NJ Business Matters: The Blog of the CIANJ

The Company We Keep

Our friends at the New Jersey Affordable Clean Reliable Energy (NJACRE) Coalition have announced  mounting support for energy policies which both protect the environment and help grow our economy. NJACRE announced today that former Governor Brendan Byrne and former Senator Bill Bradley have joined the coalition, whose goals include increasing awareness about the importance of relicensing the nuclear generating station at Oyster Creek.

The mythbusting continues. NJACRE's full press release is available here.

Forced Unionization On Tap Tomorrow in Trenton

Tomorrow the Senate Labor Committee will consider a resolution urging Congress to pass legislation the Senate and big labor have already determined will not happen. SJR 68 sends a message from the New Jersey legislature to Congress insisting that they pass the anti-democratic Employee Free Choice Act.

Organized labor has morphed itself from an entity that attempts to advocate for the interests of workers into a political machine. The Center for Responsive Politics reports that since 1994, labor has contributed nearly half a billion dollars to Democratic campaigns.Now holding the majority,big labor's big kickback comes in the form of the comically-titled “Employee Free Choice Act” (EFCA).

Here are some facts. Under current law, a union seeking to represent a group of workers must garner signed authorization cards from 30 percent of that group's workforce. Once that is attained, the union petitions the National Labor Relations Board (NLRB) to administer an election via secret ballot.These elections are ordinarily held within six to eight weeks and union organizers can demand the names and home addresses of all the organization's employees and pay them a visit. As you can imagine, the possibility for some intimidation exists. If, after this organizing drive, a majority of employees vote “yes” in their secret election, an organization becomes unionized. The National Labor Relations Act has never been significantly amended and allowed union membership to flourish in the post World War II era.

However, for decades, unions have seen their national numbers decline. With every era of decline came a new culprit. First it was President Reagan; then it was President Bush; then under President Clinton it was the bad economy; then it was the good economy. Anything to avoid confessing that they were selling a product no one seemed interested in buying. The decline could have something to do with an astute point the Wall Street Journal noted when editorializing against the EFCA—the most heavily unionized private-sector industries such as airlines and Detroit automakers—have been shedding jobs. Unions have earned the reputation of providing short-term wage gains in exchange for long-term job insecurity— and that is a swap workers are not willing to make.

Enter the EFCA, which would do away with the messy secret-ballot process and instead lower the bar so that workers would be represented by a union if more than 50 percent of employees sign authorization cards. Employees would still be subject to home visits, only they would now be making their final decisions in the presence of union organizers and coworkers. Of course, if workers want to leave their union, they will find the EFCA is a one-way street.

It undermines democracy. American elections—from your 4th grade student council representative in which children put their heads on the desk to the election of the President—are done via secret ballot. EFCA spinsters will tell you that the current system is ripe for employer coercion. Ask yourself what better protects the sanctity of an election—a secret ballot or a public declaration in the physical presence of partisans.

Even worse, the EFCA is laden with clauses that would throw initial contract negotiations into arbitration.That would deny workers at a newly unionized company the right to vote on their first contract.

Given all this, it is no surprise that a Zogby poll found that 71 percent of union members do not want to see the secret ballot discarded. As noted, organized labor stopped being about labor and started being about politics and institutional protection long ago.

Saying this is the wrong message to send to Washington just doesn't seem sufficient.

"In A Word, Science"

Dr. Patrick Moore, co-founder of Greenpeace and current chief scientist of Greenspirit Strategies, took some time to write for COMMERCE Magazine about his views as a pro-nuclear environmentalist. Yup, you read that term correctly and it should be more frequent in the environmentalist lexicon - - if the movement really is about science and not politics, of course. All two of you regular blog readers know that nuclear power already provides New Jersey with more than half of its electricity while producing virtually zero greenhouse gas emissions. 

Moore's entire piece is a must-read, but especially relevant to New Jersey is the relicensing of the Oyster Creek Generating Station.

When asked to analyze the impact of retiring Oyster Creek, the Bates-White consulting firm said the economic consequences would be substantial, including a $200 million jump in electric costs. But, so too, would the environmental impact.

Replacing Oyster Creek’s emission-free power with electricity from coal-fired plants, would result in increased CO2 emissions equivalent to adding nearly one million cars to New Jersey roads, or about half a million if the replacement power were to come from natural gas units.

A Battle 325 Years In the Making

William Penn never imagined the language in his land deal would have these types of consequences.

New Jersey and Delaware are set to square off in Washington today over who controls the basin of the Delaware River and whether or not New Jersey can allow BP to build a liquefied natural gas terminal to ultimately bring power to up to 5 million customers daily. Always topical, COMMERCE Magazine featured the proposed terminal and its benefits in our April edition. The trouble for the 5 million or so customers who would benefit is that the First State claims New Jersey does not have the right to authorize construction. The project starts on the Jersey shoreline.

