NJ Business Matters: The Blog of the CIANJ

LSP Bill Moves...Unanimously

After months of debate, the Senate and Assembly Environmental committees voted unanimously yesterday to advance a Licensed Site Remediation Professional (LSRP) program to expedite the cleanup of 20,000 polluted sites whose cases have idled within the NJDEP.

The bill advanced yesterday would create a new class of professional consultants who could authorize the continuation of a site's cleaning. The standards would still be set by the state, and the DEP would still conduct audits and maintain greater management over the most challenging cases. The bill is strongly supported by CIANJ and other industry groups in addition to support from the Governor. Meanwhile, the environmental lobby contends,

"It's not a happy day for the environment in New Jersey. ... There is an inherent conflict of interest when you have the folks doing the cleanups signing off on the cleanups," said David Pringle of the Environmental Federation.

First, that statement fails to acknowledge that an LSRP can lose their license and be put out of business if they act improperly. Second, a successful LSRP program has been operating in Massachusetts, and New Jersey is already learning from their experience.

Finally, the environmental lobby has to acknowledge that by allowing cases to stall within the NJDEP, sites are not cleaned up at all. Is that better for the environment?

When the economy turns around, let's not have government interference be an impediment to renewed growth. Congratulations to the legislators who saw past the rhetoric, and we hope to see equally strong support on the floor vote.

Law of Supply and Demand Still Beats Developer Fees

Tomorrow, the Senate Budget and Appropriations Committee will consider legislation to impose an 18-month suspension of the 2.5% fee charged to developments in the state. The fee had been envisioned as providing money for affordable housing, but the overall economic state and pesky law of supply and demand have prevented the projected $180 million from being raised. Meanwhile, we're stunting job growth, such as when the town of Evesham passed on allowing a shopping center to be built because of the affordable housing fees that come with it.

Cue the response from so-called housing advocates,

"We've heard [State Senator Ray Lesniak] say a bunch of times that 2.5 percent of zero is zero, and that is true, but there is in fact $500 million in economic development that has occurred in New Jersey in the last seven months," said Staci Berger, director of advocacy for the Housing and Community Development Network of New Jersey.

The advocates still cannot escape the reality that the tax has failed to raise estimated revenues and right now serves as a barrier to economic growth. Why should government make development and job creation more expensive for companies that want to spend their money during a recession?

Similar to California, New Jersey has artificially restricted its housing supply, and until we address that, "affordable" housing for one person will simply make it more expensive for another.

That's a tough way to grow yourself out of the recession.

Tax Collections Down; Changes Coming to NJ Budget

Earlier today, New Jersey's Treasurer announced tax collections were more than $500 million less than what was budgeted and that the shortfall was led by a drop in gross income tax collections ($229 million). This will be the last update of monthly figures before the governor's March 10th Budget Address.

Here are the governor’s suggested changes to the budget to accommodate for the deficit forecast this fiscal year, pending legislative or public employee union approval.
 

ü       A requirement that all state employees take two unpaid furlough days in May and June, saving $35 million;

ü       Redirecting $160 million in balances from dedicated funds to support programs currently supported by general taxpayer funds. About half of these funds will be used to help avoid the Unemployment Insurance tax increase (emphasis ours);

ü       Requesting the Legislature to enact a Tax Amnesty Program, which is expected to generate $100 million;

ü       Utilizing $500 million that was previously set aside for debt relief and $200 million available from the Fiscal Year 2008 budget surplus;

ü       Accessing $450 million from the Rainy Day Fund.

We applaud the Governor for recognizing the need to avoid a payroll tax increase, especially during a recession. The full statement is available at this link.

State: Up to 15,000 Take Benefits That Shouldn't

The state is conducting an audit to ensure all beneficiaries of the public employee health plan are actually eligible from the program. The Star-Ledger reports that tens of millions of dollars may have been spent on those no longer eligible - such as dependents younger than 23 who get married or divorced couples.

The state Division of Pensions and Benefits has estimated the number of ineligible dependents could be between 10,000 and 15,000, which would result in a savings of some $185 million over five years....

Several public employee representatives who serve on the commission criticized how the state, which has sent out about 25,000 letters so far, has gone about conducting the audit.

They said public employees were suspicious of the audit letters they began receiving at the end of last month, because they did not recognize the name of the consultant that had sent out the mailings.

In the era of identity theft, we are not going to pooh-pooh the privacy concerns of state workers, and Trenton has ensured future letters will be issued on state letterhead. 

Those who keep benefits that do not qualify cheat taxpayers out of millions of dollars. We applaud the state for taking basic precautions and hope the public employee unions get behind the effort as well. After all, their members are being cheated too.  

Increase the Rhetoric, Downplay the Reality

Organized labor's attempt to usher the deceptively-titled Employee Free Choice Act through Congress is continuing its reliance on demagoguery and empty rhetoric. The latest example comes from UAW President Ron Gettelfinger, who equates opponents of the EFCA with opponents of the Civil Rights Act. That's a curious analogy for someone who is advocating the elimination of the secret ballot in organizing drives.

Brian Worth, Chairman of the Coalition for a Democratic Workplace (of which CIANJ is a proud member) penned a response for today's Detroit-News. In it, he reminds us of the basic truth of the bill,

Let's be clear about what the Employee Free Choice Act does. The bill would replace secret ballot elections with a card check scheme where the votes of workers would be made public to their employers, co-workers and union organizers.

