NJ Business Matters: The Blog of the CIANJ

74% In Favor of Tax-Credit Scholarships for Low Income Children

For the third year in a row, New Jersey residents have shown support for the UEZ Jobs Scholarship Act. A just-released Monmouth University Poll shows that 74% of those surveyed support tax-credit scholarships for low income children. This is virtually the same number that answered favorably in 2007and 2006.

From the Monmouth University Poll question,

Some people in New Jersey have proposed setting up an urban scholarship fund as a five-year pilot program. Low-income parents in select urban areas would be able to get scholarships from this fund to send their children to any private or public school participating in the program. The money for this program would come from voluntary contributions by New Jersey businesses. Any business that contributes to this fund would be able to take a credit on their state income taxes equal to the amount of their contribution. Would you support or oppose setting up this type of pilot program in New Jersey?

74% Support
21% Oppose
4% (VOL) Don’t know / Refused

The complete survey, which shows overwhelming support across all demographic groups, is available here.

NJ Early Retirement Program Still Leads to Later Costs

The ongoing budget two-step between the Governor's office and legislature is turning into a bit of a mosh pit when discussing the Gov's proposed Early Retirement Incentive Program (ERIP). All two of you regular blog readers know that the Governor proposes to offer bonuses to state employees at certain service levels to encourage them to retire, which would offer taxpayer savings by removing them from the payroll.

Here at CIANJ, we support targeted layoffs and the legislators who are pushing for them. Here's why:

• The Governor's own analysis shows that the ERIP will save the taxpayers $457 over three years. Unfortunately, it will add $517 million in unfunded pension liabilities.
• We've tried ERIPs before - multiple times in fact. The result has been the refilling of vacated positions rather quickly. This leads to increased pension costs, but the same number of state employees.

As we told the Heartland Institute and wrote for COMMERCE Magazine, layoffs must be included in the mix and are preferable to another ERIP. The Governor has two answers for that: first, that this time will be different because only 10% of positions will be refilled, and that it would be impossible to implement sensible layoffs because of current Civil Service rules.

Respectfully, it is impossible for a Governor to dictate to future administrations or legislatures what they can do in terms of hiring. In addition, the argument that Civil Service rules make it impossible to develop a layoff strategy is a terrific argument for reforming those rules. Something today's Asbury Park Press notes the Governor has already promised. It is time to deliver.

"The Best Interest of the Children ot Keansburg"

A week after news first broke about the nearly-comical $741,000 buyout package for Keansburg's departing Schools Superintendent Barbara A. Trzeszkowski, the local Board of Education voted yesterday to not release any funds, pending a compromise solution. The taxpayers, who serve as the punchline in this routine, demonstrated outrage and Governor Corzine has ordered a review of all school chiefs contracts.

Reacting to the Gubernatorial order that the Attorney General seek an injunction to prevent payment to Trzezskowski, School District Attorney (and former Senate President) John O. Bennett III declared,

"We want the governor to know that that is not necessary. We want to reach a compromise that will be in the best interests of the children of Keansburg."

We are still shaking our heads at this one. When the Board originally approved the deal, did they believe then that it was in the best interests of the children? Did they believe then that this was part of providing a thorough and efficient education? Did they not foresee statewide anger given the fact 81% of Keansburg's dollars come from State taxpayers?

One of our gripes with the new school funding formula is that while it is an improvement over previous editions, it still does not correlate funding with how well a school spends its current dollars. Consider this Exhibit A.

Gov Wants to Have a Look at School Chiefs' Contracts

Perhaps there is a silver lining in the $740,000 taxpayer abuse that is the severance package of Keansburg Schools Superintendent Barbara Trzeszkowski, which by the way, is in addition to the more than $110,000 she will earn annually as part of standard retirement pay.

Today Governor Corzine said he wants all superintendents' contracts analyzed for possible flaws, and he has previously directed the Attorney General to block Trzeszkowski's lavish payout.

"I think it is not acceptable that we have that kind of payout package when our children need those dollars invested in the classroom," Corzine said.

Ditto. New Jersey spends more per-pupil than any state in the nation, yet the outcry from schools is that they are shortchanged. There are very few ways for both of those statements to be true unless dollars are misspent.

We doubt a $740k send-off equates to providing either a thorough or an efficient education. Given that, increased scruitiny of all contracts is well-deserved.

Taxpayers Group Speaks Out for UEZ Jobs Scholarship Act

In their campaign against school choice, the NJEA has attempted to take the position of taxpayer advocate, arguing the state cannot afford this investment in education that would provide $24 million in tax credit scholarships during the first year. This is striking given the state budget includes $11 billion for education and the UEZ Jobs Scholarship Act would represent 0.0012% of overall education spending. It is also striking given the NJEA's positions on other issues directly or tangentially related to education.

Nevertheless, the president New Jersey Taxpayers Association responded to the NJEA's charge in yesterday's Trenton Times. As NJTA President Jerry Cantrell puts it,

And to argue that the proposed initiative raids the state treasury is simply an outright lie. For the record, as I understand the proposal, the amount of state fiscal support ($360 million) via corporate scholarship donation tax credits would engender $6,000 per pupil scholarship costs against the $18,000-$25,000 per student that it costs to educate them in public- school settings. Let's face it: Even if the academic results were the same, the savings to New Jersey taxpayers is $720 million to $1.080 billion over the life of the pilot project vs. forcing those same students into the public school system.

