Business community, lawmakers respond to Murphy’s State of the State

Throughout his first in-person State of the State since 2020, delivered Jan. 10 in a packed Assembly Chamber, Gov. Phil Murphy leaned into the theme of the shaping the “next New Jersey.”

“Through our burgeoning Jersey Pride and through our continued hard work, we know our shared future is bright. It is bright because we are building the next New Jersey,” he said during Tuesday’s address in Trenton. “Everything we do is guided by our belief that tomorrow can be better than today for the state we all love.”

“We are shaping this next New Jersey in the service of growing and securing the middle class,” said Murphy. “As you’ve heard me say from day one – and this will not change on my last day as your governor – it is my mission, and ours, to make this state work from the middle out and the bottom up.”

Murphy touted a number of accomplishments and efforts undertaken by his administration to achieve those goals, including tackling affordability, supporting small businesses, promoting economic development, advancing critical infrastructure projects, raising the minimum wage, and providing direct tax relief to taxpayers through the ANCHOR Program.

One of the most notable pieces of news from the speech was the announcement of an extended application deadline for the property tax relief ANCHOR Program by another month to Feb. 28.

In a nod to the upcoming Budget Address – just seven weeks away – Murphy announced several noteworthy initiatives, including plans to create a Boardwalk Fund and to reform the state’s antiquated liquor license laws.

“When I come before you next month, I will propose a new Boardwalk Fund that will partner with our shore towns and counties to make vital upgrades,” said Murphy. “Our boardwalks are more than just places for recreation and exercise. They are more than just the space that connects a parking area to the beach. They are wooden Main Streets which, in so many ways, define their communities and support their economies as much as the sand and surf.”

An ‘antiquated and confusing’ system

In introducing the liquor license initiative, Murphy looked back to the throes of the pandemic.

“I am greatly aware that some of, if not the, hardest hit businesses from the pandemic were our restaurants. And few were harder hit than the small neighborhood establishments – many, if not most, family-owned – that couldn’t get a liquor license that is so critical to maintaining a healthy profit margin,” said Murphy. “There’s no other way to put it – our liquor licensing regime is antiquated and confusing.

“We rely on a foundation of rules written in the days immediately after Prohibition to govern a 21th century economy. That makes no sense,” he said, acknowledging that a change would not be easy, but he believes it will be worth it.

According to Murphy, reworking the liquor license process would create upwards of 10,000 jobs annually and produce up to $10 billion in “new economic activity in new state and local revenues” over the next decade.

Murphy explained that the number of liquor licenses allowed to be issued, which is controlled locally, is one for every 3,000 residents.

“I propose that over the next few years, we gradually relax this requirement and expand the number of available licenses until the restriction is eliminated in its entirety and the market can work freely,” said Murphy. “Meanwhile, we can maintain the local control that is so critical in making sure our downtowns retain the character that makes them so special.

“Now, I fully recognize that some restaurants have made significant up-front investments to obtain their current licenses,” he continued. “We must be fair to them, and I propose a targeted tax credit to support them as the supply of licenses grows.”

The governor followed up that announcement with a call to remove outdated licensing and operating restrictions on Garden State craft breweries, distilleries and wineries.

“People from all across the Northeast, and indeed from across the country, are coming to taste what is being poured from bottles, taps, and barrels across New Jersey,” said Murphy.

Falling short

In response to the speech, New Jersey business groups applauded recent steps to improve the state’s business climate – such as the Netflix announcement and the signing of legislation to expedite construction permits – and appreciated the pro-Jersey message, especially to attract more businesses here.

But, they say more needs to be done to address the challenges businesses already continue to face

“In these uncertain economic times featuring rising inflation, soaring energy costs, supply chain issues, the difficulty of finding and keeping workers and the fear of a recession, our state’s existing businesses – especially small ones – need more assistance,” said New Jersey Chamber of Commerce President and CEO Tom Bracken in a statement.

