Jerold Zaro burns the midnight oil more evenings than not - and he’s loving it. He never really sought the job as the Governor’s economic Czar. In fact, when Jon S. Corzine tapped him for the position after Gary Rose stepped down, it took Zaro six weeks to decide and accept. Yet since filling the post this past October 14, he has proved up to the vast challenge.
Of course, there are a lot of very strong and obvious reasons to make the Economic Chief’s chair not overly attractive right about now. In 2008, New Jersey fell headfirst into the recession along with the rest of the country. With 20 percent of the nation’s Fortune 500 firms and a substantial percentage of its financial houses located within our fences, the Garden State’s harvest looked particularly bleak. Unemployment, foreclosures, business failures all hit decade highs, while tax revenues plummeted. Federal funding, diverted to the Iraq war at the rate of $10.9 billion a month, dried to a trickle. And vital credit arteries simply ceased to flow. Welcome the Chief.
But Zaro remains brimful with fiscal optimism, and looks past this temporary downturn. “We have an unbeatable base here in New Jersey, and that will see us through these times.” To those who drag out the tired, old complaint of New Jersey being business unfriendly, Zaro ticks off the advantages on his fingers: - Ideal market placement between Philadelphia and New York; - Swift infrastructure by rail and truck with ample warehousing and 35,000 miles of interconnecting roadways; - The best and biggest ports in the nation for both break bulk and container shipping; - The highest educated workforce in America; - R & D leadership in all technology fields; - The absolutely best alternative energy payback plans in the nation - and on and on. In short, we are well located, well supplied with resources and talent, and the state’s government boosts green, tech, and other emerging markets.
“So we surely have our strengths,” says Zaro, “now it remains our (the state’s) job to target for aid those specific industries and areas that desperately need recovery.
* Elevating Main Street. All New Jerseyians have witnessed the erosions of our downtown merchants and small businesses, as malls, chains, and megacorporations arise. Regardless of where you stand on big vs. small, the economic fact is that these small firms employ at least three quarters of the Garden State’s workers.
New Jersey’s Main Street Business Assistance Program, passed December 16, 2008, is the small business initiative of the Governor’s Economic Assistance and Recovery Plan which Zaro helped craft. Administered through the Economic Development Authority (EDA), the bill puts $50 million in local banks for the funding of small and midsize firms. For the individual company, this means a straight loan, participated in by the state, or a loan guarantee through one of EDA’s agencies. Applicant companies must be two years old, Jersey headquartered, and may apply within the next 24 months. Visit www.njeda.com.
The program also applies to fixed assets, such as buildings and equipment, and even working capital. For direct asset loans, the state will offer 25 percent, up to $1 million, with a 50 percent guarantee up to $2 million. For operating capital, limits are 25 percent up to $750,000 and 50 percent of a $1.5 million loan guarantee. “This program offers a two-pronged approach to get liquidity to both businesses and our community banks,” notes Zaro.
* Pension Pump Priming. Perviously, huge pots of money, such as state pension funds, could only be deposited into fully insured and government-backed accounts. Sounds sensible, but it kept funneling funds into large institutions’ cash management funds, out of state. Now, taking advantage of new federal rulings, New Jersey proposes to deposit another $500 million into fully FDIC insured local banks. “This gets your pension fund working for the Garden State - getting much needed loans through New Jersey banks, into the hands of New Jersey residents,” says Zaro.
* Taxes. “When people tell me that New Jersey has the highest property taxes in the nation, I always tell them, ‘Yes, and thank goodness. Would you want to have lower taxes, more slums, and lousy schools?’” says Zaro. “We also have the highest form of living. You get what you pay for.” At the same time, neither he nor the Governor is blind to the nudge across the Delaware and the Hudson these costs are giving our businesses.
Additionally, New Jersey has some individual tax laws that feel particularly burdensome. Sole proprietors are taxed at the rate of their company’s entire gross, rather than the actual salary they take from the business or themselves. On the good side of the balance, New Jersey Bill A2722 eliminated the throwout law, thus avoiding out-of-area sales taxes or in increased New Jersey tax liability for corporations dealing in nontaxable states. Further, New Jersey adapted its taxes to the IRS code by extending the Net Operating Loss (NOL) carryover from seven up to 20 years.