The fight this time is about a proposed $750 million liquefied gas receiving station on the Jersey side. Its pier would extend almost halfway into the river -- far into waters claimed by Delaware under a deed issued to Quaker Colonist William Penn by the Duke of York in 1682.

That deed described a 12-mile circle around New Castle, which later became Delaware's northern border -- including the river and the soil beneath it.

New Jersey contends it has the right "to control development along its shoreline in the 12-mile circle, without interference from Delaware," said Lee Moore, a spokesman for the state Attorney General's Office.

Delaware says it "is defending its ability to protect the health and safety of residents and the environment ... by controlling and abating pollution and industrial uses in the Delaware River," said Jason Miller, spokesman for the state's Department of Justice.

The US Supreme Court is expected to settle the matter today.

The Top 1% - Not Just for Paris Hilton

Watch a Presidential Debate over the next 11 months and count how many times you hear a reference to the "top one-percent" of wage earners. Then count how many references there are to taking their money and spreading it around a little. Do a little division and call it "The Pander Ratio"; it could be fun.

Today Thomas Sowell tries to take a look at who the top 1% are. The trouble is, they're always changing,

At the highest income levels, people are especially likely to be transient at that level. Recent data from the Internal Revenue Service show that more than half the people who were in the top one percent in 1996 were no longer there in 2005.

Among the top one-hundredth of one percent, three-quarters of them were no longer there at the end of the decade.

These are not permanent classes but mostly people at current income levels reached by spikes in income that don't last.

These income spikes can occur for all sorts of reasons. In addition to selling homes in inflated housing markets like San Francisco, people can get sudden increases in income from inheritances, or from a gamble that pays off, whether in the stock market, the real estate market, or Las Vegas.

Some people's income in a particular year may be several times what it has ever been before or will ever be again.

In other words, the much-maligned top one percent who are the focus of all this attention tend to be folks who work hard their whole lives, have a good year and get rewarded for it by being assailed by politicians. As Sowell has said before, “If you have been voting for politicians who promise to give you goodies at someone else's expense, then you have no right to complain when they take your money and give it to someone else, including themselves.”

We'd Like to Introduce the Star-Ledger to Themselves

Back in October, the Star-Ledger editorialized that NJ was driving businesses out in droves and that the state needed to create policies designed to attract business. Who could disagree with such a common-sense statement as,

More than anything, the Hughes-Seneca report is proof that papering over problems from one election to another doesn't work. Eventually, steps must be taken to make New Jersey a place where businesses want to locate and ordinary people can afford to live.

So naturally, Thursday the paper decides to demand that legislators pass the most anti-business piece of legislation to be seriously considered this year. The Ledger has called for Paid Family Leave to be passed during the lame duck session.

Regular readers know this all by heart. Paid leave would put New Jersey at a competitive disadvantage as only NJ and California would mandate that every company provide this time off. We only wish the editorial board at the Ledger agreed with itself when they wrote,

In a global economy, location alone isn't enough. Companies look for equitable, stable tax policies as well as a diverse and skilled work force.

The advantages of opining. 

If Only Reform-Making Were As Quick As Credit-Taking

The editorial board at the Star-Ledger points out that New Jerseyans probably won't be giving thanks tomorrow afternoon for their property taxes "only" climbing 5.5% last year.

Sunday the paper reported on its own analysis demonstrating rates experienced their slowest climb in the past 6 years. And while Governor Corzine and several legislators were taking credit, the Ledger reminds us (and the politicians) that legislative efforts were only partially responsible,

For example, it's absurd to argue that the creation of a state comptroller, the establishment of county school superintendents, the forming of a commission to study local government consolidations, or some meager prospective pension reforms had any real impact on this year's property taxes.

That said, the imposition of a 4 percent cap on local budgets probably did have an effect, even though only one in four towns managed to meet that mandate this year. Still, this offers the best hope for controlling property taxes in the future. The success of the cap depends on the state hanging tough and saying no to towns and school boards seeking exemptions to that limit.

It is also worth noting that in North Jersey, the inflation rate was 3.1%. Property taxes escalating at 5.5% is still unsustainable.

The greatest opportunity for tax savings is in the creation of a more equitable school funding formula in which dollars follow a child. The portion of property taxes dedicated to schools is a super-majority of most Jersey homeowners' tax bills. About half of the state's $7.8 billion dedicated to schools go to 31 Abbott districts, the other half is spent on the remaining 585 districts. That creates a scenario in which local property taxes in 585 districts pick up a larger share of the tab for public schools than in other states, which is why NJ boasts America's highest property taxes.

PSE&G To Distribute 100,000 Free CFL's

PSE&G, the state's largest electric provider (and a CIANJ member), will provide 100,000 free compact fluorescent light bulbs to its customers.

The Star-Ledger reports,

The bulbs will also be distributed by PSE&G's service technicians when they make service calls and by electrical delivery employees who interact with customers on a daily basis. The installation of 100,000 CFLs will be the equivalent of taking 9,000 cars off the road for one year, saving about 40,000 tons of carbon dioxide from entering the atmosphere, [PSEG President Ralph] Izzo said.

