N.J. businesses that survived Sandy may have to foot tab, economists say
(MCT) — TRENTON, N.J. — Owners whose businesses survived Superstorm Sandy unscathed may have thought they got lucky but are likely to end up paying some of the storm’s economic costs, a group of economists said Tuesday.
Among the many ways that New Jersey’s climb out of the Great Recession will be slowed by its climb out of Sandy’s devastation, a group of state Treasury staff and economists agreed that property-tax payers who weathered the storm may have to pick up the financial slack for those who didn’t.
As residents move out and ruined buildings are demolished, the property-tax-paying base in Jersey Shore towns shrinks, which leaves fewer people — homeowners and business owners — paying a greater share.
That extraordinary shift — caused by catastrophic destruction and land erosion in the wake of the historic storm — added a gloomy overlay to experts’ previously prepared post-recession forecasts Tuesday.
In the first public discussion of New Jersey’s post-storm economic outlook — originally planned as a forum on the state’s post-recession recovery — Treasurer Andrew Sidamon-Eristoff defended the state’s slower release of a dollar estimate on Sandy’s impact than New York’s, saying he was being “extraordinarily careful.”
“The governor of New York made a big splash with his numbers,” he said of the $33 billion impact estimate by Gov. Andrew Cuomo. “I want to make sure that if and when we offer up numbers for New Jersey that they’re well informed, well-substantiated, well-documented and well-thought-out.”
New Jersey Gov. Chris Christie said late Tuesday that he would release an estimate on the cost to New Jersey caused by Hurricane Sandy at the latest on Friday.
The wider questions of Sandy’s impact had 10 of the state’s most prominent economists grappling with new realities.
Charles Steindel, chief economist for the Treasury, was surveying businesses this month on their assessments of the storm’s effects.
“We have to give the governor our best idea of how this will affect us,” Eristoff said. “For those purposes, the examples of Katrina and other storms are helpful to us.”
Joseph Seneca, an economics professor at Rutgers, presented two flow charts detailing losses in assets, short-term spending and the multiplier effects of lost flows of revenue, income and taxes.
“The losses are more to wealth; the gains are more to employment and income” during the recovery, Seneca said. On the barrier islands, useable land may be washed away, reducing the available property to be taxed. “Businesses have lost value in the structures that have been damaged, and even in some cases the land has been lost. These will be affecting property-tax assessments going forward.”
That process could evolve over years, as rebuilding shores up a town’s population and businesses decide not to relocate. But in the meantime, surviving businesses may carry some of the cleanup cost. “That’s certainly possible going forward,” Seneca said.
New Jersey already has some of the highest property taxes in the nation. Although a cap stopped towns from raising levies more than 2 percent each year, one exemption was for municipal disaster-related costs.
Any worsening in the tax burden, even short term, could make it hard for employers not to think of relocating, said David Kotok, chairman of Cumberland Advisors. Kotok told the audience that in his own firm’s experience, for example, the cost per employee in Florida is $15,000 lower than in New Jersey.