NJ Business Matters: The Blog of the CIANJ

Shining a Light on the Plaintiff's Bar

The issue of tort reform is gaining relevance in New Jersey as trial lawyers try to use the foothold gained by mass asbestos and pharmaceutical litigation to make the Garden State a destination venue for their class action suits. Regular blog readers know CIANJ is of the position that a judicial system should serve the citizens living within the jurisdiction and not be clogged by out-of-state cases that choose NJ as a venue because of our plaintiff-friendly statutes.

Today's Examiner picks up on the theme of fraudulent lawsuits, calling on the Justice Department to investigate excesses of the Plaintiff's bar,

Imagine the national outcry if hundreds of Fortune 500 corporations were discovered to be routinely falsifying their tax returns in order to qualify for tax credits worth billions of dollars.

And what if it was further learned that some accounting firms specialized in preparing fraudulent profit and loss statements to deceive the government and that the same firms also provided “experts” to help the corporations prepare equally fake supporting documents?

Does anybody doubt that there would be a bipartisan demand in Congress that would force the president to take dramatic action to investigate the scandal, identify and prosecute those responsible and recommend new laws aimed at preventing such frauds from ever again being perpetrated?

No imagination is needed to recognize the ill wind of a genuine national scandal of epic proportions blowing through the nation’s court system. It is the scandal of a relatively few well-placed class-action liability lawyers and equally corrupted professionals from other fields using false damage claims to enrich themselves by generating billions of dollars in legal fees and administrative costs, compensatory damage payments and other court-ordered reparations.

As we said in our press conference with the New Jersey Lawsuit Reform Alliance last week, every dollar a company spends defending itself from a frivolous claim represents a dollar not spent making the products that keep us healthy and that make modern life possible.

Tort fraud has already cost us up to $30 billion in just the past 15 years. Certainly our friends on Capitol Hill will act with the same speed they did when investigating corporate scandals. I'm positive of it.

Transit Hub Tax Package to Be Heard Thursday

On Thursday, the Senate Budget and Appropriations Committee will hear legislation designed to incentivize major companies to locate or expand their operations around NJ's largest transit hubs. S-3043 would direct the Commerce Commission to designate half-mile radii around certain transit stations as "urban transit hubs". A company making at least a $75 million investment within the hub while creating at least 250 jobs could be eligible for up to a 100% credit on its Corporate Business Tax (CBT) or others.

CIANJ will be in Trenton testifying in support of legislation geared toward revitalizing our urban communities. Watch this space for our testimony as the week progresses.

Today in Trenton: School Funding Formula Part Deux

The legislature is holding a rare holiday-week session today so the General Assembly can hear and debate details of the Governor's proposed $7.8 billion school funding formula. School funding consumes the largest share of the state budget and a new formula to replace the ad hoc and disjointed system currently in place offers the greatest opportunity for property tax reform.

Since the Senate hearing, formal legislation has finally been introduced. To our pleasant surprise, the property tax relief contained within the proposal is more substantial than expected. It requires towns spending more than the state definition of adequate who also receive more than the minimum 2% in state aid to return money above the 'adequacy' marker directly to the taxpayers. The baseline (before children are defined as special needs, at risk etc and before they reach high school age) in the formula is more than $9,600 per student. Under the new proposal, more than 100 towns would be required to return money to taxpayers.

While accountability in the formula is still lacking in that there is no correlation between funding levels and results, the changes do offer much of what CIANJ has long-stood for. Our testimony before the Senate is available here. A district-by-district breakdown of who would get how much from Trenton is also available. 

The Administration seeks to have the proposal pass the legislature during the current session, which means it would need to pass by January 7th.

Happy Holidays from CIANJ

Feel free to spend the rest of your day tracking Santa with NORAD.

APP Comes Out Against Oyster Creek...Generally Speaking

On the heels of the Philadelphia Inquirer's editorial supporting the relicensing of the Oyster Creek Generating Station and a federal panel's ruling that the plant's plan regarding corrosion was sufficient to operate safely through 2029, the Asbury Park Press continues its campaign to have the state government do all it can to close down the plant, and reduce the amount of energy in the PJM grid.

The Press editorial is chock full of the anti-nuclear crowd's talking points about vulnerability to terrorist attack, transporting spent fuel rods and the incentive for profit in the nuclear industry.

We just wish the APP would be honest with its readers. The charges levied against Oyster Creek actually make up a case against nuclear energy, not just the station up for renewal in 2009. There is very little in the editorial unique to Oyster Creek.