The bulbs, which will be targeted toward low and moderate-income households, will save customers about $30 per year over their lifetime.

The Record coverage notes that PSE&G has other plans for the state, acknowledging that conservation alone will not sufficiently reduce greenhouse gas emissions,

It wants state approval to finance customers' installations of solar panels, energy–efficient appliances and other equipment. Its proposals call for rate increases to help pay for the effort.

It also wants to build a new nuclear plant in South Jersey and realizes it needs to promote conservation and renewable energies first to win the public's approval, Izzo said.

"To the extent that we get prompt state action to create that business opportunity for utilities, we'll then show others that you can do well by doing good," he said.

Both you regular blog readers know that while we support conservation efforts that do not put NJ at a competitive disadvantage, there is still only one source of electricity which both generates on a sufficient scale and produces no greenhouse gas emissions - nuclear power.

AARP Joins Big Labor In Support of Paid Leave Mandate

The AARP, and organized labor yesterday announced they were joining together in the hopes of pushing a paid family leave mandate on all employers by the end of this legislative session.

"Paid family leave is a win-win for all in a decent, caring society," Marilyn Askin of AARP New Jersey said at a news conference in Trenton.

Nothing like taking the moral high ground against the 48 other states which must be something other than caring and decent, eh?

Remember, if S-2249 would pass the New Jersey government would mandate a benefit be given to employees unlike any place else in America. Add that to a business tax climate ranked 49th by the Tax Foundation and a population that lost 72,000 residents last year and half the remaining population wishing to follow them and you set yourself up for a situation whereby NJ starts to lose the prosperity and jobs it has built over generations.

Those facts must remain prevalent as proponents of paid leave have a compulsion to not put the discussion in context of NJ's overall business climate.

Tax Revenues Up; $3 Billion Deficit Still Looming

When a state such as New Jersey is forced to run its budget on thin margins, small up-ticks become big news. Exhibit A is Saturday's Star-Ledger report on higher-than-expected revenue collections.

They say this year's budget appears to be holding steady so far. Acting treasurer Michellene Davis said yesterday tax collections are running about $300 million ahead of projections for the first four months of the budget year. That's more than twice the $133 million windfall the state realized by this time last year.

She said healthy income and business tax receipts have pushed total revenues to nearly $8.9 billion since July 1. On the downside, sales taxes were off slightly, and officials know most taxes will not be collected until the second half of the year.

"Many statehouses around the country are seeing mixed revenue pictures, and are wary of trends fueled by slowed consumer spending, tightening credit and higher prices for energy," said David Rousseau, the governor's fiscal policy advisor. "We should expect to see these trends influence New Jersey revenues and will remain cautious as our fiscal picture comes into clearer focus in the weeks ahead."

The budget gap is still forecast at about $3 billion dollars heading into the next fiscal year. At some point, the legislature and governor are going to need to make a decision as to whether we maintain the status quo or opt to cut spending and become serious about spurring economic activity. Even in the 21st Century, it is difficult to grow an economy with fewer people around to do the growing.

The Truth Is Out There

Nearly 10 months ago Governor Corzine first floated the idea of "asset monetization" - leasing the state's toll roads and other assets (such as the lottery) for immediate cash to help pay down the state's $32 billion debt. Today in Atlantic City, the Governor will revive the issue and insist it will be used to pay down half of NJ's $3,317 per capita debt. If such a plan were enacted, it would immediately free $2.8 billion in next year's budget which is presently spent on debt service (aka interest payments). Regular blog readers already know that the state expects a $3 billion budget shorfall this year.

CIANJ, as far back as budget testimony offered in April, has urged legislators to remain open to the concept. We reminded the legislature that government shedding unnessecary assets does not necessarily fly in the face of free enterprise principles. While specifics of the plan are of utmost importance, using monetization as a tool to relieve debt should not be immediately dismissed.

Today's Star-Ledger reports the Governor will not lay out many specifics this afternoon in Atlantic City, but rather use the opportunity to remind legislators that they will be forced to make difficult decisions when addressing the budget, and not to shy away from those that don't poll well.

Keeping It Real

CIANJ Board Members John Smith (Director, Corporate Responsibility, PSEG), Kevin Luing (Chairman of the Board, Berkeley College) and Debroah Zastocki (President & CEO, Chilton Memorial Hospital) recently appeared on Steve Adubato's Democracy Works to discuss the challenges and opportunites faced by businesses operating in the Garden State. The 30-minute program will re-air throughout the week, but below is a 6 minute clip of what real business leaders think about doing business in Jersey.

Can You Hear Us Now?

In your blogger's opening line for his column in this month's COMMERCE Magazine, I compare paid family leave to a weight loss plan in which you can lose 20 pounds instantly. It has appeal at first - until you realize the plan involves the loss of a limb.

Who wouldn't be in favor of a plan that pays people for their time away from work to care for their families?

