The majority of CPAs in Pennsylvania and New Jersey feel that local economic growth is suffering from government gridlock and federal regulations, according to a new poll.
[IMGCAP(1)]The poll, conducted jointly by the Pennsylvania Institute of CPAs and the New Jersey Society of CPAs, surveyed more than 1,500 CPAs in public accounting in the two states about national and state business climates, economic conditions and other topics.
Roughly half the CPAs polled indicated that economic conditions in the U.S. are about the same as one year ago (55 percent in Pennsylvania, and 51 percent in New Jersey). A much greater majority of CPAs in both states believe local economic growth is suffering from government gridlock (according to 89 percent of the CPAs polled in Pennsylvania, and 92 percent in New Jersey), and federal regulations (91 percent in Pennsylvania, and 88 percent in New Jersey).
However, respondents from both states expect business revenues and salaries for their clients to increase in the next 12 months. For the Pennsylvania CPAs polled, 51 percent expect revenues to increase for their clients, while 45 percent of New Jersey CPAs expect revenue increases at client businesses. Fifty-seven percent of Pennsylvania CPA anticipated salary increases for their clients, compared to 44 percent of New Jersey CPAs. Forty-eight of Pennsylvania CPAs and 53 percent of New Jersey CPAs expect investments to remain flat, while 61 percent of Pennsylvania CPAs and 62 percent of the New Jersey CPAs polled expect workforces to remain flat.
“While some of New Jersey’s key indicators are trending into more positive territory, it’s a trickle; not the surge our economy needs,” says NJCPA CEO and executive director Ralph Albert Thomas in a statement. “Business leaders and legislators really need to work together now to help reform onerous tax policy and legislative gridlock before it irrevocably impacts the state.”
There was a significant negative shift in the perception of both states’ economic environment since the first poll in 2012. At that time, 21 percent of Pennsylvania CPA respondents and 18 percent of New Jersey CPA respondents believed that the economic conditions were better than the previous year. The new assessment shows that only 16 percent of Pennsylvania CPAs polled and 14 percent of New Jersey CPAs polled believe conditions have improved.
CPAs expressed little hope for a change in the coming year, with only 14 percent of both Pennsylvania and New Jersey respondents predicting that things will be better next year. This is much lower than 2012 when 26 percent for Pennsylvania and 28 percent for New Jersey respondents had a much more rosy view for the following year. When assessing the state’s fiscal health, only 7 percent for Pennsylvania and 4 percent for New Jersey describe their respective state as excellent or good, compared with the 2012 numbers that saw 21 percent for Pennsylvania and 17 percent for New Jersey.
[IMGCAP(2)]“A sense of urgency is required at both the state and local levels regarding government gridlock and public pension reform,” said PICPA executive director and CEO Michael D. Colgan. “Pain points that Pennsylvania CPAs have identified as hindering business and economic growth in the state must be addressed.”
The majority of CPAs believe their state’s business climate is hindering economic growth (67 percent for Pennsylvania CPAs, and 78 percent for New Jersey CPAs). When asked which two issues are most likely to hinder future economic growth, pension funding of public employees received the top vote for Pennsylvania (59 percent) and high taxes received the top vote for New Jersey (67 percent). Rising health care costs (28 percent) and high taxes (25 percent) rounded out the top of the Pennsylvania CPAs’ list. New Jersey’s other top hindrances were cited as pension funding for public employees (34 percent) and a declining tax base (23 percent).
For the most part, sentiments from Pennsylvania and New Jersey CPAs tended to trend in the same direction; however, they differed on the major issue of tax structure in their respective states. While 22 percent of Pennsylvania CPAs feel their state’s tax structure is “better” than other states, only 1 percent of New Jersey CPAs felt the same. Another differentiating area was the impact of the Affordable Care Act. Eighty-three percent of Pennsylvania CPA respondents felt that implementation of the ACA was affecting business decisions, while only 75 percent of New Jersey CPA respondents felt the same.
For more information about the poll, or to read the full report, visit www.picpa.org/cpapoll.
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