It's a pity anti-nuclear activists refuse to acknowledge there is a federal licensing process and that licensing is only granted if a plant is deemed to have met safety and environmental standards as set by the Nuclear Regulatory Commission. New Jersey already gets more than half its electricity from nuclear power, and nuclear energy produces virtually zero greenhouse gas emissions.

A Polestar report found that the Garden State cannot meet its greenhouse gas emissions reduction goals without nuclear power. If the Governor were to follow the APP's lead, he would be setting carbon reduction standards that he himself would make more difficult to attain.

Some day, nuclear power may be obsolete. Solar, wind, hydro-electric and yet-to-be discovered clean technologies may develop to the point where they can produce the energy that has made modern life possible. Until then, if we want to reach the carbon goals we have set for ourselves, nuclear must be part of the equation.

We refer you again to a column penned by Dr. Patrick Moore, co-founder of Greenpeace and current chief scientist for GreenSpirit Strategies, on the importance of nuclear energy in New Jersey.

Plant Closing Bill Signed Into Law

Governor Corzine signed legislation this morning, increasing penalties on New Jersey companies who plan mass layoffs, but fail to provide at least 60 days notice to employees, their union, the municipality the Oracle at Delphi, and the State of New Jersey.

The Federal WARN Act requires companies with at least 100 employees who plan close a plant that will result in at least 50 job losses to provide 60 days notice. Failure to do so results in a penalty of one day's pay multiplied by every year of a worker's service for each laid off employee.

Originally, the legislature passed a bill to require NJ companies to provide 90 days notice and penalize companies one week's pay (versus one day) multiplied by every year of a worker's service. CIANJ objected to the stiffer penalties which would only apply to NJ companies and noted the bill would have forced our companies to broadcast their restructuring intents a month earlier than their competitors.

The Governor conditionally vetoed that, stressing the need to keep notification requirements in concert with federal law. The legislature then changed their bill to a 60-day requirement (keeping the stiffer penalty) which is what was signed today.

As CIANJ President John Galandak told the Record yesterday,

"Once again, Trenton has decided to target New Jersey companies and make penalties here harsher"

Job Numbers In, Unemployment Slightly Up

New Jersey's Department of Labor and Workforce Development released its November job numbers to a mixed reaction as the growth of government jobs continues to outpace the growth of private sector jobs in the Garden State. Below are some of the key numbers from the report, which is available here in its entirety.

• Unemployment edged up to 4.2% from 4.1%
• 2,100 total jobs were added in November - 1,200 being government jobs and 900 generated by the private sector
• Job gains were led by education and health
• Job losses were led by financial services and manufacturing

James Hughes, dean of the Bloustein School of Planning and Public Policy at Rutgers told the Star-Ledger,

"The key office sectors combined -- information, financial activities, and professional and business services -- lost 400 jobs in November. This is not good news for the office market." When private sector employment totals for 2007 are settled next month, "it looks like the fourth quarter will be particularly weak."

The Ostrich Society here in New Jersey continues to advocate for anti-business public policy thinking it will have no impact on the state's working men and women. At some point, even they have to realize we need to reduce spending and help foster economic growth, right?

Oyster Creek Nuclear Plant Given Green Light By Federal Safety Board

The Oyster Creek Generating Station produces enough electricity to power about 600,000 homes and yesterday The Atomic Safety and Licensing Board ruled the plant's plan regarding corrosion was sufficient to operate safely through 2029. The generating station's license is up for renewal in 2009 and some want to see it - and the other nuclear plants that provide NJ with more than half its electricity - shut down.

Neil Sheehan, a spokesman for the NRC, said the panel decided that corrosion of the drywell shell would not be a factor during the next 20 years.

"They looked at some of the arguments put forth on corrosion by the citizens," he said. "And even if there was further corrosion, with AmerGen doing ultrasonic testing inspections every other outage, they would identify any corrosion that could affect the margin before it had any impact."

Safe operation of the plant is critical to the region's energy needs, economy and to the environment. Remember that nuclear power is the only source of energy we have that both produces energy on a large scale and releases virtually zero greenhouse gas emissions. You'd think an environmental movement based in science would embrace it as an option. 

Higher Costs, Less Access to Health Care - Thanks, Trial Lawyers

This morning CIANJ President John Galandak joined the New Jersey Lawsuit Reform Alliance in unveiling a Rutgers poll gauging business professionals' attitudes toward NJ's legal climate.

