Gov. Chris Christie appeared before the full Legislature in late February to deliver his final budget address in Trenton. The governorship and every seat in the Assembly and Senate are up for grabs in the upcoming Nov. 7 election. — Courtesy: Governor’s Office/Tim Larsen
By Michael G. McGuinness
As we prepare for the next governor and potential changes in the Legislature, it is important to recognize what New Jersey has accomplished in the last several years, continue this momentum and support these programs and initiatives. Our economy is certainly getting better, based on all the construction taking place and today’s low unemployment rate. Affordability and stagnant wages, however, remain challenges to many and are a big reason why a huge proportion of millennials are still living at home with their parents. Without immigration, our population would be dwindling.
On the transportation infrastructure side, we have a new Bayonne Bridge, a new Goethals Bridge underway, the widening of the turnpike in South Jersey, increased dedicated revenues for transportation and transit costs and positive movement toward initiation of the Gateway project. All of this work is long overdue, but it is helping our state get its “mojo” back and secure its place as the second- or third-largest port in the country. With the state’s access to a huge, well-off consumer base, our transportation system of rail, airport and highways and available (although shrinking) land, our e-commerce and logistics industry is still humming along nicely.
Even our regulatory agencies — the Department of Community Affairs and the Waterfront Commission of New York Harbor — have modified their oversight and surcharges that had been imposed on the warehouse and distribution industry and eliminated excessive and irrational fees. The Port Authority’s Council on Port Performance, on which I sit, continues to collaborate with the port stakeholders to modernize and streamline operations and eliminate obstacles. We are clearly better off than we were a few years ago.
Kudos as well to our policymakers for imposing a 2 percent cap on annual property tax increases. While still generous, the cap is forcing local leaders to live within their means. Recent tax cuts, enacted in an effort to retain jobs and income in New Jersey, include an increase in the threshold for the estate tax from $675,000 to $2 million on Jan. 1, 2017 and elimination entirely in 2018; a gradual decrease in the sales tax; and an increase in the retirement tax exclusion to $100,000 by 2020. Businesses and aging baby boomers need to rethink their exit strategies.
On main streets throughout the state, many more municipal leaders are taking courageous and bold steps, often bucking their voters, to modernize land use ordinances and partner with developers to transform their communities into places that millennials and the generations beyond will want to call home: mixed-use, live-work-play downtowns with easy access to affordable housing, mass transit, amenities, gathering places, restaurants and bars to create a buzz and nightlife. Our hats go off to the mayors and councils in Hackensack, Florham Park, Bridgewater, Holmdel, Nutley, Morristown, Woodbridge and plenty of other towns that are reading the tea leaves.
This development activity is generating lots of new jobs and careers for young and old alike. Many of these success stories would not have occurred without the tax incentives and payment in lieu of taxes agreements that are offered by the state and the towns. There are often many different costly factors that confront developers when they are redeveloping in an older community, including contamination, structured parking, affordable housing and off-site improvements. PILOT agreements are essentially business transactions that are transparent, negotiable, provide certainty to both parties and provide a significant investment of capital into the community that enhances the quality of life for its residents. A sure way to measure the success of these programs is to measure the number of new jobs, direct and indirect, and track the demographic changes in the community. An increase in people under 35 years of age is almost always a “homerun.”
With the above progress having been made, our new governor and Legislature will have to focus on the remaining core problem areas that are handicapping New Jersey’s ability to get ahead. Investing meaningfully in our future — people, infrastructure, quality of life and education — is essential. Sadly, New Jersey’s “out of whack” pension, health care and other nondiscretionary budget items are thwarting our ability to ever get there. These costs, along with potential Medicaid increases and education funding, must be addressed. New tax increases cannot even begin to cover these costs without further crippling our economy. Many of the government workers receiving these generous benefits are retirees living out of state that are being funded by millions of New Jerseyans — many living on the edge — who are not part of this special privileged class.
Our new governor would be prudent to hit the ground running upon taking office in January 2018 to embrace the following five goals:
- Improve business climate and affordability: Take immediate action to legislate, incentivize and mandate municipal cost-sharing, regional services and further consolidation of municipalities. New Jersey’s 9 million residents deserve this help and need courageous leaders who will not “wimp out” to preserve the obscene and antiquated home-rule structure. Even more important is to start consolidating the 600-plus school districts and transition to a county system similar to nearby states, such as Maryland. These measures would restore justice and hope of affordability by dramatically lowering property taxes.
- Capture talent: Utilize all means possible to attract and retain a right-skilled workforce. Capital chases talent. Most millennials and Generation Z-ers cannot afford to live in New Jersey. With Goal No. 1 (above) accomplished, more will do so. The easiest and smartest place to start is giving towns, developers and small businesses better and more affordable access to liquor licenses that will lead to more restaurants, amenities and places for people to gather after work. Student loan forgiveness would also be hugely helpful.
- Invest in and expand infrastructure: Encourage public-private partnerships for major work as they are the most cost-effective way to get the job done on time and on budget. To the extent possible, New Jersey should depoliticize the process for the oversight, operations, maintenance and improvements of critical infrastructure systems — roads, sewer, water and power — by relying on quasi-public or private entities.
- Enhance regulatory efficiency and the approval process: Prioritize the integration of all computer systems used by government regulatory agencies, state and local, to streamline and accelerate decision-making for permit applicants. Also reform other state — Department of Environmental Protection, for instance — and local permit programs to allow for the delegation of permit review to qualified private professionals to expedite business development.
- Launch an open data initiative: Accelerate the effective use of data by governments at all levels to improve services, inform local decision-making and engage residents. The Center for Government Excellence is part of Johns Hopkins University’s 21st Century Cities Initiative to help 100 midsized American cities enhance their use of data. New York City and the state of Ohio are currently working toward making open data available to their residents. This would be a great way to promote better regional planning and synergy among towns and make it easier for businesses and individuals to access valuable data for starting a business, finding a job and planning their futures.
As you can see, some government programs are working very well in New Jersey and they need to continue. However, to benefit the vast majority of our residents, it is my opinion that the new governor and Legislature will fail miserably if they don’t persevere in accomplishing the above five goals.
Michael McGuinness is CEO of NAIOP New Jersey and has guided the commercial real estate development association’s progress since he joined the staff in 1997. In addition to overseeing daily operations, programs and staff, McGuinness directs the chapter’s legislative activities and manages the Developers Political Action Committee (DPAC).