The State Chamber of Commerce just released a study that—surprise, surprise—concludes New Jersey is not such a great place to do business. 

The study, sort of a “report card” on factors that cause companies to locate to a particular state, or to remain once they are there, pretty much gives New Jersey an “F.”  Actually we’re 44^th, which, on a standard grading curve, is clearly a failing grade.

The factors evaluated are state, county, and local government policies considered unfriendly to business.  Not surprisingly, the State Chamber is urging changes in these policies to make New Jersey more business-friendly and competitive.

There are many reasons why this is so important.  Foremost, however, is that companies have unlimited choices in terms of where to locate.  Allow me to offer just one small example to illustrate the point. 

For years, products made in the Pacific Rim bound for the East Coast were shipped by container to ports such as Los Angeles and Long Beach in California, then trucked or railed across the county. 

But, increasingly, Asian-made products are now being sent on an all-water route to the East Coast via the Panama Canal.  That’s expected to increase with upcoming renovations to make the Panama waterway better able to accommodate larger container ships. 

What should be a major concern to New Jersey is that there are numerous, increasingly attractive, port-alternatives between the eastern end of the canal and Port Newark.  So continuing problems with necessary dredging, high operating costs, taxes, and other anti-business initiatives here could easily “kill the goose that laid the golden egg” in terms of this crown jewel of economic activity for the Garden State.

Back in July, Gordon Bishop, a well-known New Jersey reporter and commentator wrote an essay entitled: New Jersey Out-Taxes Taxachussetts.  The column refers to “the hyper-taxed Garden State,” and mentions, “New Jersey government has spent itself to the brink of bankruptcy while raising taxes on just about everything that’s for sale…37 times in less than three years…increasing the budget by 17 percent…more than eight times the national inflation rate.”  This raises a question: Why move or stay in New Jersey when practically everywhere else is less expensive?

The local level is one place which anti-business policies may be located.  A number of municipalities have expressed concern over the possibility that cable television competition may soon be introduced via a statewide franchise. Currently video franchises are obtained on a municipality-by-municipality basis.  Even prior to any legislation being introduced, however, a number of municipalities declared formal opposition to such a policy.

In an ironic twist, however, there is much more to the story than legislation to amend the existing Cable Act.   Existing cable companies are also in the telephone business in New Jersey, offering a full range of telephone services and high speed Internet.  They have entered the municipal marketplace without so much as a wink to local government, and have done so without breaking any laws.

But municipal governing bodies vociferous in their opposition to a statewide franchise have failed to notice that telephone services provided by cable television companies are taxed vastly differently than “Ma Bell.”  Local telephone companies pay municipalities a Business Personal Property Tax for the value of their infrastructure, including the equipment in their Central Offices.  The telecommunications infrastructure of cable television companies, on the other hand, is completely tax-free.  One would think, just to be fair, there would be some municipal consternation over this disparity.

Furthermore, if cable television companies were to be successful in their telephone ventures, and took over a majority of the telephone marketplace in any given municipality, these same municipalities would experience a precipitous drop in Business Personal Property Tax receipts from the local telephone company – thereby resulting in an increase in homeowner Property Taxes of a similar amount.  How’s that for being business-friendly?

The sad part about all this is not that some municipalities are opposed to statewide franchise legislation.  It is that they are opposed to the legislation while turning a blind eye to the changes currently taking place within the existing video industry.  “I can enter your business without municipal approval – and without paying municipal taxes – but you can’t enter mine without taking the same, 30 year old, cumbersome and bureaucratic route I took.  And, god-forbid that the legislature should do anything to speed up the process.”

It’s this kind of closed-mind thinking that has gotten New Jersey an “F” as a place to do business.