The trouble is this policy would not occur in a vacum. We already have the 2nd most harsh tax and regulatory environment in the US (take that Rhode Island!) and are lost 72,000 residents last year. It's hard to grow and economy and sustain a high quality of life with fewer workers to do the growing. To pass a law now that would make New Jersey the second state in the nation with a paid leave mandate on all employers would be a job-killer. Companies do what they can afford in terms of time off to care for sick family members, but maybe what they can afford is 6 weeks and not 10. Putting the same requirement on all companies in all circumstances interferes in the employer-employee relationship like nothing else - - a point driven home by CIANJ President John Galandak in today's Record.

"It's just rife with pitfalls," John Galandak, executive director of the Paramus-based Commerce and Industry Association of New Jersey, said of the bill.

"We are one of only two states that would have it," he said, referring to California as the other state. "It's another mandate, another regulation, that you have to comply with to work here."

Galandak said he also will be watching for efforts to pass budget appropriations that are sneaked through in the end-of-session rush.

"It's traditionally a time of year when Christmas tree appropriations, or special appropriations," are passed, he said.

"By everyone's account, we are facing a $3 billion gap next year. Let's not add to that."

Mobility Musings

Check out today's Wall Street Journal for even further evidence that upward mobility in America is as possible as ever.

We know this conflicts with those who see government as the great equalizer and those who have press conferences to appear before, but we thought it relevant to the discussion anyway.

The Treasury Department is about to unveil a study whereby the government surveyed nearly 100,000 income tax returns over a decade. Their findings? The poorest of Americans saw the greatest economic gains, with the percentage of income gains shrinking the higher up the income ladder one starts. This is consistent with data from the previous decade.

Click here for the entire editorial, a must read, which concludes,

"...[I]nequality is only a problem if it reflects stagnant opportunity and a society stratified by more or less permanent income differences. That kind of society can breed class resentments and unrest. America isn't remotely such a society, thanks in large part to the incentives that exist for risk-taking and wealth creation.

The great irony is that, in the name of reducing inequality, some of our politicians want to raise taxes and other government obstacles to the kind of risk-taking and hard work that allow Americans to climb the income ladder so rapidly. As the Treasury data show, we shouldn't worry about inequality. We should worry about the people who use inequality as a political club to promote policies that reduce opportunity."

Budgets Aren't the Only Things Inflated

A belated hat tip to Newark Councilwoman Dana Rone this morning for her op-ed exposing the Special Review Assessment (SRA) as a device all too often used to inflate graduation statistics and putting the emphasis on diplomas rather than education.

Both you regular blog readers know this all by heart.

To graduate from a New Jersey high school a student must pass the HSPA, which tests 8th grade skills at the conclusion of a student's senior year. Originally the SRA was developed for students who froze during the HSPA and is offered to those students who failed part of the HSPA three times. Remember that the HSPA is an 8th grade test, meaning some students without 8th grade skills were promoted throughout their high school careers.

In certain Abbott districts, between 64% and 93% of students cannot pass the HSPA. Proponents of the SRA alternative test claim that elimination of it would cause dismay among those students and force more to drop out.

Rone notes that her city accounts for one-fourth of "dropout factories" named by Johns Hopkins University,

Consider these statistics from the New Jersey Education Department's 2005-06 School Report Cards: Weequahic High School had 258 students enter high school in 2002. Four years later, 80 students had left, leaving 178 students in the senior class. Of those 178, 82 percent, or 145 students, graduated. Of those 145, 100 (or 69 percent) either failed the HSPA three times or were given an exemption from the HSPA.

Ultimately, through SRA testing or special permissions, these students were passed and given the same high school diploma as those who passed the HSPA. If not for the SRA or some other HSPA exemption, only 45 students would have graduated from Weequahic High School in the class of 2006. (emphasis ours)

This is the scenario at just one of New Jersey's "dropout factories." Imagine if you had more than 70 percent of senior classes getting left back year after year.

Only when the SRA test is no longer inflating graduation statis tics will we really be able to expose failing schools and become truly proud of our education performance in New Jersey.

Once again we ask defenders of the status quo whether handing someone a diploma is more important than educating them and preparing our high school students for the modern workforce.

Spreading the Truth About Paid Family Leave

This morning, CIANJ's Board of Directors gathered for its quarterly meeting to hear about a host of issues and achievements involving the association and what we can expect from Trenton in the Lame Duck session. A special thanks to Senator Tom Kean, Jr., Sen. Paul Sarlo and Assemblyman-elect Declan O'Scanlon for joining us.

Once again, board members were forced to endure yours truly speak about the issues facing NJ businesses during the lame duck session. And of course, we mentioned the most anti-business bill to be considered by the legislature this year: paid family leave. The bill would intrude on the employer-employee relationship like nothing else in the country. Even more business leaders were engaged on the issue this morning and are paying attention to who cares -- and who doesn't -- about New Jersey's competitiveness.

