JON CORZINE GETS DOWN TO BUSINESS

by David P. Rebovich Jon Corzine needs money. No, not for a campaign, much less for personal use. He needs money for the new state budget he will have to propose soon after assuming office in January. Ever since the U.S. Senator beat Doug Forrester in a race dominated by unfair attacks and unrealistic promises, New Jerseyans have been wondering how the Governor-elect would pursue his ambitious policy agenda and balance the budget. Last Tuesday at the New Jersey Business and Industry Association’s Public Policy Forum, Corzine may not have provided any details about next year’s budget. But he did give an audience of 400 business leaders, lobbyists, public officials and journalists a primer on his broad approach to dealing with the state’s budget problems and for developing public policies.. In many ways Corzine speech was a triumph, full of candor, logic, common sense and calm evocations of the former CEO’s experiences and expertise in management and investment. Most people at the NJBIA forum seemed impressed by the Governor-elect and with what he said. Many also seemed relieved. While Corzine did not disavow his commitment to policies aimed at providing opportunity and relief to needy and middle class folks, he emphatically stated that his policy agenda could be achieved only if businesses flourished in New Jersey. Economic growth in the Garden State is necessary so that New Jerseyans of all backgrounds can obtain good jobs and for state government to gain the revenues it needs to meet its responsibilities and pursue other desirable programs. But encouraging economic growth in the Garden State will not be easy. Indeed, the NJBIA’s Annual Business Outlook survey, whose results were reported by association president Philip Kirschner, revealed that the state’s businesses are not happy about conditions here. “For the state and national economies, a new pessimism has replaced last year’s relative optimism…This marks one of the most dramatic shifts from optimism to pessimism in a single year,” Kirschner said. 39 percent of survey respondents expect business conditions to worsen in New Jersey, while only 18 percent expect improvement. 24 percent say they will hire additional workers, down from 27 percent last year. And for the third year in a row only 28 percent of companies participating in the survey believe that the Garden State is a good place for business expansion. What are the specific reasons for this pessimism? The NJBIA survey showed that over 90 percent of the respondents believe New Jersey is worse than other states in controlling health care costs and government spending and in its tax and fee policies. Between 60 and 84 percent also think that New Jersey is worse than other states at controlling energy costs, attracting new businesses, conveying a positive attitude toward business, and trying to reduce the costs of regulatory compliance. The three worst problems with the business climate in the Garden State are high health insurance costs, high property taxes, and the overall cost of doing business. As soon became evident at the NJBIA forum, the Governor-elect is concerned about these complaints. But he will have some big problems of his own to deal with, the worst being the $5 billion structural deficit that must be addressed in the new fiscal year. Toss in his own promised increase in property tax rebate checks and that deficit approaches $6 billion. Then there is the need to find money for the Transportation Trust Fund, the School Construction Corporation, and for government worker pensions. And, in the campaign Corzine also touted an “affordability agenda” that will cost a pretty penny. Facing a new, self-defined progressive Democratic governor and a legislature known for big spending, it’s no surprise that New Jersey’s business leaders are wary about what the next state budget will bring. Will their firms pay the price, literally, for Corzine’s budget balancing plans, his progressive policy agenda, and whatever new spending plans the Democrats in the legislature have in mind? Corzine did not offer any specifics about his budget-balancing plans at the NJBIA forum. But he did discuss his priorities, approach to policy-making, and where the business community fits into both. He called himself a capitalist who believes in business and knows that as a state we “…are successful because we have a bright and able business community” that has given New Jersey the nations’ second highest per capital income. Corzine also quipped that while he is a “progressive,” he is not “foolishly liberal.” Instead, he believes in “bottom lines” and measuring program success based on results, not on some standard of ideological purity. He also described himself as a realist and an optimist. Realistically the state’s prospects for economic growth will always hinge in part on “macro-economic drivers,” including global and domestic competition, changing demand patterns, and corporate strategies. But Corzine is optimistic that the state can solve problems by having government officials engage in open dialogue with businesses and partner with them, build coalitions, and take a bipartisan approach. While not averse to taking risks, the Governor-elect prefers a “methodical, thoughtful” approach that entails thinking through policy options. The primary way for New Jersey state government to help the economy move forward is to make “strategic investments” that help create private sector jobs. He noted that 50,000 private sector jobs can yield $300 million in government revenues that can be used to balance the budget and improve the quality of life here. What types of strategic investment does Corzine have in mind? During the campaign he touted the Edison Innovation Fund, which calls for state government and the private sector co-investing in such projects as stem cell research, nanotechnology, renewable energy and clean energy technologies, genomics, advanced imaging technology, and research and development for homeland security and national defense. He reiterated that call at the forum and recommended that the state help upgrade port facilities in south and north Jersey. While politicians on both sides of the aisle are worried about New Jersey’s enormous debt, Corzine believes that further borrowing for capital investment makes sense if it results in job creation, patent rights and significant new revenues for the state. To further demonstrate his commitment to improving the business climate in New Jersey, Corzine plans to bring the Commerce and Economic Development Commission into the Governor’s Office and have it focus on economic growth issues. He also wants to name an international trade representative and encourage urban investment through more community banking operations. On health insurance, a major concern of businesses here, Corzine is interested in establishing “buying cooperatives” for small businesses to help them obtain competitive rates. And on taxes, he said that as governor he will seek fairness for businesses and not view them simply as “tax clients.” But Corzine also spoke of the need for “shared sacrifice” to help grow the economy and produce gains that can benefit all. He reiterated his support for progressive income taxation, presumably as an alternative to high property taxes. And in a question and answer session with reporters, he did not rule out a gasoline tax hike to raise revenue for the Transportation Trust Fund. For his part, Corzine realizes that he must get the structural deficit under control before he moves forward with new social programs programs. He also recognizes that New Jersey’s state government must “reestablish ethical credibility.” To help do that Corzine wants to end pay to play at all levels of government, adhere to competitive contracting and peer review when bidding is not possible, and push for an elected state comptroller to make certain that politicians and government workers do not abuse the system. This is a powerful message that gave those at the NJBIA forum a good idea of how Corzine plans to proceed as Governor. Clean up the political system, identify and cut waste and ineffective programs, deal with the huge deficit, provide some property tax relief, invest in the state’s economy, and explain to New Jerseyans that shared sacrifice is necessary. It certainly seemed that the state’s business community heard Corzine loud and clear. But the questions some folks still had last Tuesday were whether the Governor-elect would make the same speech to other constituent groups and whether these groups would accept Corzine’s priorities and his call for shared sacrifice. David P. Rebovich, Ph.D., is Managing Director of the Rider University Institute for New Jersey Politics (www.rider.edu/institute). He also writes a regular column, “On Politics,” for NEW JERSEY LAWYER

JON CORZINE GETS DOWN TO BUSINESS