A justice system should serve the citizens of its jurisdictions. Unfortunately, trial lawyers are headed for NJ to file their claims here because of our increasingly plaintiff-friendly courts. The net result for consumers is a jammed court system and higher prices for products, insurance and health care for us all.

The Executive Summary is available here. Some statistics we'd like to point out are:

• One-third of businesses interviewed have been sued in the past five years
• About 80% of employers have raised their prices because of lawsuits

Each dollar a company spends defending itself from junk science or a frivolous suit is a dollar not spent researching new medicine or creating the products that have made our modern lives possible. The legislature has the ability to act - and a good place to start would be to reject the trial lawyer led expansion of New Jersey's Wrongful Death Act. 

Trial Lawyers Bet Big In Atlantic County

The American Tort Reform Association has come out with its national list of "Judicial Hellholes" - jurisdictions that welcome trial lawyers through plaintiff-friendly venues which allow a host of frivolous cases through the door and dole out unjust award amounts. These cases consume the time and money of companies being sued and drive insurance, health care and product costs higher for virtually everyone.

The full report of the worst venues for business is available here. Coming in at Number 6 is Atlantic County:

6. ATLANTIC COUNTY,NEW JERSEY
Personal injury lawyers seem to have gained a monopoly in Atlantic County, a new addition to the Judicial Hellholes report. New Jersey is known for particularly plaintiff-friendly laws, admitting junk science in court and hosting lawsuits from all over the country against their state's own economic driver, the pharmaceutical industry. All these elements were on display in the Vioxx litigation in Atlantic County. There is also evidence that litigation fairness is deteriorating throughout the Garden State, leading to the formation of the New Jersey Lawsuit Reform Alliance in October 2007.

High profile issues such as class action abuse, pharma-ceutical liability, asbestos lawsuits and extraordinary awards often dominate headlines. But being cited as a Judicial Hellhole is nothing to celebrate. Litigation abuse ultimately hurts the people living in these jurisdictions the most nomic growth and access to health care, among other things.

You may remember the aforementioned Vioxx lawsuit from CIANJ's amicus brief which objected to a labor union joining as a plaintiff. While individuals may have been harmed in the case, the union as a whole was not - an opinion ultimately validated by the State Supreme Court.

The report also notes the formation of the New Jersey Lawsuit Reform Alliance (NJLRA), of which CIANJ is proud to be a member. In fact, tomorrow NJLRA will release a scientific survey on the attitudes of our members and the members of the NJ Chamber of Commerce toward the state's litigation climate. Funny how that timing works out, we know.

The boss will be down in Trenton speaking on behalf of our membership to the press gaggle and we'll make the full report available here later in the day.

Senate Agrees - Voluntary and Creative Programs Work Better Than Mandates

The State Senate yesterday unanimously passed common-sense legislation that would allow school districts to establish 'sick banks' which would allow employees to use more sick days than they would ordinarily be allotted.

A sick bank functions by allowing employees to contribute their unused sick days to the bank. Then, if an employee had an emergency and needed more time off than they would ordinarily be eligible for, they could draw from the bank to which they contributed. The program would ensure that the sick employee had necessary time off and that the school system was not left short staffed.

Here at CIANJ, we applaud creative efforts such as this to care for sick workers while keeping an organization afloat.

Which brings us to Paid Family Leave (that seems to happen a lot around here lately). The bill passed yesterday, S-548, is voluntary - both in terms of employees who participate and towns that make the program available.

So if a creative and voluntary program is open to local governments, why shouldn't the same be available to companies? Remember that if you're an employee who has a paid leave benefit through your employer you still have to pay the tax increases to help fund leave for everyone else.

Blue Jersey has taken to calling opponents of Jersey's paid leave mandate as the "anti-family business lobby". The truth they refuse to acknowledge is that companies across the state already work with their employees so that they can care for sick relatives while still keeping the company solvent. That may mean work-from-home arrangements, working outside hours or paid or unpaid leave as part of the host of options. However, for government to require that every company or every size and every different type of industry offer the exact same solution is an intrusion which does not exist in 48 other states.

The whole non-competitiveness thing.

Real Questions on the Real World Impact of Paid Leave

The Asbury Park Press came out today in opposition to NJ's proposed paid leave mandate, leveling the same criticisms and offering the same questions we here at CIANJ have been since the onset of the debate.

The APP correctly points out that the job killer of a bill would put NJ at a competitive disadvantage with our neighboring states. Remember that only California mandates a similar program, providing a disincentive for multi-state corporations to expand their operations here.

