New Jersey is a good place for business, and don’t let anyone tell you otherwise. Recent economic growth numbers, improved credit rating, increased investments, and a budget surplus are just a few reasons the business community should be excited about what’s next for NJ.
Growing up in the Garden State, people learn from a young age that the State isn’t a conducive place for business because of overregulation, high taxes, and property values that lead to a high cost of business. While there is some truth in this, it’s only fair to look at both sides of the coin.
Last week in Atlantic City, Governor Murphy was the keynote speaker at the NJ Chamber of Commerce’s business summit, “ReNew Jersey Business Summit: A Time for Answers.” In his speech, Murphy toted some of the state’s recent accomplishments and noted further actions that are being taken to improve the state’s competitiveness.
There’s no arguing that the Governor would likely paint a positive picture of what his administration has accomplished regardless of the numbers; all politicians do. That said, there are a lot of quantifiable changes and concrete actions that have taken place in recent years that are worth looking at.
Let’s dive into what’s been happening.
Budget Surplus
In contrast to everyone’s expectations, including the Governor’s, the recently released 2023 NJ budget projects a record $4.2 billion budget surplus. Other sources have suggested it’s actually a bit higher at $4.6 billion, but who’s counting? It’s only a couple hundred million dollars, right?
We had already noted this surplus in our article discussing potential legislative solutions to high gas prices, which made note that there’s enough money for state senators to actually propose how to return that money.
That’s an unusual situation for legislators or executives at any level of government to find themselves in, what to do with all this extra money. To the Murphy administration’s credit, and it should be noted, by their own calculation, 70% of the State’s budget is being sent right back out “in the form of grants-in-aid for property tax relief, social services, and higher education, as well as State aid to schools, community colleges, municipalities, and counties.”
Whether you believe that this is an appropriate use of tax dollars or are of the mindset of Republican State Senators who have introduced the “Give it Back” bill to return that money to taxpayers, the surplus has positive effects.
Debt Payment and Pension Funding
The Murphy administration has used the jump in revenue to pay off a good amount of the state’s debts. To the date of the Governor’s budget address, $3 billion had been paid off, saving the state and its taxpayers an estimated $600 million in interest. There have also been billions put aside to fund future state-sponsored construction programs rather than taking loans; the Governor predicted this would save $2.2 billion in interest.
Further, the state pension has had two consecutive years of full funding. I’m a little embarrassed to write that as though it’s impressive, but regular and complete pension payments aren’t exactly the state’s strong point. Should all go as predicted for fiscal year 2023, the Murphy Administration will have been responsible for more than 2/3rds of contributions to the pension fund since 1995.
Improved Credit Rating
As a result of the state’s budget surplus, handling of its debt, and proper pension funding, Moody’s upgraded New Jersey’s credit rating for the first time since 2005. This makes borrowing easier and cheaper should the state need to do so, but it also projects an aura of responsibility and trustworthiness that business needs.
Problems paying back debts alerts the business community that a place, a city, state, or nation, is not a good choice.
4th Quarter GDP Growth
According to the NJ think tank, the Garden State Initiative, while the state’s 2021 GDP growth of 4.9% was under the national average of 5.7%, New Jersey finished the year strong with a 7.4% 4th quarter growth rate. Most importantly, this final quarter wasn’t a result of increased government spending, but was a result of private businesses.
Increase in Venture Capital
Last week, the Governor noted in Atlantic City that the state had seen a sharp increase in the amount of investment in NJ-based entrepreneurs. In 2017, the state pulled in $818 million, in 2021, that number had increased to $5.5 billion.
Additionally, the Innovation Evergreen Fund that came from the Economic Recovery Act of 2020 is helping new businesses acquire the necessary funding to get established in the state.
High Rate of “High-propensity” Business Applications
Beyond the totals of investments coming into the state, there are many “High-propensity” applications being filed; this refers to startups that are most likely to actually develop into companies with payrolls. NJ’s increase in this type of application is higher than any state in the Northeast.
The Hub Research Center, Legal Marijuana and an End of the Waterfront Commission
Other indicators that the ground is fertile for business growth in NJ are The Hub research center to be constructed in New Brunswick, the beginning of recreational marijuana sales, and NJ’s determination to exit the Waterfront Commission, essentially ending it as a body.
The Hub is a research facility slated for completion in 2024 that would host hundreds of researchers looking to further develop the medical sciences. Just days ago, US Commerce Secretary Gina Raimondo named the Hub as a potential location for semiconductor manufacturing that is expected if the $52 billion bill makes it to President Biden’s desk for a signature.
Whether you like it or hate it, you can’t ignore or deny that this week’s opening of legal marijuana sales will bring additional tax revenue and encourage more businesses in the industry to make their home in New Jersey.
Lastly, New Jersey is preparing to go up against New York before the Supreme Court to win the right to end the Waterfront Commission, a commission created to protect Port Elizabeth from organized crime. The Murphy administration has argued that the Commission has outlived its usefulness. The port is not plagued by the problems it once was, nor do 5/6 of the positions the Commission was created to oversee even exist anymore. If the Commission was ended, this would add to the NY/NJ ports’ ability to properly staff and attract commerce.
Wrapping Up
There’s a lot of good news for business in New Jersey right now. We’ve weathered the past couple of years and come out stronger on the other side. It’s always worth taking a moment to acknowledge the opportunities.