To view the CIANJ At Issue brief on Paid Leave, click here.

To view a brief PowerPoint presentation on the issue, including setting the issue within the framework of NJ's overall business climate, click here.

The Big, Bad Free Trade Wolf

Last week 132 Members of the House of Representatives elected to take a protectionist stance against Peru by voting to disallow American companies the same access to Peruvian markets our South American friends enjoy in the United States. While the agreement was ultimately voted favorably by the House, the attempt to 'protect' the American economy and worker from a GDP smaller than Connecticut's flies in the face of the free trade principles that have helped the American economy expand greatly since the end of World War II. As George Will points out in the latest Newsweek, the political spin is having an impact on the American consumer.

Free trade, crucial to the growth of wealth globally since 1945, is in peril. People are playing with fire at a moment when there is economic gasoline spilled all over the place. But overstating problems can be its own form of fire: Recent polls, taken just before the announcements that third-quarter growth was a robust 3.9 percent and that 166,000 jobs were created in October, showed that up to 46 percent of Americans think the economy is in a recession.

Economic literacy needed on Capitol Hill. High oil prices and the American currency held by foreign nations have added unpredictability to the American economy - now is not the time to turn away from our economic allies, especially at a time when globalization can assist the US. 

PSEG President Separates Fact from Fiction on Nuclear Energy

This morning's Record previews the state's revised Energy Master Plan, a directive outlining NJ's energy policy expected to be released in draft form during December. The paper hits on a topic all too farmiliar to readers of NJ Business Matters - the need to promote nuclear energy as a means to meet both our generation needs and greenhouse gas reduction targets. Remember, nuclear energy emits virtually zero greenhouse gases, and already provides more than half of New Jersey's electricity.

"I hope that people recognize that you cannot preserve the quality of life and standard of living that we have just through energy efficiency and renewables. You just cannot make the math work," said Ralph Izzo, president and CEO of PSEG. "Therefore, I would hope that they would leave nuclear in there [the plan]."

For more information on nuclear energy and the importance of relicensing our existing plants, check out the website of our friends at NJACRE.org.

The November edition of COMMERCE Magazine will feature a column by Dr. Patrick Moore, a co-founder of Greenpeace, on the issue of nuclear energy. We'll point you to it when the column becomes available on-line. 

The Votes Are In

NJ.com is reporing on today's caucus leadership selections in Trenton. In the Senate, Democrats chose to keep Senator Codey as President of that body with Senator Steve Sweeney getting the nod for majority leader.

Republicans chose to select Senator Tom Kean, Jr. as their leader for the next legislative session, replacing Senator Lance.

In the Assembly all leadership positions will remain unchanged.

Assembly Republican Leader DeCroce and Senate Republican Leader Kean were both endorsed by PENPAC during the past election cycle.

It was also announced that the Assembly Labor Committee will consider the job-killing paid family leave bill on December 6th. CIANJ and member companies will be in attendance to testify as to the harms A-3812 will inflict on the NJ economy. To check out our At Issue brief on paid leave, click here.

Jersey Votes Against Business As Usual

Yesterday New Jerseyans went to the polls and delivered the message to Trenton that the tax-hiking solution to all the state's ails over the past few years are no longer good enough. Voters rejected two bond initiatives - one to spend $450 million to construct stem cell research facilities (with no defined way to pay for their completion) and one to take last year's sales tax increase and dedicate it to property tax relief (thus increasing the likelihood of another sales tax increase in the next few budget cycles).

The stem cell research bond is unfortunately par for the course in NJ public policy. The original plan included less dollars and a facility located in New Brunswick, but political bosses in other parts of the state found that unacceptable. So the final bond act called for more money to construct three facilities. Spreading facilities across the state lessens the ability to attract top talent as they would be scattered - we'd spend more money to get less.

With about 95 percent of the precincts counted as of 12:20 a.m., both initiatives were losing by more than 72,000 votes.

Although the two issues seem unrelated at first blush, opponents turned the debate on their merits into a referendum on the state's financial health.

"People are saying enough is enough with the borrowing, and that we shouldn't be venturing into highly risky business ventures," said Bogota Mayor Steve Lonegan, who campaigned against both proposals.

Congratulations to the 37 PENPAC endorsed candidates who will serve in the New Jersey legislature next year.

