New Jersey needs “a coordinated and collaborative approach” to make sure it prudently uses the billions in federal dollars it is poised to receive, the head of a business association said on Monday.
“As a state we must get out of the block and tackle mode that we’ve been in and look to longer term strategic planning,” Michele Siekerka, president and CEO of the New Jersey Business & Industry Association (NJBIA), said during a roundtable discussion.
“Like the Great Recession, New Jersey is not alone in the challenges we face from COVID,” Siekerka added. “However, we want to ensure that New Jersey does not take a lagging position to all other states in the nation as we [emerge from the pandemic] like we did back in 2009.”
The federal government is sending about $10.2 billion to the state government and local governments across New Jersey as part of the COVID-19 relief package. The money is from the $1.9 trillion American Rescue Plan, which includes $360 billion in state and local aid.
Under the bill, the state will receive $6.4 billion, and the state’s 21 county governments will receive more than $1.8 billion, while 565 cities and municipalities in the Garden State will take in $1.7 billion.
“At the end of the day, $6.4 billion is a tremendous influx of money, and with this tremendous amount of money comes tremendous opportunity for the state of New Jersey,” Christina Renna, president and CEO of the Chamber of Commerce Southern New Jersey, said. “I think all of us tuning in today would agree, unfortunately, that historically New Jersey has not always been the most fiscally prudent in its approach to budgeting and spending.”
Renna suggested immediate help through grant programs for nonprofits and small businesses and also long-term planning.
It’s “crucial that the state make smart decisions and be strategic about how the dollars are deployed,” Ralph Thomas, CEO and executive director of the New Jersey Society of Certified Public Accountants (NJCPA), said. The best way to do that is “addressing our long-term structural debt. It’s no secret that New Jersey is one of the most indebted states in the country.”
At the close of 2019, the state had $44 billion in debt, and it borrowed an additional $4 billion in 2020, Thomas said.
Thomas suggested the state identify debt that can be paid down, dedicate at least $400 million to pay down unemployment insurance trust fund debt and focus spending on nonrecurring items. It should also reserve at least one-third for a special short-term surplus to draw down over multiple budgets, and lawmakers should pass legislation to guarantee those funds are not raided for other purposes, Thomas added.
“This all seems simple, right?” Thomas said. “To avoid creating long-term structural deficits [in] future budgets, New Jersey should pay for expenditures with recurring revenues earned the same year. We believe these recommendations are bipartisan and really common sense … and are the basis for a long-term plan that will … put our state on solid economic footing.”