So, if it's successful, why in the world wouldn't we as taxpayers support it? Guess what? It could be that's what the NJEA is afraid of.

Just to be clear, while the NJEA claims this is a poor use of tax dollars, the President of the Taxpayers Association has joined the business community in support of the UEZ Jobs Scholarship Act. As we have stated repeatedly here at NJ Business Matters, S-1607 offers the opportunity to save taxpayer dollars while improving student achievement.

How can anyone be opposed to that?

Sen. Codey Supports Restoring NJSBDC Funds

Senate President Codey announced last week that he is in favor of restoring the $1 million proposed cuts to New Jersey Small Business Development Centers (NJSBDC). Restoring the funds would be welcome news to the state's small businesses and the announcement comes a week after CIANJ's Board of Directors voted to support a funding restoration. The decision was announced at our Bruce G. Siminoff Legislative One on One Dinner, at which Senator Codey was a keynote speaker.

From our joint statement with the New Jersey Technology Council,

"The NJSBDC is an essential and terrific organization that helps small businesses in New Jersey with very little resources,” says John Galandak, President of CIANJ. “To cut their funding would put the organization in peril. The return on the investment in the NJSBDC far exceeds the investment itself. Why would you undermine something that will generate additional tax revenue? For these reasons, we are urging the Legislature and the Governor to sign a budget in which funding for the NJSBDC is restored.”

If the NJSBDC lost its $1 million in state funding, it would also forefit more than $800,000 in federal dollars.

In 2007, the NJSBDC network, which includes 11 centers in the state, assisted almost 22,000 business owners. The network helped clients receive $36.5 million in financing (loans and equity investment), and almost $2 million in grants were received by science-technology companies through NJSBDC’s technology commercialization program last year. In 2007, the network helped clients receive $64.48 million in procurement contracts (federal, state, private/commercial), and helped its clients create and retain 12,737 jobs--almost 1,000 were newly created positions.

"The Point of the Tip of the Iceberg"

One of our arguments in favor of the UEZ Jobs Scholarship Act is that the legislation would allow taxpayers to save long-term by avoiding some school construction costs. New Jersey's urban cores simultaneously have closings in private schools while public schools claim to be in need of serious capital investments. Allowing children from public schools to use tax-credit scholarships to attend private schools helps address that capital investment at a reduced cost to New Jersey's overburdened taxpayers.

We'd like to thank the NJ School Development Authority for further making the point. The chief of that organization told the Star-Ledger that the $2.5 billion that may be delivered to his agency this year,

"won't even address the tip of the iceberg. $2.5 billion will allow us to address the point of the tip of the iceberg."

He claims the $2.5 billion would be enough to cover costs for about 47 of the 398 schools in need of construction.

The State does not have the kind of money needed to address the entire iceberg. Unless of course it wants to play the role of the Titanic. Passing common-sense legislation that would improve student achievement while saving taxpayer dollars seems like a better approach, does it not?

Having Fun at Our Expense

The city of Keansburg in Monmouth County is an Abbott district, and 81% of its funds come from the taxpayers of the State of New Jersey and not from taxpayers within the district. Keep that in mind when reading the remainder of this post.

Keansburg Schools Superintendent Barbara Trzeszkowski will retire next month with a severance package of more than $740,000. That is in addition to her annual retirement salary of more than $110,000. Your blogger can't figure out whether the hefty severance and retirement package is part of providing a "thorough" education or an "efficient" one. Sometimes it all gets so confusing.

The ultimate joke is of course, on New Jersey's overburdened taxpayers, who will pay the severance package out in five installments.

Frank Belluscio, spokesman for the New Jersey School Boards Association, said he could not say how Trzeszkowski's reported severance package stacks up against others around New Jersey, but noted that school systems are trying to rein in such large payouts.

"There is a more recent trend toward placing controls over payment for unused time," Belluscio said. "These include capping the amount of unused leave that could be reimbursed upon separation and basing payment on the individual's salary at the point at which the leave time was earned."

Belluscio said the size of a superintendent's final severance package is directly related to the employee's contract provisions agreed to by the school board.

Just like the case of Union City bus drivers being paid six hours of overtime per month to charge their cell phones, this contract was approved by a local school board. We wonder who made the case to them that this lavish buyout was in the best interest of the children.

Cause and Effect

From today's Star-Ledger,

A joint venture between a Canadian energy company and a privately held New York firm wants to build a $550 million liquefied natural gas terminal 15 miles off the Jersey Shore, with a pipeline running to an on-shore facility in Linden....

The projects would provide a new source of fuel to a region where rising demand and scarce supplies have led to big spikes in electric and home heating bills.

And from today's Wall Street Journal

Regions that produce energy and other commodities are enjoying higher employment and faster-rising incomes. In North Dakota, Montana, Wyoming, Oklahoma and Texas, personal income, which includes income from wages and investments, grew between 6.4% and 7.4% in the fourth quarter of last year from the year before, before adjusting for inflation. Incomes in the country as a whole grew 5.9%.