Without the protection of the secret ballot, there would be no guarantee that workers could express their true wishes on the personal decision of whether to have a union in their workplace. Labor leaders want Congress to pass card check because the bill will make it easier for labor organizers to recruit workers into joining unions.

But the American people, including rank-and-file union members, understand the importance of the secret ballot and are opposed to the Employee Free Choice Act by overwhelming margins.

What better way exists to protect privacy than a secret ballot?

Tax Boards - A Recession-Proof Industry

A hat tip to Jerry Cantrell, President of the NJ Taxpayers Association, for his work in shedding light on the unnecessary cost that tax boards place on New Jersey's taxpayers and pension system.

The boards exist in every county, and were recently expanded at taxpayer expense. Perks include taxpayer funded junkets, a $22,000 annual salary and full pension benefits - - all for a board that meets monthly.

Recently, legislation was introduced to shrink the boards, but the well-connected board members have managed to stall any attempt at reform/taxpayer savings. As Cantrell points out in this NJVoices post,

So, why, you might ask, has it taken so long to address the violation of the public trust in this case? Well the issue first arose in the public eye when in 2006 a Star-Ledger reporter raised the issue of the extravagant waste by the Morris County board members. The reporter as part of the story line contacted the prime sponsors, Senators Bucco (R-Morris) and Adler (D-Camden) both of whom acknowledged they had put the [board expansion] legislation forth based upon flawed research and that they would immediately initiate new legislation resending the prior one.

Seemed like a simple solution to the problem, right?

But wait, this is New Jersey and here we are three years later and even after annual updates by the Star-Ledger reporter, the resending bill is being held up by committee chairs, Senator Rice (D-Essex) and Assemblywoman Pou (D-Passaic). While we read daily of more layoffs, and federal bailouts we can't even fathom the excuse for failing to do the right thing on this simple issue is that we might need (after three wasted years and $3 million down the drain) the additional bodies. 

Newark's State of the City Address

Excellent job by the City of Newark for their live stream of Mayor Booker's State of the City address. The archived video is available below.

The Rest of the Story

In this week's edition of the CIANJ Business Beat, we highlight Senate Budget Committee Action that would alter the FY 2009 budget. One area for savings to the state is the ability to withhold education funding in an amount equal to what a school district would save in pension deferrals. However, the APP's Capitol Quickies points out this provision would force many towns that would rather not skip pension payments into an impossible decision,

One of the points backers of the pension deferral plan make to critics of the idea is that it’s voluntary — that local government not interested in delaying parts of their 2009, 2010 and 2011 pension payments don’t have to.

However, a separate bill pending in the Legislature would make such a move hard on school districts. One of the budget cuts planned to the balance the state’s current budget would withhold $75 million in state aid to schools this spring — which would mean that districts would have to cut spending elsewhere if they want to make their April pension payment.

Check out the exchange between Senator Oroho and state Treasurer Rousseau by clicking here.

Reporting Some Facts, Underreporting Others

The New Jersey Department of Education has released its 2008 School Report Card, which measures school district performance based on a number of variables, including standardized test scores. If you've been placing close attention, then you know that this is the first year in which raised "cut scores" are included in the data. Prior to this, scores as low as 35% were considered proficient.

Upwards of 40 percent of the 5th and 6th graders statewide failed the language arts tests, and roughly one-quarter of them failed the math test....

Students in 11th grade fared slightly worse than last year but far better in terms of passage rates than the middle schoolers. In language arts, 82.8 percent of them passed, and 74.8 percent of them passed the math test. Students in those categories were deemed proficient or advanced proficient.

Fourth graders continued the steady gains of recent years with 82.6 percent of them passing in language arts, 84.8 percent passing in math and 85 percent passing in science.

Remember that higher cut scores are a diagnostic tool, not a corrective one. We would also take this opportunity to explain how certain problems can be understated by statistics. For example, Camden High School's dropout rate is listed at just below 14%, which is a high number unto itself. However, the chart below shows enrollment by grade. This year's senior class has 160 students. As freshmen, there were 451 students. As you can see, each class has a sizable drop-off from freshman to sophomore year.

Happy Birthday, Income Tax

This may not have shown up on your page-a-day calendar, but today marks the 96th anniversary of the ratification of the 16th Amendment. That's the one that gave the federal government the authority to tax income. Prior to that, the Supreme Court ruled that while the federal government is allowed to apply the levy, it is a direct tax and therefore must be proportional to a state's population.

Under that first income tax, the top rate was 7% and it did not apply to those earning less than $10 million (2008 dollars) annually. The bottom rate didn't even apply to those making less than the equivalent of $64k in today's dollars, and the whole manual was just 4 pages long.

It has become much more burdensome and extremely confusing, which makes today's top news item so fitting,

Thomas A. Daschle, President Obama's choice to be secretary of health and human services, has withdrawn his nomination, White House officials announced shortly after noon.

Daschle cited the distractions that followed his failure to pay all of his taxes in recent years. His decision came as another prominent Obama nominee, Nancy Killefer, withdrew her nomination to be chief performance officer because of similar -- and, in fact, smaller -- tax lapses.

Daschle, a former Senate majority leader, had come under pressure since Friday, when it was reported that he did not pay more than $100,000 in back taxes, primarily for the use of a car and driver given to him by an associate. He met yesterday with members of the Senate Finance Committee to explain the omission and apologized.

Senator Daschle cites confusion over what is and is not a taxable item. Kinda makes the case for a simplified tax code, doesn't it?