They also raise the same questions we have regarding the impact on small businesses. For example, Governor Corzine has been touting that small companies can "opt out" of the program because they are not required to hold a position open (tangential argument: there are other requirements on all businesses such as record-keeping and notification mandates. No one has the option to ignore those, therefore the notion that a company can "opt out" of the program seems a bit odd).

The APP raises another specific question regarding whether or not workers could collect unemployment and paid family leave simultaneously:

The Corzine administration interprets the bill's language to mean small businesses can deny a worker's leave request, giving the person the option of staying or quitting.

The bill's sponsor, Sen. Stephen Sweeney, D-Gloucester, said small businesses wouldn't be required to hold positions for workers on leave and could lay them off. The difference between his and Corzine's interpretations would determine whether the employee would be eligible for unemployment benefits. That's huge.

We smell lawsuits. The ambiguity alone will be a field day for lawyers — more reason to let this bill die a quick death.

There are also other fundamental questions. For example, if a small business allows one worker job protection but not another, does that put the company in violation of the state's Law Against Discrimination?

These have not been answered, and until they are the echo chamber that has been the rest of the mainstream media - who by and large have been running through the talking points of liberal think-tanks and bill proponents - should have taken a more extended look.

The Obvious Choice, The More Obvious Motivation

Cheers to Ledger columnist Tom Moran this morning, for pointing out how turf wars launched by the educational establishment threaten to thwart the amazing work being done by private pre-schools in the state's poorest districts and beyond.

In 1999 the State Supreme Court ruled that 3 & 4 year old children in the state's Abbott districts must be offered pre-schools (CIANJ concurs with studies that show the worthwhile investment early childhood education is). The public school system didn't have the space or teachers to implement a successful program and so private schools worked with the public school system to educate our youngest children.

The result has been one of the greatest success stories in NJ's school system.

However, as the Governor proposes expanding pre-schools outside of Abbott districts, the public school monopoly feels threatened and is working to ensure successful private schools do not receive any state money as part of the plan - disregarding the success of public-private partnerships in poor districts.

But the preschools in these districts are both public and private. And because parents make the final choice about where to enroll their kids, the schools must compete for business.

So here we are. We have a success story, and the question is whether we have the wisdom to repeat it.

And so we put a question to the educational establishment, who say they are protecting the existing system in the name of the best interest of the children - Why doesn't the "best interest of the child" include letting them attend the best school possible? Government-run or not.

Increasing Costs, And Jeopardizing New Jobs

The General Assembly today passed S-2247, requiring companies that take advantage of BEIP grants to pay the prevailing union wage on certain projects.

Business Employment Incentive Program (BEIP) grants work to entice companies to expand or locate within New Jersey by paying a portion of the company's income taxes provided they generate at least 25 new jobs. To date, the program has helped create 70,000 new jobs and nearly $12 billion in new investment.

It's the state's most successful job creation program ever, built on the principle of reducing costs in order to get companies to expand or locate in New Jersey.

Prevailing wage requirements increase construction costs by 10-25%.

So now, a string attached to accepting a grant which reduces the cost of doing business will be to increase your cost of doing business. The bill also requires a landlord to pay the prevailing wage if a BEIP recipient occupies at least 55% of their building - even for work done elsewhere on the property.

Now, a quasi-related third party would be able to jeopardize your incentive grant. As we said in our committee testimony, it would border on irresponsibility for a company to accept a grant under those circumstances.

The final tally in the Assembly it was 53-24. We'll post the votes of the Assembly when they become available on-line The votes of individual legislators are pasted below. The legislation appears to be headed for the Governor's desk. A "NO" vote is consistent with the CIANJ's position.

