State must employ incentives to lure businesses
Posted by the Asbury Park Press on 10/2/07
BY JOSEPH M. KYRILLOS JR.
The call for action to revive New Jersey's economy sounded years ago, but our state's leaders are sleeping through it. Now, a summer job report confirms that New Jersey's economy is failing. According to the Rutgers Economic Advisory Service, New Jersey's "minimal" rate of job growth lags far behind the rest of America — between a third and a half of the national rate. Job creation policy, along with tax reform and government reform, is among the most urgent and crucial state issues of our time.
Six years of uninterrupted annual tax increases and antagonistic policies toward businesses have exacted a heavy toll on our state's economy. This failed policy has helped one employer in New Jersey create new jobs: the state bureaucracy.
The rest of New Jersey is losing. Lagging job growth, a soaring cost of living, an exodus of businesses and high-net worth individuals are the economic consequence of the state tax system that chief financial officers rank as 49th out of 50 in America. These are the natural results of high property taxes, high state income taxes that allow for no deductions, a so-called millionaires' tax and regulations such as mandatory family leave imposed even on the smallest businesses.
There is a troubling statewide trend behind headline-making layoffs such as Johnson & Johnson's plan to cut as many as 4,820 positions in the coming year. Rutgers economists report that New Jersey has added jobs at an anemic 0.4 percent this year.
They forecast we will continue to underperform the nation in terms of employment growth for all 2007 and 2008. The report specifically noted that New Jersey is "lagging when it comes to higher-wage job growth." In addition to losing manufacturing jobs, long since documented, New Jersey is also suffering from the lack of expansion in the pharmaceutical and telecommunication sectors, which have historically helped fuel our economy.
The economic rut we are in was not dug by New Jersey's work force — it is among the most highly skilled and best trained in the nation. It is not a product of our natural situation or lack of resources — our state sits at the crossroads of commerce, it has the highest median household income and is home to 24 Fortune 500 companies.
Our prosperity is being eroded by our record-high cost of living and the cost of doing business. Both are attributable to fiscal irresponsibility and bad economic policy in Trenton.
To reverse course, our state government must first do no harm. That is why I will continue to fight against state budgets that stifle growth and postpone the hard choices necessary to reform our broken government.
But we also must take affirmative steps to revive this economy — to secure the jobs we have, attract new jobs and cultivate new and emerging sectors of this economy.
To compete for high-quality jobs and investment, New Jersey must put out the welcome mat for new employers. A key component of any state's economic development strategy is the financial incentives used to help attract and retain quality jobs. That's why I have proposed legislation that would strengthen and modernize New Jersey's effort to attract new employers to our state.
The effectiveness of the state's primary job creation initiative, the Business Employment Incentive Program, is hampered by limitations, including caps on the salary and the number and types of jobs that our state seeks to attract. This is backward thinking. New Jersey needs more high-paying jobs, not fewer.
My plan would also reform the Business Retention and Relocation Assistance grants. This initiative was designed to attract and retain businesses that are considering relocation of their operations. But it needs to be strengthened by increasing the value of potential tax credits for projects that provide substantial job commitments.
It is equally essential that New Jersey target new and emerging industries. To accomplish this, we need more targeted economic development initiatives like the measure I recently proposed to draw high-tech businesses to New Jersey. The plan is designed to attract and retain digital media businesses and the high-paying jobs they bring.
A recent report commissioned by NBC Universal suggests these incentives would attract 6,850 new jobs and generate more than $1.5 billion in new economic activity for New Jersey. This is but one example of the efforts Trenton must take to position ourselves with partners in the private sector to lure new employers and jobs to New Jersey before they locate out of state.
Fundamentally, private investment and entrepreneurs create job opportunities, not the state government. But what we can and must demand from our government is that it not stand in the way and that it instead forge a productive partnership with new employers working to create new jobs in this state.
New Jersey has the people and the potential to lead the nation in economic opportunity, but we are squandering that potential. Our governor and legislative leaders must recognize that the fiscal and economic policy choices we make today will determine whether, 10 years from now, we will look back and remember a once strong and prosperous state that lost its way. Now is the time to change course to secure the future of this state for our children and grandchildren.
Joseph M. Kyrillos Jr. is a Republican seeking re-election to the state Senate from the 13th Legislative District, which includes parts of Monmouth and Middlesex counties.