New Study Says Affordability, Investment Are Major Hurdles in New Jersey

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Burdensome regulations, high taxes, and spiraling health care costs were the top concerns cited by business leaders in a new study of New Jersey's business climate entitled "Economic Policies and Solutions: Making New Jersey a Better Place for Business."

the study was designed not just to find problems with how New Jersey was attracting and retaining businesses, but also to identify areas where the state was being proactive and ensure that it continued in that direction.

Burdensome regulations, high taxes, and spiraling health care costs were the top concerns cited by business leaders in a new study of New Jersey's business climate entitled "Economic Policies and Solutions: Making New Jersey a Better Place for Business".

The study, one of the most comprehensive in recent memory, was conducted by The New Jersey Policy Research Organization (NJPRO), the think-tank affiliate of the New Jersey Business & Industry Association. The survey portion of the study included both a telephone poll of 249 state business leaders and a separate set of interviews with 29 New Jersey and out-of-state business and government leaders. It also contains compilations of state business-climate rankings, the business policies of 18 states, and 37 policy recommendations for New Jersey based on other states' best practices.

When asked about the state's future business environment over the next five years assuming that current policies remain in place, 42 percent of respondents believed that the New Jersey business climate will deteriorate.

"Affordability and investment emerged as themes throughout the survey," said Sara Bluhm, NJPRO's executive director. "Affordability was characterized by the costs facing all businesses - taxes, energy, healthcare and regulation. These factors can easily make or break a business and determine whether it will start or expand its operations in New Jersey or depart the state.

"Investment," Bluhm continued, "was expressed by such concerns as better preparation for skilled workers in manufacturing and other trades. It also applies to state funding of university research and development, and partnerships between academia and private industry."

Bluhm noted that when businesspeople were asked to rate the state's performance in addressing their concerns, they believed it fell far short in a number of areas. For example, only 23 percent of survey respondents felt the state was doing a good or excellent job of making the state affordable to live in. Twenty-eight percent rated the state good or excellent when it came to affordable health coverage, 30 felt the same about a favorable state tax structure, and 31 percent about affordable energy.

In one-on-one interviews with state business executives, there was a striking similarity in responses with those polled by telephone. Business executives were frustrated by the costs of doing business and dealing with an increasingly demanding environmental and labor regulatory bureaucracy within the state.

At the same time, business executives considered New Jersey's highly skilled workforce the state's greatest resource, although many felt more should be done to provide blue-collar workers with the skills needed to succeed in industry.

As part of the study, NJPRO's researchers also sought out comparisons of New Jersey's business climate to other states' commercial environments, drawing on polls conducted by business organizations and media. The results showed New Jersey seriously lagging behind other states.

Based on how other states create friendly commercial environments, NJPRO made a series of recommendations in the study, including five high-priority "prosperity policies" to improve New Jersey's business climate:

  • Let businesses reduce their state tax burden by carrying their losses forward for the same number of years they can for federal taxes and base their tax liability in total on what they sell in New Jersey, not whether they have a headquarters or own property in the state.
  • Give state businesses a quick, efficient system when it comes to permits and licensing. Upgrade the state's business website to help a firm understand, apply for, pay, track and ultimately obtain the licenses and permits it needs to legally operate.
  • Fix the state's business liability laws. New Jersey has become the destination of choice for plaintiffs wanting to sue businesses.
  • Do a better job of funding academic R&D and creating research partnerships between universities and businesses.
  • Control the costs and improve the quality of the state's health care plans.

Philip Kirschner, president of the New Jersey Business & Industry Association ( NJPRO's parent organization), pointed out that the ultimate goal of the research and recommendations is to improve the partnership between New Jersey's business and government sectors, and create solutions to problems facing the state. "In releasing this report," he said, "we're mindful of previous business climate studies and surveys released by state business associations and think tanks. These reports have often portrayed the state in a negative light. In our own report, there is good and bad news. Our ultimate purpose, however, is not to recycle business community complaints but rather to offer constructive solutions that create dialogue between business people and concerned policy makers."

NJPRO's Bluhm added that "the study was designed not just to find problems with how New Jersey was attracting and retaining businesses, but also to identify areas where the state was being proactive and ensure that it continued in that direction."

The full study can be found at http://www.njprofoundation.org/pages/respa.htm .

ABOUT THE NEW JERSEY POLICY RESEARCH ORGANIZATION
The New Jersey Policy Research Organization (NJPRO) Foundation is an independent affiliate of the New Jersey Business & Industry Association. NJPRO is New Jersey's leading policy organization conducting innovative, timely and practical research on issues of importance to New Jersey employers.

Working with diverse interests, NJPRO sponsors and supports research in New Jersey through both public and private public policy research institutes, universities, colleges and individuals.

NJPRO produces Facts for Discussion, a publication that focuses on one topic and presents the facts and policy implications. Recent Facts for Discussion topics include New Jersey's workers compensation system, the cost of healthcare, and tax policy. In addition, NJPRO'S annual business research compilation, Bright Ideas for Business, recognizes the best business research being conducted at state colleges and universities.

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