“We do believe the administration can – and should – be doing more to address affordability for New Jersey small businesses,” said Michele Siekerka, New Jersey Business & Industry Association president and CEO, in a statement. “We should avoid being a national outlier for business taxes and high regulatory costs, not embrace it. It is our wish and hope in 2023 that Gov. Murphy works with the business community to bring more affordability and much-needed relief for New Jersey’s small businesses.”

The next issue of NJBIZ, publishing Jan. 16, will drill further into Murphy’s speech, what he said about the economy and businesses here and further explore reactions from the business community.

The New Jersey State League of Municipalities responded to the address by especially applauding its long-sought reforms to the liquor license process.

“Society has drastically changed since Franklin Roosevelt was president and New Jersey’s ability to issue liquor licenses needs to join the long list of those positive changes,” said League President and Millstone Borough Mayor Raymond Heck. “A relic of post-prohibition reforms in the 1930s, New Jersey’s process to obtain a liquor license has been badly broken for many decades and we applaud Gov. Murphy’s proposal. The League, and our Liquor License Reform Task Force, is eager to vigorously participate in this process, including the development of new consumption licenses for the growing craft beer, wine, and spirits industry that creates jobs and economic activity in our communities while providing broader access to liquor licenses.”

Room for improvement

Reactions to the speech also poured in from lawmakers around the state with, not surprisingly, Democrats firmly behind Murphy’s vision while Republicans blasted it.

“I welcome the Governor’s continued focus on affordability and economic opportunity. We need to build upon the progress we have made in providing tax relief, affordable housing, job creation, debt reduction, credit upgrades and strategic investments that promote economic growth,” said Senate President Nick Scutari, D-22nd District, in a statement. “We have to maintain our emphasis on the needs and priorities of the hard-working people of New Jersey, especially the actions we can take to make their lives more affordable and improve their quality of life.”

“We are proud of what we have accomplished to make New Jersey a better, more affordable place to live. The Governor’s State of the State speech accurately captured the successes of the past five years,” said Assembly Speaker Craig Coughlin, D-19th District, in a statement. “Working together, we passed the largest property tax relief program – including the largest property tax relief initiative – in New Jersey history. Because of the sound financial decisions we have made, we have seen three credit rating upgrades over the past year, and we will preserve and expand programs to make New Jersey a more affordable place to live this year.”

Meanwhile, following the speech, Senate Republican Leader Steve Oroho, R-24th District, and Assembly Republican Leader John DiMaio, R-23rd District, held a press conference to respond to the speech — sharply criticizing Murphy and Democrats on a range of issues, including spending, affordability, taxes, the business climate, and more.

“As usual, the governor and Democrats are more interested in protecting and expanding government programs and less interested as we are, the Republicans that are working to protect your money and to protect your family’s way of life,” said DiMaio, pointing out the $16 billion increase in spending since Murphy took office.

“Despite the rosy picture Gov. Murphy is trying to paint, the state of the state is not good. And after five years of the Murphy Administration and two decades of full Democrat control of the Legislature, the outlook for New Jersey continues to get worse,” said Oroho. “We have the highest taxes, the most debt, and the worst business climate in the nation, Every year when national rankings come out, New Jersey is dead last.”

Oroho ticked through further criticisms such as the use of federal COVID funds, the high cost of Murphy’s clean energy plan, offshore wind farms, crime and more.

“It should be clear we can do better,” said Oroho. “Gov. Murphy can start by listening to Republicans who have offered sensible solutions to all these problems. New Jersey may be on the wrong track for now, but Republicans are showing it doesn’t have to stay that way.”

The State of the State Address, its reactions, and the upcoming Fiscal Year 2024 Budget Address, set the stage for what should be an eventful year here in the Garden State.

“Surely, fostering a stronger, fairer, responsible, more affordable, and growing New Jersey is what each and every one of us here were elected to do. And regardless of whether our names are followed by a letter ‘D’ or a letter ‘R,’ this is work to which we are all committed,” said Murphy. “Let us never forget that in the grand ranking of things, we are partisans fourth, elected officials third, New Jerseyans second, and Americans first and foremost.”