	Albano, Nelson T. - Yes	Barnes, Peter J., III - Yes	Baroni, Bill - Yes
	Bateman, Christopher - No	Beck, Jennifer - No	Biondi, Peter J. - No
	Blee, Francis J. - Yes	Bodine, Francis L. - Not Voting	Bramnick, Jon M. - No
	Burzichelli, John J. - Yes	Caraballo, Wilfredo - Yes	Carroll, Michael Patrick - No
	Chatzidakis, Larry - Not Voting	Chivukula, Upendra J. - Yes	Cohen, Neil M. - Yes
	Conaway, Herb, M.D. - Yes	Conners, Jack - Yes	Connors, Christopher J. - No
	Corodemus, Steve - No	Cruz-Perez, Nilsa - Yes	Cryan, Joseph - Yes
	Dancer, Ronald S. - Yes	DeCroce, Alex - No	Diegnan, Patrick J., Jr. - Yes
	Doherty, Michael J. - No	Egan, Joseph V. - Yes	Epps, Charles T., Jr. - Yes
	Evans, Elease - Yes	Fisher, Douglas H. - Yes	Giblin, Thomas P. - Yes
	Gordon, Robert M. - Yes	Green, Jerry - Yes	Greenstein, Linda R. - Yes
	Greenwald, Louis D. - Yes	Gregg, Guy R. - No	Gusciora, Reed - Yes
	Handlin, Amy H. - No	Holzapfel, James W. - No	Jasey, Mila M. - Yes
	Johnson, Gordon M. - Yes	Karrow, Marcia A. - No	Kean, Sean T. - Yes
	Lampitt, Pamela R. - Yes	Malone, Joseph R., III - Yes	Manzo, Louis M. - Yes
	Mayer, David R. - Yes	McHose, Alison Littell - No	McKeon, John F. - Yes
	Merkt, Richard A. - No	Moriarty, Paul D. - Yes	Munoz, Eric - No
	O'Toole, Kevin J. - No	Oliver, Sheila Y. - Yes	Panter, Michael J. - Yes
	Payne, William D. - Yes	Pennacchio, Joseph - No	Pou, Nellie - Yes
	Prieto, Vincent - Yes	Quigley, Joan M. - Yes	Roberts, Joseph J., Jr. - Yes
	Rooney, John E. - No	Rumpf, Brian E. - No	Russo, David C. - No
	Scalera, Frederick - Yes	Schaer, Gary S. - Yes	Stack, Brian P. - Yes
	Stanley, Craig A. - Yes	Stender, Linda - Yes	Thompson, Samuel D. - No
	Truitt, Oadline D. - Yes	Vainieri Huttle, Valerie - Yes	Van Drew, Jeff - Yes
	Vandervalk, Charlotte - No	Vas, Joseph - Not Voting	Vega, Silverio A. - Yes
	Voss, Joan M. - Yes	Watson Coleman, Bonnie - Yes	Whelan, Jim - Yes
	Wisniewski, John S. - Yes	Wolfe, David W. - No

Today in Trenton: A New School Funding Formula

Today may be the busiest day of the year in Trenton. The General Assembly is scheduled to vote on more than 100 bills, decide if it wishes to advance paid family leave, and in the remaining time abolish the death penalty. Don't people want to see the Mitchell Report press conferences?

Meanwhile the Senate will consider testimony offered on the Governor's proposed new school funding formula. A town-by-town matrix of who gets how much from the state is available here. Our testimony is available here.

In short, CIANJ measured the formula against the organization's long-held principles of a single formula for all children, dollars following the child as they move from one district to another and accountability through rewards for teachers and administrators at high-performing districts coupled with school choice in our worst performing ones.

The new formula is based on better science than the existing one and is an improvement over the status quo. We finally have something that reduces funding (eventually) for schools with declining enrollment and bolsters it for towns that are growing. For too long large cities with declining student populations continued to see funding increases because the existing model ties dollars to buildings, staffing levels and programs but not the number of children in the schoolhouse. Meanwhile, booming towns saw no increase in funding from Trenton and had to shoulder the burden through higher property taxes while subsidizing other districts. A change from that is welcome news.

However, the plan still fails to hold school districts accountable as there is no correlation between how well a school performs and how much money it receives. Without that, other improvements become less meaningful. The system is in need of fundamental reform, and without increased accountability and oversight that cannot occur.   

Do Taxpayer Dollars Fund Advocacy for Paid Leave?

On Thursday, Steve Lonegan, Bogota Mayor and Director of the NJ Chapter of Americans for Prosperity, questioned the appropriateness of NJ Time to Care. The organization, which is part of Rutgers University, supports Paid Family Leave in New Jersey.

Lonegan raised the same questions CIANJ President John Galandak did in a letter to Rutgers back in September. CIANJ does not believe that advocacy on behalf of an issue before the legislature is an appropriate use of taxpayer dollars.

When Politicker NJ ran the story on Thursday, Professor Eileen Appelbaum, the Director of the Center for Women and Work was quoted as saying,

“We know working families need it and that it’s good for business, but we don’t lobby for any kind of legislation,” said Appelbaum, who noted that there is no reference to the legislation on the organization’s Web site.

NJ Time to Care's website reads,

New Jersey's existing Temporary Disability Insurance system (TDI) offers a perfect framework to build on. TDI already provides partial wage replacement to people who need time off from work for illness or injury. Expanding the current TDI into a family system would require only that workers make a small additional payment into the TDI fund-from.