“These policies are difficult to tinker with too much,” says Zaro. “New Jersey is facing an unprecedented revenue loss.” He cites that capital gains, sales taxes, and real estate fees have all crashed to record lows. With New Jersey being the medicine chest to the world, when the big pharma loose money, it is nearly impossible for the state to recoup its losses. Finally, as federal aid goes, the Garden State is receiving one fifth return - 20 cents of every dollar it sends to Washington.
* Unclogging Regulations. Nearly one fifth of New Jersey’s economy is in some way tied to construction. Also, we conduct the largest number of polluted-site cleanups in the nation. Both these facts are made all the more impressive considering that the average Department of Environmental Protection round of approvals takes three years.
To clean up that bureaucratic mess, Zaro has proposed legislation for licensing site professionals. “This would engage a cadre of pre-qualified, licensed site professionals who could be rapidly routed to your site,” explains Zaro. “They would monitor your site, instead of your running back and forth to the state and wringing your hands, waiting for some inspector.” Using these outside, independent professionals, he estimates would chop 2.5 years off the costly permit waiting time. When Massachusetts began employing this model, they raised their number of sites cleaned by 2,000 percent in one year.
* Keeping us Working. It drew a lot of journalistic criticism as a frivolous handout, but for many small business it has provided just that little nudge to make new hires. The Governor’s Job Creation Grants offer individual employers a $3,000 signing bonus for any new employee hired who stays on at least one year. Particularly for small businesses, this is enough to add benefits to a salary package, and make their hiring competitive. The $50 million cost to the state is expected to generate 17,000 new jobs by 2010.
Virtually everyone is rumoring on the street that we will come out of this recession and that as far as it goes, things could be a lot worse. Chief Zaro believes roughly the same thing, however he is one of the prime players in making that assessment come true. “Anyone out of work is repugnant,” says Zaro. “Anyone thrown out of their home faces a brutal situation. As a state, we cannot endure such conditions. But neither can we just write checks to solve the problem.”
Whenever we emerge from the current downturn, it is clear that New Jerseyians will recover with new strategies. We will be doing things differently. The burgeoning of new transit villages, keeping revenues ahead of sagging infrastructure, and developing an energy conservative lifestyle are just a few tips of a changing landscape this recession will bring about. The harsh light of these times will doubtless reveal long unaddressed needs. And just as sure, the Garden State will answer them. We have the political will, and as Mr. Zaro has pointed out, we certainly have the talent and resources. Biz4NJ
Jerold Zaro, for many, holds a name more connected with bread than public service. In l927, Joseph Zaro, Jerold’s grandfather, with his father (then age 10) immigrated from Eastern Europe and opened up Zaro’s Bakery in New York. Today Zaro breads feed over 1.5 million people daily in 20 stores, some of the most familiar being those in Grand Central, Port Authority and Pennsylvania stations. And it’s still family run. Jerold Zaro, however, sought a world beyond the family business. Born in the Bronx and raised in Teaneck, Zaro headed off to Boston University, graduating in 1973 with a Bachelor’s in politics and government. He then attended Boston College with John Kerry, and earned his law degree in 1976. He returned to the Garden State to serve as Law Secretary to Hon. Thomas Shebell of the Superior Court. Segwaying into private practice with the Ocean-based firm now known as Ansell Zaro Grimm & Aaron, Zaro specialized in commercial real estate, and banking and finance. During that time he served eight years as Chair of the Ocean Independent Bank. Yet he has always kept his hand in public service. From 1991 - 2003 Zaro served as Commissioner, then Chairman of the New Jersey Highway Authority. And from 2004, he was Commissioner of the New Jersey Sports and Exposition Authority. In October, 2008, Zaro retired from his law practice to take the position of Chief of the Governor’s Office of Economic Growth.