The Statehouse in Trenton
By Michael G. McGuinness
Over the holiday break, I was surprised to learn that 770 local cost-sharing agreements were reached in 2019, which is more than double the amount reached from 2014 to 2018. The article on the impact of crippling local taxes, written by Michaela Bond, appeared in The Star-Ledger on New Year’s Eve and referenced New Jersey’s “Shared Service Czars” — two former mayors, Jordan Glatt of Summit and Nicholas Platt of Harding — who were appointed by Gov. Phil Murphy. Kudos to the governor for his attention to shared services and the significant cost savings and improved services that they represent to state residents. Admittedly though, Platt was quoted as saying, “Without the big three — police, fire and schools — we’re just scratching the surface.”
It seems that the combination of financial pressures due to rising costs and decreasing revenues from the exodus of taxpayers, deteriorating infrastructure and service and an increasingly competitive marketplace has finally exposed the folly of an unswerving allegiance to home rule. It’s about time, since the private business sector is constantly reinventing itself through mergers, consolidations and strategic partnerships in order to survive and better serve its constituents.
My hope for 2020 is that our government officials will find the courage and willingness to tackle some thorny issues, including: overhaul New Jersey’s retirement and health care plans for state and school employees; consolidate school districts; and remove barriers to allow regionalization of tax assessment, health services, municipal courts and fire and police services. Perhaps the patron saints (in the Catholic tradition) — Anthony (lost things) and Jude (hopeless and desperate cases) — will intercede for us. If tackled, these measures will, over time, provide for better care and services to taxpayers while freeing up billions of dollars to invest in infrastructure, retraining and education programs and reducing the crushing tax burden on residents and businesses. The Legislature’s Path to Progress Report, released in August 2018 and championed by Senate President Steve Sweeney, provides a roadmap for getting there.
Until Trenton addresses its fiscal crisis, funds to invest in our infrastructure, most notably mass transit, will be in short supply. A long-term stable funding source for NJ Transit operations that is not subject to the politics of the annual budget process is critical. Without these guaranteed funds, our state does not stand a chance of competing for jobs, attracting employers and retaining our workforce. Why would any fiduciary of a growing business choose to invest here and plant roots in a state and community that is not a good steward of these precious assets?
Although NJ Transit’s assets provide rail service to nearly 150 towns, very few transit-oriented developments and transit villages have materialized. Local officials and residents need to be made aware of the benefits that such development can bring to communities including higher property values, more ratables, dining and gathering places and better access to jobs. Transit-oriented development is much more sustainable (with a lower carbon footprint) than the old-school large-lot suburban development. NJ Transit is in the process of inventorying its well-situated properties with an eye toward monetizing sites where possible and partnering with smart developers to help capture the value that accompanies redevelopment. Any new revenue streams should help NJT upgrade its infrastructure to be more robust and provide a better rider experience. Local leaders in our increasingly urbanizing state should welcome and embrace these changes that include vertical development.
I would also urge our state and local leaders, especially the Legislature and governor, to welcome and embrace the 21st century workforce, which is almost at full capacity given New Jersey’s 3.4 percent unemployment rate. A large percentage of today’s workforce are independent contractors, do freelance work or work for gig economy firms. Legislation (Senate bill 4204 and Assembly bill 5936) and regulations are advancing to force firms to classify more workers as employees who receive mandated benefits (health insurance, workers’ compensation, unemployment compensation, overtime pay, etc.). Aside from being a very costly proposition for employers who would resultingly pay lower wages, it would decimate this popular business model chosen by so many people today, who enjoy the flexibility to work from home, set their own schedules and receive higher wages instead of the benefits they receive somewhere else. “This trend has fostered an increase in innovation and entrepreneurship as many new platform companies have started operations” (Tracy Miller, Opinion, Star-Ledger, Jan. 6, 2020).
If enacted, these proposals would also seriously jeopardize New Jersey’s port and logistics industry — an economic engine for our state — since independent owner-operator truckers represent 80 percent of the drivers who service our port daily. Gov. Murphy has stated that innovation and diversity represents New Jersey’s competitive advantage, yet these mandates would most certainly drive substantial freight and cargo business to other competing East Coast ports, while having a disproportionate adverse impact on minority business owners who represent a larger share of this workforce.
As we kick off the new year on the heels of the longest economic recovery on record, let’s all make a resolution to move outside our comfort zones and tackle the hard stuff first. The future is ours to lose.
Michael McGuinness is CEO of NAIOP New Jersey and has led the commercial real estate development association since 1997. NAIOP represents developers, owners, asset managers and investors of commercial, industrial and mixed-use properties, with 830 members in New Jersey and over 19,000 members throughout North America.