In return, those who need it would get up to 12 weeks of paid family coverage per year. Like the current TDI system, family leave would replace two-thirds of weekly wages up to a limit that would increase every year to reflect the cost of living. In 2007 the top benefit is $502 a week.

So even though NJ Time to Care is quick to claim they don't lobby for specific legislation, they do offer a plan which is the same as what A-3812/S-2249 (as introduced) seeks to accomplish.

In addition, the organization's website has driven readers to take action in favor of specific legislation.

Click here to see an archived image of the site, downloaded on September 12th.

The graphic which reads, "Information on contacting your legislator CLICK HERE" takes readers to an e-mail drive in support of - you guessed it - A-3812/S-2249.

Isn't this advocating for a specific bill? Should taxpayer money be spent in such a way?

Speaker Roberts Says Current Paid Leave Bill Not Going to Advance

Speaker Joseph Roberts, leader of the General Assembly, told business leaders today that he feared the Paid Family Leave mandate currently before the legislature would put New Jersey at a competitive disadvantage. Therefore, the Associated Press quotes Roberts as saying,

"As the bill stands now, as the bill looks now, it's not going to advance. We need to continue to work on some of the details, some of the fine print.''

Senate President Codey mentioned possible changes to the bill, such as reducing the amount of leave time allowed to six weeks and exempting small businesses from the program - such as what is done at the federal level. FMLA recognizes that small firms, those with fewer than 50 employees, cannot operate without key personnel for extended periods.

The comments echo what Senators Tom Kean, Jr. (R) (who opposes the legislation altogether) and Paul Sarlo (D) told CIANJ board members last month. 

The Prudential Center in Newark Has Been Open For Six Weeks

And the legislature is already moving toward adding a 5% tax on all tickets sold for events at the arena.

"The problem is, it drives business away," said (Prudential Center General Manager Dale) Adams. "They should try to lower the taxes and encourage the acts to play here instead of other states. Business will prosper."

Rice's legislation exempts arenas operated by state authorities, such as the Meadowlands venues, from the new ticket surcharge.

Of course it does.

The Senate Budget Committee, which advanced the ticket tax, failed to pass S2891, which would impose a 7% tax on parking around the arena.

Maybe We Can Borrow Some Signs?

On Monday, December 11th of last year state workers marched on Trenton in protest of proposed changes to their benefits. The changes suggested, such as having future retirees pay one-and-a-half percent of their health insurance costs, grew out of the special legislative session on property tax reform. It's that last bit, we were told, that really drew the ire of public employee unions.

Workers rallied outside the statehouse proclaiming, as the protester's sign in the photo reads, "Negotiate, Don't Legislate!". They contended that a change in benefits belonged at the bargaining table and not by order of the legislature.

Today, those same unions will rally again in Trenton in favor of paid family leave. All two of you regular blog readers know our opposition by heart, but for the rest we'll link to CIANJ's At Issue briefing.

Many employers have decided that allowing workers paid time off to care for family members is a way to attract talent and something which can help attract a top notch workforce, and so they offer it as a benefit. You know - negotiate, don't legislate.

A single mandate on all types of employers of all sizes creates real world problems not imagined by Trenton.

So if you're strolling by the State House and see the flashy signs calling for a paid leave mandate, maybe you should ask the folks holding them why this benefit is OK to legislate, but the others weren't.   

The State Giveth, The State Taketh Right Back

The Assembly Labor Committee voted yesterday to jeopardize New Jersey's most successful job creation program. Business Employment Incentive Program (BEIP) grants work to entice companies to expand or locate within New Jersey by paying a portion of the company's income taxes provided they generate at least 25 new jobs.

It's a pretty simple deal - the government offers to lower costs as a way of creating jobs. Since its inception, the program has helped create 70,000 jobs and $11.9 billion in new business investment in New Jersey.

The committee voted yesterday to tie prevailing wage requirements on all construction work done by BEIP grant recipients. The mandate requires companies accepting a grant to pay the standard union wage, regardless of whether they use union workers. Prevailing wage requirements drive construction costs up between 10% - 25%.

In other words, the program has created 70,000 NJ jobs by lowering the cost of doing business. Now, a string of using the program will be to increase the cost of doing business.

Even better, A-4001 also requires a landlord to pay the prevailing wage if a BEIP recipient occupies at least 55% of their building. Even for work done elsewhere on the property. Now, a quasi-related third party would be able to jeopardize your incentive grant. That leads to unacceptable unpredictability.