Most states with thriving economies didn't have a sharp run-up in housing prices and so have avoided precipitous declines. Now, as high energy prices spur production from oil and natural-gas wells once too costly to be profitable in Texas and other states, there is strong demand for new workers -- and for hotels and restaurants to accommodate them. Newcomers flocking to jobs in labor-short markets help buoy housing markets.

Trial Lawyers' Anti-Competitive Priorities

Sunday's Courier-Post highlights the goals of Tommie Ann Gibney, the incoming president of the Association of Trial Lawyers of America - New Jersey (ATLA-NJ). The group, in the midst of a PR driven name change, has announced that it once again intends to try to expand New Jersey's Wrongful Death statute in a manner that would increase insurance premiums and add unpredictability to the system,

The most specific goal for the organization this year is to amend the state's wrongful death statute. Currently, survivors in a wrongful death action can seek damages only for lost income. There is no monetary value put on what Gibney calls "the reality of what a family is in the 21st century."

First, the statement that survivors in a wrongful death case can only collect damages for lost income is not true. New Jersey’s Wrongful Death Act (N.J.S.2A:31-5) already allows for recovery for losses such as the monetary value of parental guidance; the value of household services provided by the victim, and hospital, medical and funeral expenses among other damages.

What the trial bar wants to include is unlimited damages for grief and emotional distress. Last year, Governor Corzine vetoed a bill that would have advanced that goal when it reached his desk, saying the legislation did not strike a fair balance. New Jersey's Wrongful Death Act is squarely in the mainstream of American law. Trial lawyers want to see us pushed to an anti-business extreme.

HT: ShopFloor.org

Expect Paid Family Leave Lawsuits

During the debate on the newly-signed Paid Leave mandate on virtually all New Jersey employers, CIANJ and other business groups argued the bill left small businesses exposed to potential lawsuits. While the law's intent is not to require companies with fewer than 50 employees to hold a job open for employees on leave, dismissed employees could still have grounds to sue based on other state and federal laws.

Today's Record offers even more support for that argument against paid leave,

"I find it interesting and very contradictory that they would ... put such an explicit statement in there that anybody who takes it is subject to replacement as long as it's a small employer, with 50 or less employees,'' said Chris Mills, a partner in Murray Hill-based labor law firm Fisher & Phillips. "I'd be astonished if employee advocates didn't try to find a way around this. It's almost a lose-lose situation here.''

Even if the law says workers at small businesses who take paid leave can't sue their bosses if their job is filled while they're caring for a new child or ill family member, Mills said legal challenges are almost certain. People who already have job protections based on age, gender, race, and/or sexual orientation, likely will have their day in court....

Of course that also means small businesses will endure the hardships and costs associated with being a defendant.

[Two A]ttorneys are recommending their clients, mostly large companies, prepare to implement the law, which workers will be eligible to take July 1, 2009. Smaller operations, each lawyer said, should look to local business associations for guidance. And no boss, they recommend, should risk being sued by either denying leave or not holding a job, if possible, for employees who take the time.

"Because it's only six weeks, companies with under 50 employees ... most are going to hold a job open because of concern they'll get sued,'' said [David I. Rosen, a shareholder at Littler Mendelson in Newark.]. "It's just not worth it.''

The threat of lawsuits and the conflicts with other statutes was a good reason not to pass the paid leave mandate into law. Now that the bill has been signed by Governor Corzine, it is an excellent reason for legislators and the Administration to monitor lawsuits and adjust the law periodically.

Sadly, some small business would have to serve as a test case for that to happen, spending attorney fees on their defense in the process. Surely the paid leave advocates who helped create the situation would come to their aid, no? 

Cash Infusion for UI Fund Wins Unanimous Support in Committee

The Senate Budget and Appropriations Committee has just voted unanimously in favor of S-1698, which would send $260 million into the state's Unemployment Insurance (UI) fund. The cash infusion likely avoids an automatic $350 million tax increase on state's employers to help bolster a fund that legislators have raided of more than $4.6 billion since 1993. CIANJ supports the legislation and thanks the committee members for their YES votes.

Our post earlier in the day on the bill is available here.

From NJ.com,

In these tough economic times this is a good bill, not to add taxes on our employers," said Sen. Paul Sarlo (D-Bergen).

Lawmakers acknowledged the $260 million proposed for the bailout may not be enough to offset rising claims against the fund.

According to committee chairwoman Sen. Barbara Buono (D-Middlesex), the bill's sponsor, Gov. Jon Corzine and lawmakers plan to include language in the upcoming state budget that would authorize additional payments into the fund to fend off the tax hike.

"Just ask Florida"

Don't adjust your monitors; this post is different from the one you saw earlier today - except that it offers even more evidence of satisfaction with school choice programs similar to what S-1607 would offer in New Jersey.

Florida currently has a program that allows poor children to take tax-credit scholarships from corporations to be used at public or non-public schools. During New Jersey's Senate Economic Growth Committee hearing on S-1607, school choice opponents urged the legislature to,

"Just ask the people of Milwaukee, Cleveland, Washington, D.C., or Florida, who have seen billions of dollars in public tax revenue diverted to private and religious schools."