District 7

Senator Diane Allen (R)

District 8

Assemblywoman-elect Dawn Marie Addiego (R)

District 12

Assemblywoman and Senate Candidate Jennifer Beck (R)

Assemblyman-elect Declan O’Scanlon, Jr. (R)

Assemblywoman-elect Caroline Casagrande (R)

District 13

Senator Joseph Kyrillos (R)

Assemblyman Sam Thompson (R)

Assemblywoman Amy Handlin (R)

District 16

Senator-elect Christopher “Kip” Bateman (R)

Assemblyman Peter Biondi (R)

Assemblywoman-elect Denise Coyle (R)

District 17

Assemblyman Upendra Chivukula (D)

District 20

Senator Raymond J. Lesniak (D)

District 21

Senator Thomas Kean, Jr. (R)

Assemblyman Eric Munoz (R)

Assemblyman Jon Bramnick (R)

District 23

Senate Minority Leader Leonard Lance (R)

Assemblyman Michael Doherty (R)

Assemblywoman Marcia A. Karrow (R)

District 24

Senatator-elect Steven Oroho (R)

Assemblywoman Alison Littell McHose (R)

Assemblyman-elect Gary R. Chiusano (R)

District 25

Senator Anthony Bucco (R)

Assemblyman Michael Patrick Carroll (R)

Assemblyman Richard Merkt (R)

District 26

Senator-elect Joe Pennacchio (R)

Assembly Minority Leader Alex DeCroce (R)

District 30

Senator Robert W. Singer (R)

Assemblyman Joseph R. Malone III (R)

Assemblyman Ronald S. Dancer (R)

District 36

Senator Paul Sarlo (D)

Assemblyman Gary S. Schaer (D)

District 39

Senator Gerald Cardinale (R)

Assemblyman John E. Rooney (R)

Assemblywoman Charlotte Vandervalk (R)

District 40

Senator-elect Kevin J. O’Toole (R)

Assemblyman David C. Russo (R) 

Making Perverse Incentives Pay

This morning at the inter-galactic headquarters of CIANJ our Human Resource Council will gather to stay updated on legal issues impacting the HR community in a presentation titled,  Sexual Harassment: Challenges in the Evolving Workplace by the uber-talented Annemarie Simeone of Norris McLaughlin Marcus, P.A.

Before the main event, attendees are forced to hear your friendly neighborhood blogger discuss the perils of New Jersey's proposed Paid Family Leave mandate. The job killer of a bill would allow employees at virtually all companies to take up to 10 weeks of paid time off to care for a newborn or newly-adopted child or a sick family member. It may seem harmless at first glance, but as the layers of the program are unwrapped, you begin to realize the ways in which it will drive taxes up and jobs to other states. Doing this at a time when NJ has the nation's second highest tax burden, highest property taxes and is losing 70,000 residents per year only compounds the problem.

To read the CIANJ At Issue Briefing on Paid Family Leave, click here.

Haven't We Seen This Movie Before?

Cheers to the Wall Street Journal today for pointing out Congress is about to consider another spontaneous reaction that will cause unintended consequences to be managed well beyond the next election cycle.

A note of relevant history - In 2002, Congress overwhelmingly passed and the President signed Sarbox, placing new accounting requirements on American business. The implementation and costs have gone beyond what Congress expected (or admitted to expecting) and now New York is in jeopardy of losing its crown as chief of the financial services world. Details available in a report issued by Sen. Schumer and Mayor Bloomberg.

The knee-jerk du' juor comes in reaction to the subprime mortgage situation in the form of the Mortgage Reform and Anti-Predatory Lending Act of 2007, introduced by Rep. Barney Frank.

Throughout the 1980s and '90s, Congress prodded, even strong-armed, banks into making more mortgage loans to low-income and minority families. Washington enacted anti-discrimination and community lending laws with penalties against lenders for failing to issue riskier mortgages to homebuyers living in poor neighborhoods or with low down payments and subpar credit ratings. And so it was that the modern subprime mortgage market was born.

Now, and for a variety of reasons, some two million of those loans have gone sour, and the same politicians are searching for villains. Leading the charge is House Financial Services Chairman Barney Frank, who is accusing banks of "predatory lending"--by which he means making loans to the very group of borrowers that Mr. Frank and his colleagues urged banks to serve.

History schmistory. People have photo-ops to get to.

The Journal correctly notes that the free market is already punishing those accountable. Executives are losing their jobs and investors are fleeing the market. Those who committed crimes have a legal system to answer to. However, just like the Alternative Minimum Tax and Sarbanes-Oxley have created fiscal headaches because of their expanding scope and the nature of government, Mr. Frank's proposal would do the same. The editorial closes,

The latest housing data indicate that new home sales are down 23% from a year ago, with the biggest retrenchment in the subprime market. The volume of subprime securities was down a whopping 70% to $15 billion in the third quarter from $62 billion one year ago. Originations of the controversial subprime ARMs are down by 50% so far this year compared to 2006. Mr. Frank's bill couldn't come at a worse time, as it will further shrink credit to marginal borrowers, which will mean fewer buyers and extend the housing downturn.

The Frank bill is essentially a Sarbanes-Oxley for housing, an attempt to punish business in general for the excesses of an unscrupulous few and the perverse incentives created by Washington policy.   

High Insurance Costs Are Bad Medicine

The state with the highest per capita income can do better than this.

United Health Foundation, the American Public Health Association and the Partnership for Prevention have released a joint study indicating New Jersey's healthcare system is slipping toward mediocrity with an increase in preventable illnesses and a decrease in prenatal care primary reasons for driving our national healthcare rating from the 14th best to 21st.

