The Edge for February 2022
Can Gov. Murphy and the Legislature Cut Taxes and Recover All the Jobs Lost in the Pandemic? 2022 is a Big Year.
Taxes. Business incentives. Job growth. The future of work. Can New Jersey be the innovation state? Our panel of business reporters discussed these issues – and how they impact the state’s business climate – during a Jan. 27 Reporters Forum hosted by the New Jersey Chamber of Commerce.
See below to read more about what was said at the forum moderated by Tom Bergeron, owner and editor of ROI-NJ.
Is the Governor Cutting Taxes?
Rhonda Schaffler
Business Correspondent
NJ Spotlight News “The day the governor gave his state of the state speech, he (recited) 14 tax cuts, and it caught a lot of people by surprise,” said Rhonda Schaffler, business correspondent at NJ Spotlight News. “The tax cuts were fact checked and they were there. But the tax cuts were very targeted so not everybody felt them. For example, extending tax cuts for vets. There were tax cuts for lower income. So while he had this list, a lot of people did not benefit from them.
“If you are paying more in taxes, than it is not a tax cut for you,” Schaffler said.
“Governors usually want their legacy to be one thing and Murphy is doing something different,” said Stacie Sherman, deputy managing editor for U.S. Bureaus at Bloomberg News. “He is doing different tax cuts and hoping people remember the tax cut that helped them. We’ll see if that works.”
For employers, however, taxes have increased because they are paying more in payroll taxes to replenish the state’s Unemployment Insurance fund that has been depleted in the pandemic, Schaffler said. “The business community, the N.J. Chamber included, has been outspoken on the need for the state to use (federal pandemic aid) to replenish the fund. I’m surprised the state has not done that.”
Developing the Innovation Economy
The governor has, however, rolled out corporate tax incentives, many designed to attract companies in what he calls “the innovation economy,” the panelists said.
There appears to be progress with Pfizer expanding its campus in Berkeley Heights; The Hub project in New Brunswick, wind energy in South Jersey and the prospect of Netflix building a giant studio in Monmouth County.
“With clean energy and tech, there is a lot of excitement about what could come,” said Daniel Munoz, staff writer at NJBIZ who focuses on economic development. “But these take a long time. Most of these tax incentives are 10-year agreements and sectors like medical devices can take a decade to go from concept to product.”
But Murphy seems focused. “He talked about the innovation economy again as he was sworn in for a second term,” Schaffler said. “He wants New Jersey to become known for an innovation economy like it was once known for Bell Labs.”
There is potential, added Sherman. “2022 is going to be a big year,” she said. “Murphy has lured companies. Now he has to see them come here, create jobs, spend money and hopefully lure other business. Then we will see if the innovation economy really works.”
Economic Recovery
Tom Bergeron
Owner, Editor and Chief Content Officer
ROI-NJ“With national GDP growth numbers, we are not keeping pace,” Schaffler said. “More importantly, 6.3% unemployment in New Jersey is higher than the national rate. That’s what people talk about: Am I employed? Do I feel safe in my job? New Jersey has recovered three quarters of the jobs that were lost at the worst of the pandemic, so we are not whole yet, and other states are.”
The governor has said the economy is showing gains, but Schaffler said, “If your economy doesn’t show gains after a recession, that’s bad.”
Complicating matters as we move forward, Bergeron said, is “We’re dealing with supply chain issues, shipping delays, hiring shortages and pandemic recovery.” This year, Bergeron said, will be challenging.
Affordability and Property Taxes
Daniel Munoz
Staff Writer, Government/Economic Development
NJBIZ“In the governor’s state of the state speech, Murphy said affordability will be addressed in his second term,” Munoz said. “There will be more focus on funding education and property tax relief.”
The governor even said he wanted to lower property taxes, not just contain them, which is akin to the Holy Grail in New Jersey.
“Regarding whether Gov. Murphy can actually reduce property taxes, what I’ll be looking for when the state budget is introduced (later this month) is whether there is new spending and how are we paying for that.” Schaffler said. “There is a reason everyone keeps talking about affordability and if (the governor and Legislature) don’t take some action, there will be real disappointment in the state.”
Gov. Murphy faced a very close election in November because of taxes and affordability, Sherman added. “We have to be able to afford our bills,” she said. “Property taxes have gone up every year for decades. Once you hit you second term, a governor thinks, ‘What is my legacy?’ And in New Jersey, if you want a positive legacy, you cut taxes.”
Child Care
Stacie Sherman
Deputy Managing Editor for U.S. Bureaus
Bloomberg News“As a woman and a mom, the big issue right now is school and child care,” Sherman added. “It’s a big impediment to getting the economy back up and running. President Biden is trying to address the issue of child care, and Gov. Murphy has proposed tax credits for child care. It’s an important and often neglected topic that is important to getting people back and the economy back.”
The irony, Schaffler said, is “Women, on top of child care responsibilities, get paid less than men. Even if you are going back to work and you feel comfortable putting your child in child care, they may not have space for your child because of staffing shortages there.
“It’s a massive disruption in the labor market. You go back to the Great Recession and that looks like child’s play compared to what is going on here. Everyone is rethinking the future of work, and nobody has the right answers yet. There is no easy answer. It’s complicated and some of it is out of political leaders’ control.”
The Future of Work
Everybody has been asking whether the future of work will involve returning to offices, working from home or a hybrid?
“This will be the year that companies will think about their space and where they want their workforce,” Schaffler said. “Will it be in the city? Will it be hybrid?”
“People want to spread out,” Sherman said. “People don’t want to be so close to each other in an office. The conversation is about whether remote works. Companies are going back and forth about whether you can do the same job in the office that you can do at home. This year will lay the ground work for the future of cities vs. suburbs.”
Bergeron said there may already be an answer and we don’t know it yet: “It seems,” he said, “like remote work and hybrid work is here to stay.”