Earlier today, we demonstrated the satisfaction that the Milwaukee business community has demonstrated toward their school choice program. Apparently, Florida is pretty happy as well. In fact, earlier this month the FL legislature voted to expand the program by $30 million, which would allow an additional 6,000 students into the program.

Parental satisfaction is a central reason to support school choice. If parents of limited financial means are dissatisfied under the status quo, they have few options. School choice offers the ultimate measure of accountability because parents and students are free to leave a school that does not meet their needs. Apparently, parents in Florida are satisfied with what they're getting - just ask them. 

"Just ask Milwaukee"

During the Senate Economic Growth Committee's debate on S-1607, the UEZ Jobs Scholarship Act, school choice opponents urged legislators to

“Just ask the people of Milwaukee, Cleveland, Washington, D.C., or Florida, who have seen billions of dollars in public tax revenue diverted to private and religious schools. Sadly, it has now been documented that years of vouchers, tax credits, and other privatization schemes haven’t produced a shred of evidence that they improve student achievement.”

Clearly, that is not the opinion of the Milwaukee business community. In fact, the Metro Milwaukee Association of Commerce believes its city's school choice initiative has been so successful, they would like to see it expanded and for caps on student enrollment to be removed.

Here's a link to their full-page ad full and the names of business leaders satisfied with their city's successful program. New Jersey's children, parents and businesses deserve the same opportunity.

Today in Trenton: Securing the Unemployment Insurance Fund

Later today, this Senate Budget and Appropriations Committee will debate two pieces of CIANJ-supported legislation that impact employer contributions into the Unemployment Insurance (UI) Fund.

The UI fund is filled by a tax on workers, totaling about $305 million per year, and a tax on employers, equaling about $1.5 billion annually. If the fund has less than 1.4% of the payroll of all employees in the system, then employers are automatically taxed an additional $350 million.

Unfortunately, the legislature has chosen to raid the fund of more than $4.6 billion since 1993 to pay for other areas of the state budget. Doing this when economic times were good, prevented a "rainy day" reserve from being built for future downturns in the economy.

This year, the fund is expected to fall below its 1.4% threshold. To avoid the automatic tax increase, S-1698 (Buono/Kean, S.) would infuse the fund with about $260 million.

CIANJ supports the legislation and urges its passage. Replacing $260 million of what was diverted helps employers avoid paying for the same system twice, and helps avoid a tax increase during difficult economic times.

The same committee is also scheduled to consider legislation that would create a long-term solution to the redirection of UI fund monies. S-562 (Sweeney/Sarlo) would create an automatic reduction of employer contributions into the fund, should its value exceed 5.0% of the payroll of all employees in the system. Should it become law, the program would prevent an excessive amount of cash from being available for diversions to unrelated programs.

Look for an update in this space sometime around 1:00 p.m. To listen live to the proceedings, which start at 10:00 a.m. - Trenton Time - click here. 

We Promise Not To Use The Words "Lock Box"

The State Treasurer has just given the legislature somewhat-surprising news - the state now expects to take in about $533 million more in revenue that was originally anticipated. However, the news came with a signal from the Corzine Administration that we here at CIANJ applaud,

"As the governor has said since February, we are at a turning point," state Treasurer David Rousseau told the Senate Budget and Appropriations Committee. "The time has come for us, together, to say: no more."

The short term increase to the State Treasury does not eliminate New Jersey's long-term budgetary issues, such as debt, pension and benefit obligations and an expected decrease in tax receipts next year. The Governor's original budget message was one that began New Jersey on the road to fiscal sanity. Today's news does not change that, and does not lessen the imperative that the legislature deliver a budget that does not increase spending over last year.

Open to Trade, Open for Business

US Commerce Secretary Carlos Gutierrez and California Governor Arnold Schwarzenegger use the op-ed page of today's Wall Street Journal to make the case for free trade, and to chide Congress for their inability and downright unwillingness to further open foreign markets to American products.

Free trade has been under assault from political leadership, and the assault has become even more hostile in a federal election year. Unfortunately, if political posturing were to become public policy,

In every state of the union, such a retreat would be disastrous for jobs, economic growth and consumer choice. Nowhere is this more clear than here in Torrance, Calif., where today we are visiting a Hitachi plant that remanufactures auto parts. This "foreign" company employs 16,000 Americans -- 8,000 in California alone -- and is just one of hundreds of overseas firms that invest directly in the U.S. From where we're standing, what America needs is more openness here and abroad -- not less.

"But what about American manufacturing?" one might ask. "What about American exports?" Even at a time when our economy has slowed, U.S. exports are booming. In 2007, we saw a record $1.6 trillion in exports, up 12.6% from the prior year. And exports are growing even faster in 2008. In the first quarter of this year, export growth is up nearly 18% from the same period last year. Nearly a third of all U.S. agricultural products and more than 20% of the goods we manufacture were exported last year. Indeed, exports have been a kind of silent stimulus over the past year, helping even a slowing economy stay in the black.