Our one-pager on the bill is available here. The committee vote is available below. A "NO" vote is a vote consistent with CIANJ's position.

Assemblyman Joseph Egan - Yes
Assemblyman Jeff Van Drew - Yes
Assemblyman Neil Cohen - Yes
Assemblyman Michael Doherty - No
Assemblyman Guy Gregg - No
Assemblywoman Shelia Oliver - Yes
Assemblywoman Nellie Pou - Yes

Nothing for Money

We don't normally cheer a whole lot of bills which are reported favorably by the Assembly Labor Committee, but today offered the opportunity for us to tip our cap to the body.

A little known fact about Unemployment Insurance is that employees who are officers or have a controlling interest in the company are ineligible for unemployment benefits. That's right, you can pay into a system for years, but if you lose your job or the business fails, you are unable to collect on the benefits for which you were taxed. Sweet deal.

For at least the past 8 years legislation has been introduced to change that and make corporate officers eligible for the same benefits as everyone else who pays UI taxes. And for 8 years it has gone exactly nowhere.

Today the Labor Committee voted unanimously to pass A-189, offered by Assemblyman Guy Gregg, which would lift the restriction on corporate officers from being eligible for UI benefits. The Assemblyman called the bill an example of "equity and fairness." We agree and thank him for his efforts.

Today in Trenton: Jeopardizing New Jersey's Most Successful Job Creation Program

Here in New Jersey, different administrations and legislatures have tried different ways to spur on economic growth. The most successful of all programs in the state has been the Business Employment Incentive Program (BEIP).

BEIP grants work by incentivizing companies to locate to New Jersey or to expand their operations here. They offer businesses the carrot of a 10%-50% reduction on the company's share of the state income tax in exchange for creating at least 25 new jobs in the Garden State. The reduction increases to up to 80% for companies which assist the state's smart growth initiatives. Since its creation in September 2003 the state has invested $1.1 billion into the program. The result has been $11.9 billion in business activity because of the grants and 70,000 new jobs.

Today the Assembly Labor Committee will reconsider legislation that will lessen the effectiveness of the program. A-4001/S-2247 would require BEIP grant recipients to pay the prevailing union wage on any construction work done to build or grow operations. Your friendly blogger will be in Trenton testifying in opposition.

1. CIANJ opposes an expansion of the prevailing wage into the private sector. Government has already established a minimum wage and to require a business to pay an artificially higher wage drives higher costs. That whole cost should be at the intersection of supply and demand thing.
   
2. BEIP grants work because they reduce the cost of doing business. The prevailing wage increases construction costs by 10% - 25%. So the state will now have a cost reducing incentive program that can only be accepted if the grant recipient agrees to a mandatory cost increase.
   
3. The bill also requires that a landlord pay the prevailing wage if a BEIP recipient occupies at least 55% of their building. This means an unrelated third party can put a company's grant in jeopardy. It would border on irresponsible for an organization to accept a grant without full control as to whether or not all of the conditions are met.

We'll link to our testimony and final vote tallies later in the day.   

Now More Can BRRAG

The Record today covers legislation first introduced here at NJ Business Matters on Monday.  The Senate Economic Growth Committee voted in favor of S80, which broadens who is eligible for the state’s Business Relocation and Retention Assistance Grant (BRRAG) program.

Presently the program provides grants to companies expanding or locating to the state while creating a minimum of 250 jobs. S-80 would alter the program by reducing the minimum number of jobs created to 50, thus allowing smaller firms the same opportunities presently available to large companies and increasing New Jersey’s competitiveness in a global marketplace.

CIANJ applauds its movement and looks forward to again supporting it before the Senate Budget and Appropriations Committee.

Fund The Child, Not the System

Last week your friendly blogger had the opportunity to observe a panel discussion geared toward the state's mayors on a proposed new school funding formula. The panel offered the opportunity to hear from groups such as the teacher's union, school administrators, and those representing both Abbott and suburban districts.

A hat tip goes to our friends at E3 and Derrell Bradford, who offered a refreshing perspective in altering the status quo to include increased accountability, open enrollment and dollars following the child (DFC).

The present system funds programs, administrations and staffs but amazingly there is little to fluctuate the amount of money arriving at a schoolhouse with how many children are in the building. As you might imagine this especially punishes rapidly growing districts who are often a population magnent because of their high-quality schools.

The E3 white paper on necessary aspects of a new school funding formula is available here in its entirety. The quality and cost of education impact everyone and the state must not use the same instruments while expecting better results. 

