NJ Business Matters: The Blog of the CIANJ

Best of the Web: Christie vs. Lonegan

Republican gubernatorial hopefuls Chris Christie and Steve Lonegan debated last night in the first of two ELEC-approved events. Earlier this spring, both appeared separately at CIANJ to discuss issues impacting our small business members (video available at www.cianjvideo.org).

Below is a quick roundup of the blogosphere's post-debate chatter.

• Over on Lawsuit Reform Watch, Marcus Rayner notes the candidates' positions on tort reform and Supreme Court appointments.

• On NJVoices, pension expert John Bury uses his space to score the candidates on a variety of issues.

• Patrick Murray of the Monmouth University Polling Institute offers a pollster's perspective on the debate.

• Keeping it in Monmouth County, blogger Art Gallagher offers his thoughts on More Monmouth Musings

Feel free to post other entries you've spotted in the comments section.

Smoking Out Tax Collections Part II

Last week we highlighted a Tax Foundation study on the impact the federal cigarette tax increase will have on New Jersey. As government increases cigarette prices through taxation, the demand for (legal) purchases declines. The Tax Foundation estimates the federal tax hike will cost New Jersey $70 million in lost revenues.

Today, Gregg Edwards of the Center for Policy Research discussed the impact of Governor Corzine's proposed New Jersey only cigarette tax increase. These tax hikes have never produced their promised revenues, and in 2006 the increase led to a $22.2 million decline in collections. Edwards estimates this year's lost tax collections will be $15 million, should the tax hike go through.

"New Jersey's cigarette tax is counter-productive. It's a money-loser for Treasury. It robs customers from New Jersey retailers. It provides organized crime and street gangs witha low-risk way to finance their criminal activity. It forces local police departments to prevent the illegal sale of a commonly available legal consumer product and it makes cigarettes more accessible to teenagers."

Arkansas already recognizes the problem of lost sales and is even considering a rate that declines in stores close to the state's borders. A flawed solution, but at least it demonstrates an understanding of the problem.

'Deferral' is Not a Four-Letter Word

Your blogger has been scouring the internet lately and coming up with lots of good pieces to bust some of the corporate tax myths perpetuated by President Obama and his team of economic advisers and spokespeople. In print form, yesterday's Washington Post column by Robert Samuelson is our favorite. Meanwhile, the Tax Foundation has put together a two-minute video that clearly explains why tax deferrals exist in the first place, and the competitive disadvantage the president's plan would put American companies.

Insert Witty Space-Related Headline Here

The second editorial in today's Star-Ledger continues the deluge of finger-wagging at New Jersey's continued financing of E3CO - an organization that purported to teach children about growing food in space - even though the group provided no documentation of its work, and its Executive Director collected a salary after passing away. The group's other salaried worker "went underground" in another sense of the term once news reports began circulating.

Obviously, a budget that must be trimmed to the bone does not have room for a program that at first glance appears to be riddled with fraud. While the $100,000 is a minute portion of the overall budget, allowing fraud to continue only begets more fraud.

However, lost in the debate is why New Jersey funded the program even before the fraud began. A South Jersey principal was quoted as saying her students loved the program when it was in operation, but there are lots of worthy causes and kid-friendly programs - why doesn't government fund them all?

The first question a legislator asks him or herself when spending taxpayer money should not be, "Is this a good cause". That puts government in a position whereby it chooses winners and losers. Instead, legislators should begin by asking, "Is this a proper function of government?".

$100,000 to pay an outside group to teach kids about growing food in space is not. Had the program been funded by private sources instead, both the initial expenditure and the fraud could have been avoided.

Extend Foot. Pull Trigger.

The Assembly Labor Committee has just advanced legislation to further expand prevailing wage requirements into the private sector. The bill manages to simultaneously make doing business more expensive, while putting obstacles in the way to state mandated targets for reduced greenhouse gas emissions.

A-3372/S-2340 requires companies receiving Board of Public Utilities (BPU) financial assistance to pay the prevailing union wage on construction projects related to that assistance. In general, CIANJ's position on the prevailing wage is that it is an artificial price control that sets labor costs somewhere above the intersection of supply and demand. This adds cost to construction projects.

Particularly troubling with this bill is that should it become law, BPU programs meant to reduce business costs will include a requirement that increases costs elsewhere. Furthermore, many BPU grants are given to help companies reduce their energy consumption. Making that more expensive erects hurdles on the path to carbon reduction goals.

One thing business is consistent about is the need for consistent policies from government. For all the talk of love for jobs and clean energy in this state, this sure seems like a counter-intuitive plan. YEAs and NAYS from yesterday are below.