In economic downturns, the global economy can help keep American companies profitable. This in turn, keeps American workers employed. That logic does not disintegrate because this is an even-numbered year.

What's next...

Thank you to NJ Business Matters for welcoming us as a guest blogger this week.  For more information about the New Jersey Lawsuit Reform Alliance (NJLRA) and civil justice issues in New Jersey, please visit www.njlra.org often.  To join our mailing list, please visit http://www.njlra.org/join.html.

What's next for NJLRA?  We are going to continue to look at the growing problem of out-of-state plaintiffs coming into New Jersey to sue our companies and we will seek to educate our elected officials about how our laws can be reformed to be more in-line with those of other states.  We will soon be working to have several pieces of legislation introduced to accomplish this and will let you know more about them when they are pending in the legislature.

We will also continue to monitor the courts for opportunities to weigh in with amicus briefs that share the business community's perspective with our judges.  If you are involved in a case or know of one where NJLRA can be helpful, please contact us.

We hope you will consider NJLRA a resource for your business about litigation matters and we will continue to work closely with CIANJ to represent the business community in our courts and in the New Jersey Legislature.

Economic Growth Committee Passes School Choice Legislation

Earlier today, the Senate Economic Growth Committee voted to pass S-1607, the Urban Enterprise Zone Jobs Scholarship Act. The bill, long-supported by CIANJ, would allow corporations to make tax-deductible contributions to scholarship organizations. The dollars would be used by children in Newark, Camden, Trenton, Elizabeth, Lakewood, Paterson, Orange and (as of this morning) Jersey City to attend participating public or non-public schools of a student's choice.

Regular blog readers already know our reasons for support by heart. For the rest of you, here's a link to our press release and here's a link to the testimony of your friendly blogger.

Now for some mythbusting...here are the top three myths we heard perpetuated at this morning's hearing.

• Myth one: S-1706 will divert money from public schools

No it won't. Here is a link to the bill. Read it from cover to cover and you will find nothing that says the tax credit money will be taken from public school funding. In fact, many urban schools are held harmless under the new school funding formula for three years, even as they lose population.

• Myth two: This five-year pilot program would drain $360 million from the State Treasury at a time when public schools are already struggling for adequate resources. The Legislature would almost certainly cut funding for public schools by $360 million to pay for this program.

Again, that is not in the bill language. To believe that adding $24 million in education investments in year one would somehow result in draining public schools of money is to speculate about what the legislature will do down the road and act as though it is fact. Also, not all students in the program will attend private schools. The intent of this legislation is to give children in failing schools a choice as to where they get their education.

• Myth Three: New Jersey cannot afford this program

This bill is an example of New Jersey spending money to save it. Private schools in New Jersey's urban centers are closing, and as each one closes its students move into public schools. The pilot districts have some of the highest per-pupil spending in the nation! That does not include the potential need for new school construction. In a state that spends about $24 billion in education, this $24 million investment in year one would represent 0.012% of overall spending. Keeping private schools open saves taxpayer dollars and helps boost student achievement.

Those voting YES were the bill sponsor, Senator Raymond Lesniak (D-20), Senator Joseph Kyrillos (R-13), and Senator Stephen Oroho (R-24). CIANJ thanks them for their support, despite enormous pressure from the teachers' lobby. Senator Teresa Ruiz (D-29) voted NO.

Same leopard, different spots.

NJ Lawyer magazine published a story last week ("Perhaps a new name for ATLA?" May 2,2008 by Dana Sullivan) informing us that ATLA-NJ, the American Trial Lawyers Association, New Jersey chapter, plans to change its name to the New Jersey Association for Justice.  This follows a name change at the national level to the "American Justice Association" and changes at the state level in several states, including Michigan, Ohio, Pennsylvania and Florida.

NJ Lawyer reports:

Members are expected to vote on the name change in October.

"This has nothing to do with our not being proud of our being trial lawyers," said Amos Gern, ATLA-NJ president, during the organization's annual Boardwalk Seminar on Thursday in Atlantic City.

Two years ago, the national organization changed its name to American Association for Justice (AAJ), and Gern acknowledged the change was made for public-relations reasons. So now the local unit is preparing to follow suit and eliminate "trial attorneys" from its name.

Despite Mr. Gern's protests, it seems clear that this change is a nationally coordinated effort to hide the fact that these groups work to promote the interests of plaintiffs attorneys, not justice.  This Orwellian strategy will not change the public's mind about abusive litigation, however. 

Tell us your story...

Have you or your company been the victim of lawsuit abuse?  If so, the New Jersey Lawsuit Reform Alliance (NJLRA) wants to hear your story.

NJLRA is collecting stories of lawsuit abuse from around New Jersey and from all industries so that we can share them with legislators, jurists and decision makers.  Data and state rankings are powerful, important facts that help us inform our leaders about the problems in New Jersey's civil justice system.  But sometimes they need to hear an anecdote about how a lawsuit destroyed a business or racked up millions in attorneys fees without helping a consumer.

So please tell us your lawsuit abuse story today.  Simply go to http://www.njlra.org/html/index.html now and click "Share your story." 

Thank you.