People Follow Opportunity

The Small Business and Entrepreneurship Council has released its Small Business Survival Index for 2007, and for Jersey - the results aren't pretty. Our home state ranked 50th, edging out California and Rhode Island as the state most hostile toward small businesses.

Oh by the way, NJ is considering legislation that would make us only the second state to impose a Paid Family Leave mandate on all small companies.

The complete survey, which accounts for everything from tax rates, to electric rates, to health insurance mandates, is available here.

A theme we try to reinforce here at NJ Business Matters is that an unfriendly business climate has reverberations beyond the bottom lines of business owners. Anti-business legislators try to frame the argument as business owner greed versus working class need, but when businesses sour on a state, it hurts everyone.

It must be noted that countless issues play into human decision-making. But the impact of public policy often is very important. The relative governmental costs among the states will impact where people live and work, that is, where they seek opportunity. That most certainly is illustrated by where people are moving to and from among the states.

In terms of population growth, from 2000 to 2006, total U.S. population grew by 6.1%. As for the top 25 states in the 2007 Index, population growth over this period registered 8.2%, while among the bottom 26 (including the District of Columbia), population growth registered 4.1%. Therefore, the population in the top 25 states on the Index grew at double the rate of the bottom 26 on the Index over the period of 2000 to 2006. In terms of raw numbers, the top 25 added 11.1 million in population, while the bottom 26 added 7.3 million.

People follow opportunity. It's why New Jersey lost 72,000 residents last year. Hostility toward business drives companies and the jobs they create away from New Jersey. That equates to less high-paying jobs for our citizens and a depressed quality of life for us all. Public policy matters, and for a state ranked dead last in small business friendliness, it matters for us now even more.

Today in Trenton: Economic Growth Committee Considers Business Incentive Legislation

Later this morning, the Senate Economic Growth Committee is scheduled to hear legislation that would help New Jersey attract jobs and bolster its economic development programs. CIANJ has urged legislators to pass both measures to help create jobs and ease administrative burdens in Urban Enterprise Zones.

S-80, sponsored by Senators Kean and Bucco, would lower the threshold for eligibility in the state’s Business Relocation and Retention Assistance Grant (BRRAG) program. Presently the program provides grants to companies expanding or locating to the state while creating a minimum of 250 jobs. S-80 would alter the program by reducing the minimum number of jobs created to 50, thus allowing smaller firms the same opportunities presently available to large companies and increasing New Jersey’s competitiveness in a global marketplace. CIANJ supports the legislation and urges its passage.

Also under consideration is a bill that would ease administrative burdens for companies located solely within an Urban Enterprise Zone (UEZ). A-3938 (Burzichelli/Cryan) would change sales tax exemptions back to a point of sale model and away from the rebate system presently in place. Current law requires UEZ qualified businesses to pay the full sales tax and then apply for the rebate, creating an administrative burden that has lessened the effectiveness of the program. CIANJ favors the passage of A-3938.

No News Is Good News

The Assembly Labor Committee is scheduled to meet on Thursday, and paid family leave is not on the agenda. The same day that decision was made, Governor Corzine was speaking with the good people at the South Jersey Chamber of Commerce, telling them he was intent on getting the law passed by the end of the year.

"I am not convinced it is devastating to business practices and operations."....

He admonished the crowd of suit-clad executives that if they were "intellectually honest" they would look at the experience in California and see paid family leave does not impose a hardship.

First, if we are being intellectually honest, then one must admit that to compare New Jersey's economic advantages to that of California's is a false analogy. A business seeking to operate on the west coast is more geographically constrained than here in the east. Drive 2 hours from the Port of Los Angeles, and you're still in California. A 2 hour drive from New York City puts a business in any one of four states.

Second, the layering of Paid Leave with FMLA, FLA and the state's Law Against Discrimination will cause issues in New Jersey similar to those on the west coast. Conflicts as to whether an employee can be let go while taking leave have arisen in California, which led to Governor Schwarzenegger's veto of measures expanding his state's mandate.

The business community's opposition is not to allowing workers to care for loved ones. Businesses that can afford it provide for paid time off and work with employees in ways to aid them and ensure necessary work is accomplished. In fact, in January CIANJ will be offering its Human Resource Council a seminar on exactly that issue. However, requiring every type of company of every size to follow the same remedy intrudes on basic business practices. We've already seen challenges arising from unpaid family leave at the federal level and the genuine hardships aspects such as intermittent leave have generated. Isn't it time we addressed those before imposing another only-in-New Jersey mandate on Garden State companies?