The number of New Jersey residents without health insurance has been steadily increasing -- a rate that has risen by 76 percent since 1990. At the same time, the percent of children in poverty in the state nearly doubled in just the past year.

Among the most troubling areas cited by the report was prenatal care. The percentage of pregnant woman receiving adequate prenatal care in New Jersey was just 63.4 percent -- worse than any state except New Mexico. The rate of infectious diseases dipped slightly, but the state still scored near the bottom in such cases nationwide.

None of this is surprising to our army of three regular blog readers. You already know that insurance in New Jersey is higher than anywhere else in America. You also know that New Jersey places enough mandates on insurance companies that it increases costs by up to 20% and has priced many of our poorest citizens out of the market.

Oh, and we can also partially thank the trial lawyers.

[NJ State Health Commissioner Fred] Jacobs attributed the state's low scores in prenatal care in part to the declining number of obstetricians -- some to retirement and others surrendering to the high malpractice premiums of the specialty -- calling it a major issue that needs to be addressed. (emphasis ours)

Does NJ Business Matter to You?

Happy Election Day Jersey! Don't let your enthusiasm fizzle in the drizzle. The polls are open and as you head into your voting booth, we give you this thought from economist Thomas Sowell

If you have been voting for politicians who promise to give you goodies at someone else's expense, then you have no right to complain when they take your money and give it to someone else, including themselves

Let's Not Make The Housing Slump Worse

Jersey's papers are abuzz this morning with figures on slumping home sales, especially in New Jersey's urban cores. Yesterday, the Star-Ledger reported that urban home sales in New Jersey dropped an astounding 34% during the first six months of the year. There were plenty of suspected culprits, including lending practices and a natural downswing in the market.

That being said, when the legislature reconvenes they will consider legislation that could actually make the problem worse in New Jersey's largest cities.

In the spring A3190/S2643 was introduced in the New Jersey legislature, which would allow some of New Jersey's large cities to place an additional tax on the sale or transfer of real estate, providing a disincentive to invest in the cities of Newark and Jersey City. In effect the legislation would allow municipalities to impose a 0.1% tax on the sale of property in two cities with some of the highest property taxes in New Jersey. Government should, in an effort to spur investment, be taking active steps to reduce taxes in these urban areas.

0.1% may seem insignificant, but increases in realty transfer fees do reduce home sales. A February 2006 study conducted by the Rutgers Economic Advisory Service and Center for Urban Policy Research found that a 10 percent increase in the realty transfer fee would yield a reduction in home sales by 0.42%.

The tax increase implemented by A3190, $.50 per $500 of the sale price, represents a price increase of greater than 10% for homes sold for up to $850,000.

Driving up price higher than the natural intersection of supply and demand will weaken sales. It's not something government should be engaging in knowing what the results will be. This legislation should not even be considered during the Lame Duck Session. 

Vote for Business

In case you've forgotten, tomorrow is Election Day in Jersey, with all 120 seats up for election in the New Jersey General Assembly and State Senate. We open the week with the lead story from Friday's CIANJ Business Beat, including candidates endorsed by PENPAC, affiliated with CIANJ.

The Private Enterprise Political Action Committee (PENPAC), affiliated with CIANJ has interviewed candidates, reviewed questionnaires and analyzed voting records. The PAC sought to find candidates whose viewpoints were in alliance with the CIANJ's Legislative Agenda and who adhere to free enterprise principles in order to make New Jersey an even greater place to live, work and conduct business.

To review a list of legislative districts indexed by municipality, visit the New Jersey legislature's website.

"In the coming legislative session, lawmakers will make decisions on many significant policy issues, regarding asset monetization, balancing the state budget and healthcare reform, all of which will have an enormous impact on

New Jersey businesses and their operations,” said PENPAC Chairman Richard Goldberg.  “That is why it is critically important that New Jersey business men and women support candidates whose policies will promote economic investment, stabilize taxes, and allow businesses to thrive and create jobs in the State of New Jersey.”

PENPAC is proud to endorse the following 2007 candidates for the New Jersey Senate General Assembly:

District 2

Senator James J. McCullough (R)

District 3

Assembly Candidate Phil Donohue (R)

District 7

Senator Diane Allen (R)

Assembly Candidate Brian Propp (R)

Assembly Candidate Nancy Griffin (R)

District 8

Assemblyman and Senate Candidate Francis L. Bodine (D)

Assembly Candidate Dawn Marie Addiego (R)

District 12

Assemblywoman and Senate Candidate Jennifer Beck (R)

Assembly Candidate Declan O’Scanlon, Jr. (R)

Assembly Candidate Caroline Casagrande (R)

District 13

Senator Joseph Kyrillos (R)

Assemblyman Sam Thompson (R)

Assemblywoman Amy Handlin (R)

District 14

Assembly Candidate Adam R. Bushman (R)

District 16

Assemblyman and Senate Candidate Christopher “Kip” Bateman (R)