The Plaintiffs are coming...

The New Jersey Lawsuit Reform Alliance (NJLRA) has joined with the NJ Business and Industry Association and the Healthcare Institute of NJ to submit a friend of the court briefing to the NJ Superior Court's Appellate Division in Briest v. Wyeth.

The plaintiffs, Laura and Robert Briest, have lived in Virginia their whole lives. In 1998 and 1999 Mrs. Briest was prescribed and took (in Virginia) Premphase, a hormone replacement drug manufactured by Wyeth. In 1999 she was diagnosed with breast cancer. In 2004, nearly five years after she stopped taking the drug and after her diagnosis with breast cancer, Mrs. Briest sued Wyeth under New Jersey's Product Liability Act, arguing that the premphase caused her breast cancer.

Why did this Virginia resident and her husband sue in New Jersey?

Virginia's statute of limitations does not allow her to bring suit more than two years after the date of her injury and would not allow the suit. Because Wyeth is headquartered in New Jersey, the Briests and their lawyers decided to take advantage of NJ's more permissive statute of limitations and bring suit here, arguing that since Wyeth is headquartered in NJ the State has a vested interest in the case. The trial court allowed the suit, and Wyeth has appealed.

This ruling creates an uneven playing field for New Jersey companies that hurts New Jersey's economic competitiveness. The result of this ruling is that New Jersey companies will now face suit under the worst of either of two states' laws, whichever is more favorable to the plaintiff. Should everyone who wants to sue Ford be able to choose which law, Michigan's or their own state's, is better for them? Since companies like Ford and Wyeth do business in all 50 states (and many countries), it makes more sense that the laws of the state where the transaction occurred should be applied.

Is it any wonder that today an estimated 93% of pharmaceutical mass torts in New Jersey are brought by out-of-state plaintiffs? Unfortunately our laws are more favorable to plaintiffs than those of many other states and - even more unfortunately - many of our courts are allowing people from around the nation to sue under them.

Meanwhile, New Jersey consumers - and taxpayers - are forced to wait in line behind plaintiffs from other states who are eager to cash in on a suit against our compananies. New Jersey courts should serve New Jersey residents and our businesses, not plaintiffs from around the nation seeking to sue our companies.

Stay tuned for the results of this appeal.

Encouraging Economic Growth...Everywhere

Last year, CIANJ supported legislation designed to spur investment in New Jersey's cities. The Urban Hub Transit Act, which passed and was signed by Governor Corzine, offers a 10% tax credit on the Corporate Business Tax (CBT) per year for ten years if a company makes a substantial investment and brings jobs to within 1/2 mile of a rail station in nine cities. The bill's intent is to encourage the use of mass transit and be used as a tool for economic development.

While the bill was worthwhile, Sen. Tom Kean, Jr. has introduced legislation to make it more expansive. S-1466 would make companies eligible for the tax credit if they make a capital investment of $75 million and create new jobs within 1/2 mile of a rail station in any municipality. As the Senator notes in today's Record,

"If it's good for one community, it should be good for every community," he said. "If we are trying to encourage growth within New Jersey, we are trying to encourage the use of mass transit, let's create growth or opportunities for growth in areas that already have mass transit available."

Happy Tax Freedom Day

Congratulations New Jersey, today is Tax Freedom Day for the Garden State.

Each year the Tax Foundation estimates the number of days per year an individual must work to pay their federal, state and local tax burden. The average number of days for America was 113, based on an individual paying just over 30% of their overall income in taxes. On average, the country worked until April 23 to pay their tax liability. In New Jersey, we celebrate a bit later.

Now you can begin to move on to things like food, clothing, shelter...and profit.

The full Tax Freedom Day study is available here.

It's not always about the consumer

Last week in New Jersey Superior Court (in Atlantic County, no less) a NJ woman, Lauren Coyle, filed a class action lawsuit against AriZona Iced Tea and its parent companies alleging that they are illegally marketing their product as "100% natural" when in fact the product contains high fructose corn syrup.  She is seeking damages for herself and everyone in NJ who purchased an AriZona iced tea in the past six years.

What, specifically, is she seeking? Aside from attorney's fees (bingo) and a court order preventing AriZona from marketing its product as "100% natural," she is seeking to be reimbursed for the difference between a premium, i.e. "100% natural," beverage and an ordinary one. What is that, about 25 cents?

As with many class action suits brought under the New Jersey Consumer Fraud Act (CFA), the only people who will benefit from this suit are the lawyers, who will run up enormous fees in discovery and trial costs. The average consumer who is alleged to have been defrauded will see little, if any compensation.

The CFA was designed to allow individual consumers who have been defrauded by a business or sold a defective or harmful product to seek compensation. The fact that Ms. Coyle and her lawyers think that they can benefit from this suit exposes just how far our law and our courts have strayed from these ideas. Ms. Coyle could have simply turned the bottle around, read the ingredients and found high fructose corn syrup among them, and returned her iced tea to the store. Or she could have asked the company for her money back. Instead, consumers who have truly been harmed will now wait in line behind Ms. Coyle and the millions of people who purchased AriZona Iced Tea during the past six years while the court sorts this out.

