NJ Business Matters: The Blog of the CIANJ

Budget Watch: Through the Floor Edition

The state's budget deficit for this year is triple the previous estimate, and is now calculated to be $1.2 billion this year, and up to $5 billion next year.

In light of the reshaped fiscal landscape, state officials canceled the scheduled sale of $750 million in transportation bonds Wednesday so they could update background information for potential buyers. The sale is scheduled for today.
Corzine and state Treasurer David Rousseau declined to give specifics Wednesday on where cuts could come, or which contracts would be targeted for reductions.

"We will look at the largest absolute dollar contracts, and we'll sit down and talk to the vendors," Corzine said.

He said those "same kinds of discussions" will be held with state workers, adding that while he does not expect layoffs, "we're not taking that off the table."

Add to this the fact that there is extra strainon the depleted Unemployment Insurance fund, and the picture grows even more grim. If "everything is on the table" the way the Governor and legislature claim, then this must include delaying pay increases scheduled to state workers - just as was done in New York.

A Decade of Lost Jobs

The gloomy forecasts for New Jersey's immediate economic future continue. Today, a Rutgers University study predicts that New Jersey's private sector may have fewer jobs at the end of this decade than it did at the beginning. This would be the first time this "milestone" has been reached since the Great Depression.

In short, New Jersey's economic expansions in the 80's and 90's averaged the addition of about 73,000 jobs per year. The post-2001 recovery (when the McGreevey Administration and legislature decided to increase business taxes during an economic downturn) only added about 23,000 jobs per year. Therefore, this recession has a greater proportional impact on the overall job number.

It is another indictment of the failure of New Jersey's tax increasing policies. During good economic times, government regulation and spending designed to reach certain goals failed to do so. We failed to meet affordable housing goals, urban education goals and economic growth goals. Part of this (and we stress part) can be attributed to the explosion in the size of government, and the tax increases that came along with it.

Proponents of that governmental expansion have had several years and a time of economic boom and bust to look back at the results. That, and 400 years of economic history. The result will be fewer private sector jobs, the loss of native population and increased debt. Failure.

The state still has advantages that are the envy of the world. It is time to reduce the overall tax burden, push through corporate tax reform and let the private sector invest the way it sees fit. Many of Wall Street's troubles stem from the divorce of risk from the risk taker. The same fundamental flaw becomes evident when State Street spends other people's money as well.

Thank You

Update: Here is a copy of the President's remarks at the Redication Ceremony of the Intrepid Sea, Air and Space Museum

AFL-CIO Wants Card Check in First 100 Days

From the "dog bites man" department comes word that organized labor wants a return on its $100 million campaign investment.

The comically titled Employee Free Choice Act is a top priority of big labor, and seen as the best way to replenish their membership and political clout. As we have argued many times, America's union movement is slowly morphing from one that advocates for workers into a political operation that seeks to hold onto its own power. Nothing demonstrates that better than the desire to eliminate secret ballot elections in the organizing process.

Last week, Bloomberg ran a piece on the political environment surrounding card check legislation, and the expected filibuster attempt in the U.S. Senate.

AFL-CIOTreasurer Richard Trumka said he expected Obama to push the so-called card-check legislation during his first 100 days in office.

"What's good for the American working class is going to be at the front of the policy discussion, not at the end,"said Trumka, whose labor federation is the largest in the U.S. with 10.5 million members.

Democrats gained six Senate seats in the Nov. 4 elections with three other races undecided. Republicans lead in the races in Alaska and Minnesota and the Georgia race will go to a runoff. If the Democrats fail to win any of those races, they will have majority control with 57 seats, including two independents who back the caucus.

Under Senate rules, 60 votes are needed to overcome objections to legislation, so Democrats would need the help of Republicans to pass the union measure.

Eliminating the secret ballot is good for American workers? Then why do the overwhelming majority of union households oppose card check?

Rahm Emanuel (Votes) on Tort Reform

ShopFloor's lead blogger, Carter Wood, stepped over to Point of Law last week to offer tort reformers a preview of Barack Obama's designated Chief of Staff, Rahm Emanuel. The Chicago Congressman has a voting record to score, and it offers some signs of hope for those looking to bring equity to American courts.

Some highlights,

On February 17, 2005, he voted for final passage of S. 5, the Class Action Fairness Act, which passed 279-149.

• On October 19, 2005, he voted for H.R. 554, to prevent frivolous litigation against the food industry, which passed 306-120.

