New Jersey’s economic outlook is facing a fresh round of turbulence, with new data and ongoing disputes putting pressure on both state leaders and local officials. The state’s August 2025 tax revenue report shows a sharp drop in business tax collections, a decline so steep that it cannot be dismissed as a seasonal fluctuation. Instead, it points to a deeper issue—business growth is slowing, and the Garden State may be on the brink of a broader economic setback.
For years, New Jersey has leaned heavily on business taxes to help balance its budget and fund critical services. Now, with corporate revenue slipping, Trenton is confronted with a wake-up call: a strong economy cannot survive on consumer spending alone. Business investment, job creation, and commercial development must remain at the core of the state’s priorities if it hopes to sustain growth. This collapse in tax receipts should push policymakers to reexamine the climate for companies looking to invest in New Jersey. For deeper coverage of business in the Garden State, visit Explore New Jersey Business.
But the state-level revenue drop is not the only warning sign. At the local level, Hackensack is embroiled in legal turmoil over development incentives that were once seen as key drivers of its downtown revitalization. The One Essex project, a $107 million mixed-use development backed by a subsidiary of Sanzari Enterprises, is now at the center of a lawsuit after the city’s new leadership voted to rescind a previously approved 30-year tax break.
The project, in planning since 2016, is slated to bring 250 residential units—10 percent of them affordable—alongside a 435-space parking garage to downtown Hackensack. Supporters had hailed the development as a major step forward for the city, promising both modern housing and investment momentum. Yet without the financial stability offered by the long-term tax abatement, the developer argues the project is no longer viable.
In its filing with Bergen County Superior Court, Sanzari claims the city’s move is unlawful, pointing to the original financial agreement that stipulated it could not be altered or terminated without the consent of both parties. The lawsuit accuses Hackensack officials of attempting to leverage the situation for higher tax payments while disregarding obligations tied to affordable housing under statewide settlement agreements.
Mayor Caseen Gaines and his new council, elected earlier this year, have made reexamining tax breaks for real estate projects a central theme of their agenda. They argue that the city should not be locked into deals struck by previous administrations without full transparency or clear financial justification. Developers, however, counter that the sudden reversal jeopardizes years of planning and undermines confidence in Hackensack’s commitment to redevelopment.
This is not an isolated case. Just weeks before Sanzari’s lawsuit, another developer—the Enburg Group—filed suit over the city’s cancellation of a tax break for its 100-unit project on Main Street. Together, the two cases paint a picture of a city attempting to reset its development policies but colliding with legal, financial, and political realities.
The ripple effects extend beyond Hackensack. Developers across New Jersey are closely watching these disputes, weighing whether the state’s already complex development landscape has grown more unpredictable. At a time when rising construction costs and high interest rates are straining project budgets, the loss of long-term financial incentives could make some developments unworkable.
Both the drop in statewide business tax revenue and the clash in Hackensack reflect a broader challenge: New Jersey’s economy is at a crossroads. On one hand, the state remains attractive to investors thanks to its location, skilled workforce, and access to major metropolitan areas. On the other, the combination of high taxes, regulatory hurdles, and political uncertainty continues to dampen confidence.
Whether in the halls of Trenton or the council chambers of Hackensack, the message is clear. New Jersey must find a balance that encourages private investment while ensuring taxpayers see real benefits. Without a stable, predictable environment for businesses and developers, the warning signs flashing in this month’s revenue report could be just the beginning of a much larger problem for the state’s economy.