Assemblyman Peter Biondi (R)

Assembly Candidate Denise Coyle (R)

District 17

Assemblyman Upendra Chivukula (D)

District 18

Assembly Candidate Joseph Sinagra (R)

District 20

Senator Raymond J. Lesniak (D)

District 21

Senator Thomas Kean, Jr. (R)

Assemblyman Eric Munoz (R)

Assemblyman Jon Bramnick (R)

District 22

Assembly Candidate Robert Gatto (R)

District 23

Senate Minority Leader Leonard Lance (R)

Assemblyman Michael Doherty (R)

Assemblywoman Marcia A. Karrow (R)

District 24

Senate Candidate Steven Oroho (R)

Assemblywoman Alison Littell McHose (R)

Assembly Candidate Gary R. Chiusano

District 25

Senator Anthony Bucco (R)

Assemblyman Michael Patrick Carroll (R)

Assemblyman Richard Merkt (R)

District 26

Assemblyman and Senate Candidate Joe Pennacchio (R)

Assembly Minority Leader Alex DeCroce (R)

District 30

Senator Robert W. Singer (R)

Assemblyman Joseph R. Malone III (R)

Assemblyman Ronald S. Dancer (R)

District 36

Senator Paul Sarlo (D)

Assemblyman Gary S. Schaer (D)

District 38

Senate Candidate Robert Colletti (R)

Assembly Candidate John Driscoll, Jr. (R)

District 39

Senator Gerald Cardinale (R)

Assemblyman John E. Rooney (R)

Assemblywoman Charlotte Vandervalk (R)

District 40

Assemblyman and Senate Candidate Kevin J. O’Toole (R)

Assemblyman David C. Russo (R)

Once is a Fluke, Twice is a Coincidence, But 50 Times...

The Bureau of Labor Statistics has released its October jobs numbers (from the household survey) and found that nonfarm payroll in the US increased by 166,000 during the month of October with the unemployment rate holding at 4.7%.

For those of you keeping score at home, the total of new jobs created since the tax cuts of 2003 now stands at 8.3 million over 50 consecutive months of growth. Time to make those cuts permanent. 

Not-So Breaking News: Higher Costs Lead to Fewer New Jerseyans with Health Insurance

Yesterday the Economic Policy Institute released a study demonstrating the percentage of New Jerseyans under 65 who hold employer-provided health insurance has slipped by 3% over a five year period. The chief reason cited was an increase in costs that made coverage unaffordable.

Of course, our friends at New Jersey Policy Perspective used the opportunity to call for a government-led charge for universal healthcare.

Here at CIANJ we wish to see an environment in which everyone who wants health insurance can afford it. Unfortunately, many of the proponents of government-led universal care are also the ones who work to make that impossible. Insurance costs are rising by up to 12% per year. At that rate, the government will not be able to afford it, meaning universal government coverage merely treats the symptoms and not the cause.

New Jersey has more than 30 mandates which health insurers must provide as part of basic coverage to their small business and individual policyholders. That leads to many New Jerseyans purchasing coverage for things they do not need or do not want. In total, that accounts for up to one-fifth of our premiums. Then, unlike car insurance whereby your rate is determined by your particular situation, NJ requires community coverage rates. So young healthy people now have a disincentive to get into the pool.

Reversing those trends are concrete ways to reduce the cost of insurance. To drive the cost up and then decry the fact fewer of our hard working men and women can afford it seems a little... 

A Failure of Our System

13 of New Jersey's high schools were named to Johns Hopkins University's "Dropout Factories" list, meaning fewer than 60% of the total numbers who entered a high school for their freshman year were present for graduation day.

Today's Star-Ledger makes the obvious point that a high school dropout factory is unacceptable and needs to be corrected, but then the editorial board introduces us to a favorite subject of Special Review Assessment defenders,

New Jersey, with 13 of its 348 high schools on the dropout factory list, would seem to be doing better than many other states. New Jersey, however, is a state where students who stay in school can get diplomas even if they cannot pass the official state graduation test. An alternative exam provides a back door to graduation, a door that the state plans to close by eliminating the alternative test.

Is that alternative keeping more New Jersey high schoolers in class compared with other states? If so, will closing off that op tion have unintended consequences for the dropout rate? Is New Jersey doing a better job of providing high school choices that keep more kids in school?

To graduate from a New Jersey high school a student must pass the HSPA, which tests 8th grade skills at the conclusion of a student's senior year. Originally the SRA was developed for students who froze during the HSPA and is offered to those students who failed part of the HSPA three times. Remember that the HSPA is an 8th grade test, meaning some students without 8th grade skills were promoted throughout their high school careers.

In certain Abbott districts, between 64% and 93% cannot pass the HSPA. Proponents of the SRA alternative test claim that elimination of it would cause dismay among those students and force more to drop out.

The question for those defenders is simple: isn't actually gaining knowledge and an education (upon which a high school senior is tested at an 8th grade level) more important than being handed a diploma?