At least these votes demonstrate some recognition of the problem, which is a far better alternative than having a trial lawyer in the AG's office - - or the White House.

The full post is available here. 

Raiders of the UI Fund

Last year, we made sure CIANJ members were the most well-informed group in town when it came to the state's Unemployment Insurance (UI) fund. That knowledge is going to be utilized again this year.

Regular blog readers know that 88% of the UI fund is paid into by employers, with the rest paid via payroll deductions on employees. The fund must have a minimum amount in it, equal to 1.4% of the total salary of everyone in the pool. If the fund runs short, then a tax increase is triggered on the state's companies. There is no trigger for increased worker contributions.

It is because of this arrangement that the state's business community has objected to various raids on the fund, which were used during economic boom times to help pay for the expanding state budget. Nevertheless, more than $4.5 billion was diverted from UI since 1993. Now that we are in a recession, the fund may fall beneath its magic number. Last year, the state avoided the tax increase by infusing the fund with $260 million in cash. With higher unemployment, a bigger infusion may be needed this year to avert raising yet another tax on New Jersey companies.

It’s “an unpalatable choice” for the state, said Joseph Seneca, economist at Rutgers University’s Bloustein School of Planning and Public Policy: shift money from a state budget suffering with shrinking revenues, or raise a business tax during a stormy economy.

The last two budget cycles have been very honest and lessened the state's dependency on budget gimmicks such as raiding the UI fund. Unfortunately, that does not unring the bell from the last 13 prior years, and a tax increase now punishes employers for decisions made over their objections.

Seller Beware

As we sit down to write this, the Dow is down 450...no, make that 454 points. Part of the downward pressure is brought about by news that October retail sales are the worst in a decade.

From CNBC.com,

"The October retail environment was simply awful with a high degree of uncertainty around the financial markets, consumers put off any discretionary spending resulting in exceedingly weak October sales results," said Michael P. Niemira, chief economist and director of research at the International Council of Shopping Centers.

Meanwhile, legislators here in New Jersey can help salvage a retailer's holiday shopping season by passing the 50% sales tax exemption that is languishing on desks in Trenton. The instant retort against the plan is that the state "needs the revenue". 

The budget will absolutely be impacted by Wall Street's downturn and the national economic crisis. But in the quest for revenue, shouldn't seasonal jobs be taken into the equation?  

Voters Take Back Control of Debt

Yesterday, New Jersey voters supported public question 1 by a substantial majority, tightening the loophole that Trenton has used to ram through public debt without the benefit of public voting.

As regular blog and magazine readers know, the Constitution already forbids the legislature from taking on debt without voter approval. To get around this pesky provision, legislators set up state agencies such as the School Construction Corporation, to acquire the debt on behalf of the State. The Supreme Court has ruled that the debt of said agencies can be done without the consent of voters.

Consider that loophole largely shut - though we do acknowledge the Amendment still provides wiggle room.

The final count was 57% - 43%

Congratulations to President-Elect Obama

What else is there to say? Congratulations to President-Elect Obama on his victory, and on the clear mandate given to him by the high percentage of Americans that turned out to vote.

The columnists and editorial boards stress the historic nature of the election, but this is also about the future. It is about a nation, an economy, and an ever-evolving competitive world.

Those who went to the polls yesterday did so because they cared about their country, as did everyone who ran for the country's highest office. Now the winners - both Presidential and Congressional - must turn around and show the same dedication when deciphering policy decisions that can impact several generations.

After all, no one said that "Country First" and "Change" have to be mutually exclusive propositions.

It's Election Day - When We Vote Via Secret Ballot

More than 100 million Americans will head to the polls today to vote for President and Members of Congress. Amazingly, many of those candidates promise to return the favor by eliminating secret ballots in union organizing efforts.

From the D.C. Examiner,

It’s cynical, even by political standards, for candidates to accept today’s private votes if they support the Employee Free Choice Act (EFCA) — a one-bill union bailout for decades of corruption, ineptitude, and insulation from true competition.

Facing a decades-long decline in union membership, labor executives have crafted this law to strip working Americans of the right to cast a private ballot in workplace elections, as they decide whether to join a union. In place of an election, EFCA would impose a petition-like system already proven susceptible to coercion.

In other words, those loveable, incorruptible Teamsters can solicit employees’ support for an organizing drive in front of their peers and continue harassing them until they sign a card. Once enough employees have signed the card, the union automatically “represents” everyone.