Needing a Friend in Trenton
While the Shore’s businesses struggled to survive during the recession, Trenton did them few favors.
The state raised payroll taxes to shore up the unemployment trust fund. It cut the amount of money available to market the tourism industry. It extended a surcharge on corporate taxes. It increased the tax on liquor and wine wholesalers.
“It’s difficult to be a small business owner in New Jersey,” said Dana Gangemi, vice president of operations for WayComm Consulting, a Sea Girt-based telecommunications consultant.
With the gubernatorial election two days away, the Shore’s business owners are renewing their call for the state to ease burdens on businesses and help the economy recover from the recession.
The election comes as surveys continue to show New Jersey as having one of the nation’s costliest business climates. And while industry officials are realistic enough to know that’s not likely to change dramatically in the coming years, they say the end of the recession offers a ripe opportunity to be more business friendly.
“For the future, we think the top priority just has to be the state’s economy, creating more jobs and employment in the state, and creating the kind of business climate that encourages businesses to create jobs,” said Philip Kirschner, president of the New Jersey Business and Industry Association, the state’s biggest business lobby.
For their part, the candidates who have been polling the highest have reached different conclusions about how well the state is positioned to foster economic growth.
Gov. Jon S. Corzine, a Democrat, has said he moved swiftly when it became clear the global economy was heading for a crash. He reminded voters during the campaign that New Jersey was the first state to pass legislation designed to give the economy a jolt. And he said he made tough decisions to balance the state’s budget.
Chris Christie, a Republican, has said New Jersey’s poor economic performance wasn’t solely caused by the recession. He wants to cut taxes across the board and reduce state spending — moves he believes will allow New Jersey businesses to expand.
And Chris Daggett, an independent, has said he wants to expand the sales tax and reduce property taxes, which would free up money to invest in promising industries such as green technology research.
The winner will lead a state that didn’t grow as fast as the rest of the nation during the expansion, but also didn’t collapse as much during the recession.
Nonetheless, the state’s perennial budget deficits have left businesses digging deeper each year to help New Jersey balance the budget.
For example: New Jersey has a 4 percent surcharge on the corporate business tax in what accountants describe as a tax on a tax. New Jersey charges companies that have no taxable income as much as $2,000. New Jersey companies are allowed to write-off less money for equipment that they purchase than what the federal government allows, said Dawn Greenberg, tax principal at Cowan & Gunteski, an accounting firm in Toms River.
“The business tax structure is not very taxpayer friendly,” she said. “For businesses, there are a myriad of issues and complexities.”
The Asbury Park Press asked the Shore’s business owners about some of their other top concerns. What did they ask for?
Less paperwork. Businesses located in an Urban Enterprise Zone, for example, complain about the amount of time they have to spend filling out paper work to be approved for tax breaks. Elsewhere, business owners said each new regulation, tax or program can turn cumbersome.
“Every year there’s something else, something more to add to what we have to do,” said Mark Lamhut, vice president of Paul-Mark Printing Inc., a Freehold printing plant. “Small business owners don’t have a staff just to sit and do all the different accounting and paperwork and new things that seem to crop up.”
More business promotion. The state in 2003 passed an occupancy tax to generate revenue that would at least partly be used to market the tourism industry. Yet the state has tapped into that revenue to help balance the budget; revenue dedicated to tourism promotion has steadily been cut.
Philip Franco, owner of the Carriage House, a bed-and-breakfast in Ocean Grove, said the trend is simply a sign that the state hasn’t gotten its own costs under control.
“We have a very bloated public sector,” Franco said.
Business-friendly programs. Many Shore-area manufacturers have turned to the New Jersey Manufacturing Extension Program to help them become efficient enough to work in New Jersey and still compete in a global economy. Subsidized by tax money, the program is less expensive than private consulting firms.
It teaches companies to empower workers to make recommendations on how the company can produce an item more efficiently. It makes workers more productive. It reduces inventory, and it makes companies more profitable.
The state in fiscal 2009, however, eliminated the $1.1 million it gave the program. The program still receives money from the federal government and fees it charges on projects. But it has reduced its field staff from 16 to 10 and hasn’t been able to extend its reach, said Lynore DeSantis, vice president of finance and operations.
Component Hardware Group Inc., a Lakewood company that makes plumbing and hardware products and has about 90 employees, has used the extension program and found it to be valuable, spokesman Kevin Tumpey said.
Tumpey described a long list of hurdles his company faces doing business in New Jersey: The company is in an Urban Enterprise Zone, but it spends countless time filling out paperwork to obtain tax breaks. The company wants to expand, but it is wary of the permitting process.
So it has tried to become as efficient as possible, in part by turning to the manufacturers extension program.
“It’s one of these programs in the state that’s very beneficial, especially to small-and mid-sized companies, to stay competitive, learn better business practices, become more efficient, do more with less,” Tumpey said.