Her lawyers now stand to make a lot of money. Ms. Coyle, barring punitive damages, might take home tens of dollars. The rest of us will get a coupon.

Miracle on the Charles

The editorial page of today's Wall Street Journal offer yet another example of the free market trouncing central planners.

Our friends in the Bay State had been paying some of America's highest car insurance premiums, largely the result of a state government that set the rates each year. On April 1st, the state lifted that heaviest regulation, allowing for what it calls "managed competition." While still not the optimal model, the net result has been better rates for consumers.

Overall, premiums in the state are due to fall nearly 8% this year as insurers adjust to a world in which they need to compete to attract customers instead of bargaining with their regulator for price hikes. Imagine: When you remove price controls, supply increases and prices fall.

Just a healthy reminder of why we advocate for free market policies in the first place.

What are New Jersey businesses telling us about the tort system in NJ?

This past December the New Jersey Lawsuit Reform Alliance released a study of New Jersey businesses' attitudes about our state's tort system, conducted by the Eagleton Institute of Politics at Rutgers University.  The Commerce and Industry Association of NJ and the NJ State Chamber of Commerce graciously allowed us to survey their membership, and many of the readers of this page may have participated in the survey. 

The results of the survey are available here.  What did you tell us?

According to this study, 89% of NJ businesses agree that lawsuits drive up the cost of doing business and the same percentage agree that these costs also increase the amount of money consumers pay for goods and services. 

About 40% of you have been threatened with a lawsuit in the past five years, and one-third of you have actually been sued.  Fifty-nine percent of the businesses we surveyed do not think that the courts treat defendants and plaintiffs equally and, of those 59%, 93% think that the courts favor the plaintiffs.

Most disconcerting, 25% of the respondents said that they had seriously considered relocating outside of NJ because of the state's civil justice climate.

We all know that there are many reasons that New Jersey is a tough place to do business.  Do we really want to keep lawsuits on that list? 

First, Do No Harm

This week's NJBiz highlights the 9.4% jump in health insurance premiums paid by New Jersey companies last year, and the impact the escalating rates are having on employers and employees alike. For a family of four, the average national premium is about $12,000, but it is closer to $15,000 in New Jersey, adding to the costs of doing business we mentioned in today's first post.

The faster prices escalate, the more likely an employer is to be priced out of the market.

Despite the increases, 98 percent of companies with 51 or more employees said they still provide health coverage as an employee benefit.

But a growing number of smaller companies said they have dropped coverage because they can no longer afford it. Twenty-five percent of respondent companies with between two and 19 employees reported not providing health insurance, up from 8 percent four years ago.

There are many, many causes for high insurance premiums, but the legislature could act today to help slow the increases simply by doing nothing.

CIANJ's Legislative Agenda calls for a moratorium on all health insurance mandates. These mandates set requirements for what insurance companies must cover as part of a standard plan in the regulated market. No matter how well-intentioned the mandates are, they result in higher premiums and add to the problem of the uninsured. Presently, mandates already account for up to one-fifth the price of insurance.

Legislators should first, do no harm.

Senator Lesniak Blogs for School Choice Bill

On Thursday, the Senate Economic Growth Committee will consider legislation that CIANJ has long-supported and with which regular blog readers are very familiar - the Urban Enterprise Zone Jobs Scholarship Act. The bill (S-1607) would allow corporations to receive a 100% tax credit for dollars contributed to scholarship organizations in seven New Jersey cities.

The organizations would then distribute the funds in the form of scholarships to poor children in these cities to be used at public or non-public schools. Scholarship amounts would be set at roughly $6,000 per-pupil for grades K-8 and $9,000 for students in grades 9-12. This would lower the state's per-pupil expenses by between 40% and 60% for each scholarship recipient. Plus, students would undergo testing to ensure student achievement is being improved.

Senator Ray Lesniak, Chairman of the Economic Growth Committee, has written about the legislation on his NJVoices blog. Both he and Senator Tom Kean, Jr. have sponsored the bill, which would offer taxpayer savings while improving student achievement in the seven pilot districts. As Senator Lesniak aptly notes,

Just a few stats serve to describe the taxation sword of Damocles hanging over our heads. New Jersey has the highest public school per-pupil spending in the U.S.: more than double that of parochial schools. [Should private schools continue to close], More teachers would have to be hired, at the highest average salaries in the nation. Our unfunded liability for teacher pensions and retirement healthcare--already the highest per capita in the U.S.--would rise again. And new schools would have to be built to accommodate the additional students--while existing parochial schools were left empty and unused.

Those who oppose S-1607 argue that New Jersey cannot afford the $24 million first year cost at a time of fiscal distress when other services are being pared. I say New Jersey cannot afford not to preserve its faith-based school systems.

If we allow these financially distressed schools to close, educating its students in far more expensive public schools would far exceed the cost of the scholarship program. It would also leave these same taxpayers with a Hobson's choice: either tolerate further overcrowding in the public schools or pour yet more billions into additional public school buildings. This would be fiscal irresponsibility at its worst.

Similar programs have already been launched in states such as Pennsylvania and Arizona, benefitting tens of thousands of children and the taxpayers alike. Giving New Jersey's inner-city school children the same opportunity should be a priority of legislators everywhere.