	Egan, Joseph V. (C) - Yes	Evans, Elease (V) - Yes	Dancer, Ronald S. - Yes
	DeAngelo, Wayne P. - Yes	Doherty, Michael J. - No	Oliver, Sheila Y. - Yes
	Quijano, Annette - Yes	Scalera, Frederick - Yes	Webber, Jay - No

Gov Signs LSP Bill

Last week, Governor Corzine signed legislation that creates a class of Licensed Site Professionals (LSPs) to expedite environmental cleanups. The bill passed with overwhelming majorities in the Assembly and Senate, despite fierce opposition from environmental lobbies that perpetuated fantastic scenarios that have not played out in states with already successful programs. 

In New Jersey, 20,000 permits sit on the desks of the NJDEP while developers can wait years for approval. As CIANJ President John Galandak noted in our press statement,

Contaminated sites that wait for DEP approval simultaneously hurt business and the environment. Expediting cleanup and growth is part of the way out of a decade of stagnant job growth in the state and we applaud Governor Corzine and the legislature for their efforts.

Here is the Governor's news release announcing the bill signing and here's his Executive Order that in effect modifies the bill under his Administration.

 It is a small, but significant step for New Jersey.

In Case You Didn't Notice...

State furloughs begin in New Jersey today, and first on the one-day closed list is the War Memorial in Trenton. Tomorrow, the state's welcome centers close and next week the Motor Vehicles Commission takes an extended weekend.

The gnashing of teeth and pounding of tables over the furloughs has been furious from union leadership in the past few weeks. The governor deserves credit for showing the political fortitude to stick with a cost saving measure that, despite labor's apocalyptic predictions, will not dramatically impact the lives of the New Jersey taxpayer. I checked, and the sun still rose in the east this morning and the state workers are not unemployed.

The full furlough calendar is available at this link.

Senator McGovern on Binding Arbitration

We have dedicated millions of pixels lately to discussing the anti-worker card check bill being negotiated in Congress. While the thrust of the conversation has been on the elimination of the secret ballot, former Senator and presidential candidate George McGovern (D-SD) uses today's Wall Street Journal to draw attention to binding arbitration requirements contained within the bill.

If the EFCA were to pass, newly-unionized workforces would be forced to reach an agreement with their employer within two years or face binding arbitration. This puts the employer at a significant disadvantage and would deny workers the right to vote on their contract - after denying them the right to vote on unionization in the first place.

In a contract negotiation, each party typically perceives the other as too demanding. But no one loses their right to contract willingly or suffers being forced to agree to anything. Employees can strike if they feel that they have been dealt with unfairly, but it is a costly option. Employers are free to reject labor demands they find to be too difficult to accept, but running a business without experienced employees is itself difficult. Both sides have an incentive to press their demands, but they also have compelling reasons not to press their demands too far. EFCA would disrupt that balance by enabling government-appointed lawyers to decide what they believe is fair or reasonable.

A federally appointed arbitrator cannot be expected to understand the nuances specific to each business dispute, the competitive market position of the business, or the plethora of other factors unique to each case. Yet fundamental decisions on wages and benefit costs, rules for promotions, or even rules for exiting an unprofitable line of business could fall to federal arbitrators under EFCA.

A compromise with a binding arbitration provision still diminishes worker rights and still hamstrings a company's ability to do business.

NJ Lawsuit Reform Blog Launches

The good people at the New Jersey Lawsuit Reform Alliance have launched a new blog dedicated to tort reform in the Garden State - Lawsuit Reform Watch. Marcus Rayner, Executive Director of NJLRA, will offer commentary on a system of civil justice that is fair to all parties and that discourages lawsuit abuse. It is the only site of its kind in the New Jersey blogosphere. Long-time NJ Business Matters readers will remember Rayner's guest appearance here at NJ Business Matters last year.

Be sure to check the site often for updates on the effort to bring balance to our tort system and create a model for the rest of America to follow. For more information on NJLRA, visit their website, here.

Booker: NJ is America's Most Inefficient State

Newark Mayor Cory Booker is joining a growing number of New Jersey policy leaders who recognize the state cannot afford the status quo of government's overlapping services and benefits for public employees. Be sure to check out this entire report from Bloomberg, but the highlights include,

“New Jersey will go bankrupt in 10 to 20 years because we cannot afford our employees as a state,” Booker said. “I’m talking about every worker from the cities and counties to the state government. Eventually, we’re going to price ourselves out as a government or tax ourselves to death.”

New Jersey is America's highest tax state, and yet somehow, we're broke. That dysfunction has systemic roots, but it has been nurtured by the political waters. How close to Mayor Booker's Doomsday Scenario must we approach before the political entrenchment is overcome by the economic realities?