Gov. Sherrill order seeks to make NJ friendlier for businesses

Gov. Mikie Sherrill signed an executive order Tuesday that directs state officials to explore a range of reforms that include changes to tax incentives, lower fees, and more state support for certain industries in an effort to make New Jersey a friendlier state for businesses.

The order lays out a four-pronged approach that calls for the state to improve its overall business climate, focus state support on a limited number of key sectors that generate quality jobs, boost research and development, and ensure gains from growth are felt across the state’s population.

“The only way we’ll get businesses here is if they see a future here,” the governor said at a press conference in Trenton.

The order creates the New Jersey Business Economic Development Council to coordinate efforts to improve New Jersey’s business climate across the state’s executive agencies.

That panel, chaired by Todd Fisher, senior director of strategic initiatives and economic opportunity in the governor’s office, will be responsible for identifying a set of sectors for intensive state economic development activity and others to be supported with economy-wide tools.

The order tasks Kellie Doucette, the state’s chief operating officer, with identifying and recommending changes to taxes and fees and procedural, licensure, and other requirements that have increased the cost or complexity of starting, running, or growing a business in New Jersey.

It also seeks to help New Jersey build a brand for excelling at its strong suits, like pharmaceutical development and manufacturing, to draw in businesses that would locate in New Jersey had they known.

Business groups welcomed the move, meeting it with the same cautious optimism they’ve expressed when the governor announced reforms to permitting or when she introduced her first budget.

“We are encouraged by the administration’s commitment to making New Jersey more business-friendly and competitive,” New Jersey Chamber of Commerce President Tom Bracken said in a statement. “We join the broader business community in looking forward to partnering with the administration to turn this strategy into meaningful action and measurable results.”

New Jersey routinely lands low in surveys on state business climates. Republicans and business groups have pointed to the state’s poor placement on CNBC’s ranking of America’s best states for business. New Jersey placed 50th in business friendliness and 31st overall, buoyed by third-place ranking in quality of life.

New Jersey boasts the highest state corporate tax rate in the nation for businesses that make at least $1 million in profit, and still levies rates close to the country’s highest on other businesses.

Sherrill, a Democrat, did not preview any changes to the tax code Tuesday but repeated that the state could eliminate a nonmarginal 2.5% corporate business tax surcharge, called the corporate transit fee, on businesses with at least $1 million in profit by standing up new revenue streams from state-owned properties near NJ Transit stations.

The surcharge, first proposed in 2024 to boost NJ Transit, is expected to generate $814 million in revenue in the current fiscal year. It’s not clear when or if revenue from the use of state properties could reach that level.

The corporate transit fee expires at the end of 2028.

Sherrill suggested the state’s “scattershot” tax incentive programs had helped contribute to its high overall tax rates.

“You have these corporate taxes that have sticker shock for a lot of companies that want to come here,” she said. “But at the same time, we want to really rationalize that because a lot of people aren’t paying those corporate rates on average, so you have kind of the worst of all worlds.”

Sen. Paul Sarlo (D-Bergen), who chairs the chamber’s budget committee, said he backs Sherrill’s approach on the corporate transit fee. The state should avoid raising business taxes, he added.

“That’s not on the table,” Sarlo said. “Over time, I’d like to see it come down, of course, but it’s definitely not increasing.”