Why now?

Why was the New Jersey Lawsuit Reform Alliance created?  Yesterday the Star-Ledger published an op-ed that I wrote detailing just how bad New Jersey's civil justice climate has become.  You can read it here.

Unlike other bad tort jurisdictions, most of which allow local plaintiffs to sue major corporations from around the world in their local courts (think Mississippi), New Jersey is gaining a reputation for allowing plaintiffs from around the nation to sue our corporations here in New Jersey.  Merely allowing these suits to be brought here in New Jersey is a problem, but when New Jersey law is more plaintiff friendly it becomes a serious problem for a New Jersey-based business and another nail in the coffin of the economic competitiveness of our state.

As I write in the Star-Ledger, 93% of the mass pharmaceutical torts in our state courts have been filed by out-of-state plaintiffs.  Ninety-three percent.  Is it any surprise that New Jersey's share of pharmaceutical jobs in the nation declined from 20% in 1990 to just over 13% in 2005?

The New Jersey Lawsuit Reform Alliance (NJLRA) was created to address this problem.  NJLRA advocates for reform to ensure that New Jersey's civil justice system treats all parties fairly and discourages lawsuit abuse.  NJLRA and its members believe that a fair civil justice system resolves disputes expeditiously, without bias and based solely upon application of the law to the the facts of each case.  Such a system fosters public trust and motivates professionals, sole proprietors and businesses to provide safe and reliable products and services while ensuring that truly injured people are compensated fairly for their losses.

This week I will be blogging more about NJLRA, New Jersey's civil justice system and ways that we can improve our laws and our courts to address this growing issue. 

I hope you will visit our website at www.njlra.org to learn more.

Stating the Obvious

The editorial boards at the Star-Ledger and Asbury Park Press both chose today to write about New Jersey's sagging business climate, and call on the Governor and legislature to change it.

The Ledger cites a Rutgers University Study, which we first mentioned here at NJ Business Matters two weeks ago. The study found that in 2007, New Jersey's private-sector employment base grew by only 0.1%. That put New Jersey 41st in the nation and we ranked behind every bordering state.

The Press editorial does the better job of directly stating the problem,

But even [streamlining econmic development agencies] will not succeed unless the state revamps its tax system, which makes it so expensive to live here, and its regulatory structure, which businesses find cumbersome and overly restrictive.

Taxes and regulation are intertwined with economic development.

The last sentence says it all. Legislators and administrations routinely introduce pro-business initatives. All of them would help create jobs within certain niches, but most suffer from the same fatal flaw: they require companies to send money to Trenton, only to have some of it sent back with strings attached. Every business climate ranking, even those that do not put New Jersey near the bottom, acknowledge that this is one of the most expensive states to do business. Changing that undeniable fact should be job number one in assisting an economy in trouble.

Among the areas in which NJ ranks near the bottom, according to the Tax Foundation, are corporate and individual income tax rates, and property taxes. Those all sound like a good place to start.

Different Era, Same Regulation

New Jersey Citizen Action is opposing deregulation of the wireline phone industry, charging an open marketplace could lead to increased rates of 335% for New Jersey consumers.

Richard Young, spokesperson for Verizon, puts it best,

"We looked at the study (cited by Citizen Action), and we believe the study is shallow, short-sighted and full of holes. ... We are asking the board to look at marketplace realities."

Bingo. The main argument by NJCA and their allies is that there is a lack of competition in the marketplace. Unfortunately, they take too narrow a focus. Aside from competition from other hard-wired phone companies, there is now competition from wireless phones, VoIP and cable. In fact, those segments now represent a larger share of the market than traditional landline companies do. By the way, those other industries do not face the same regulation as landline companies. All the wireline companies are asking for is to be allowed to compete more equitably with the other forms of communication.

Many New Jersey regulations are designed to sunset after a certain period of time to prevent regulations from a different era from hampering modern business. The explosion in carriers and forms of telephone technology exactly fits that description. It's time for years-old regulations to catch up to reality.

Maybe We Should Make More Copies of the State Audits

Yesterday, the Education Law Center and their supporters argued before the Supreme Court that New Jersey's Abbott school districts are under-funded. Then, they got in their cars and drove through a city that spends more than $16,000 per-pupil in education, with state taxpayers picking up 80% of the tab.

"At bottom, the state's proposal (would) turn its back on the severe and extreme disadvantages of Abbott school children repeatedly identified," the brief filed by the Education Law Center, lead attorneys in the Abbott case, says. "There is simply no basis ... to, once again, consign untold future generation[s] of Abbott children to pay the price so dearly exacted upon prior generations of those children."

Last year New Jersey state taxpayers distributed $7.3 billion in state aid. More than half that went to the 31 Abbott districts, leaving more than 500 non-Abbott districts to divide the rest. At some point, the legislature has to come to the conclusion that spending more money on the problem of urban education does not make the problem go away - it only makes it more expensive.

The Urban Schools Scholarship Act, which would allow corporations to fund a school choice pilot program for poor children in seven New Jersey cities, is long overdue.