programs should be fair, transparent and bad actors should not receive any credits. Furthermore, the programs should be simplified and expanded to include smaller businesses and all parts of New Jersey and not just certain industries or geographical locations. It is also important to note that economic incentives do not have to come only in the form of state taxes but can also include regulatory incentives, and/or expedited permits and approvals.
This Legislature and this Governor must pivot to supporting and assisting our businesses. Optics are important when one considers that we live in a mobile and global economy where servicing clients and customers can be accomplished remotely. New Jersey must do all it can to compel businesses to stay and grow their businesses here and not look elsewhere. While all the initiatives and laws which have been passed are important, there needs to be an appreciation that the costs to operate a business in New Jersey have increased as a result of those laws whether we are talking about an increase in the minimum wage, paid sick leave, or other laws. It is time to focus on passing laws which help businesses. One such example can be codifying the Red Tape Review Commission which proved to be successful time and time again on a bi-partisan level in recent years. Simply put, businesses need to feel welcomed, need predictability and certainty and must be reassured that if they invest in New Jersey, their investment will be protected and grow. This will in turn benefit all of New Jersey, including Trenton.
New Jersey’s priority must continue to be the rebuilding of our economy through policies that result in an economic climate in which private sector jobs are created. Private sector jobs fuel our economy, improve our quality of life and are responsible for a large percentage of state revenues.
There should be no doubt when we leave here today that the tax incentive programs should continue, be enhanced and be promoted to attract further investment in our State. Thank you for the opportunity to comment.