More than half of the companies responding to the survey said their health plan costs rose by double digit rates of inflation in 2001, with increases of 20%, 30% and higher not uncommon among the 1,600 New Jersey employers participating in the survey.

The survey also showed costs rising as a proportion of employers' payroll expenses. Survey participants paid an average of $6,136 per covered employee to provide health benefits last year, up $465 or 8.2% from the year before. The average cost equaled 14% of reported average wages of $42,981, up from 11% of average wages just a few years ago.

Last year's cost hike follows an average increase of 8.8% in 2000, making for an average increase over two years, given the effect of compounding, of close to 18%, more than triple the rate of general inflation.

But the average increase doesn't tell the whole story. Fifty-six percent of employers participating in the 2002 survey said they expect their health plan costs to rise at a double digit pace again this year, up from 24% of respondents anticipating double digit increases just three years ago.

"'We are not facing a potential crisis. We are in one now!'" said NJBIA Executive Vice President Philip Kirschner said at the news conference, quoting a Middlesex County manufacturer with ten employees that is facing a 44% increase in its premiums for 2002.

"Our members are frantic to find a solution," Kirschner said. "They are switching into cheaper plans, having employees share more of the cost, reducing medical coverage and doing anything they can short of dropping health benefits altogether."

For a second consecutive year, most managed care plans failed to deliver cost savings for inflation-weary employers. In contrast to the mid-1990s, when managed care plans saved employers money, today they are pacing the rate of health plan inflation.

The average cost of a point of service plan rose to $6,060 from $5,501, a gain of $559 or 10%. The average cost of a preferred provider plan rose to $6,493 from $5,932, a gain of $561 or 9%. HMO plans as a group saw a smaller jump, rising by $202 or 4% to $5,669. However, this average was skewed by a handful of companies, comprising a small fraction of the HMO sample, which cut their plan costs by 40% or more. If these unusual cases are taken out, the average cost of an HMO plan rose by more than 12% last year.

The 2002 Health Benefits Survey was conducted between January 7 and 31 of this year. It was mailed to the Association's 14,958 member companies employing two or more people. The results are based on the first 1,600 responses. More than eight in ten respondents were small companies with 2-50 employees.

The Association's annual Health Benefits Survey, first conducted in 1993, remains the largest statewide survey of the experiences and opinions of New Jersey employers in providing health benefits coverage to their employees. Among the survey's other findings:

• The smallest companies, those with 2-19 employees, paid the most for healthcare coverage. Their average cost of $6,411 per employee for health coverage was $823 or 15% more than the average of $5,588 paid by companies with 100 or more employees.
• Despite rapidly escalating costs, the proportion of respondents offering health benefits to their employees did not decline over the last year, with 93% providing coverage to full-time employees and 74% to full-time employees and their dependents.
• A majority of the cost-control actions taken by employers in 2001 involved asking their employees to pay more through higher premiums, copayments and/or deductibles. In fact, 61% of the actions taken by employers involved this kind of cost shifting. Only 39% of cost-control actions involved changing plans or joining a managed care network.
• Asked what specific types of medical coverage are included in their plans, 94% said they provided coverage for prescription drugs, 76% for chiropractic services, 44% for dental work, 38% for eye care, 30% for acupuncture, and 19% for massage therapy.

"Ever increasing costs for health insurance are becoming a heavy burden for companies like ours. In each of the past three years, increases have been in the 20% range. If this continues, we will have to contemplate dropping health benefits."

"This year (2002) we have been increased up to $11,743 (per employee) for health insurance, which represents a 34% increase over last year! This has got to stop!"

"Health insurance has become the single most expensive component of my expenses with the exception of payroll itself. For the year ahead, total cost for health insurance will top $36,000, which represents 5% of our gross sales (not income, but total sales). This has become almost cost prohibitive."

NJBIA Blasts Proposed Business Tax Increaseof $711 Million at First Budget Hearing
On April 3 NJBIA Vice President Art Maurice blasted the Administration's proposed plan to increase corporate tax collections 64 percent during a recession as a counterproductive policy that will hurt employers, cost jobs and stall our economic recovery. Governor James E. McGreevey's plan to generate $711 million more in business taxes will impose higher taxes on tens of thousands of businesses. Many employers, including small businesses, will pay higher taxes on gross sales, payrolls, and business property under the Governor's fiscal 2003 budget proposal.

Maurice told members of the Assembly and Senate budget committees that in order to generate an extra $711 million more in Corporation Business Tax (CBT) collections this year, the Administration's plan would no longer tax net income, but impose onerous new taxes on the costs of doing business. Employers with high sales volumes, high overhead and low profit margins could be crushed under this tax change. Manufacturers and retailers would be especially hard hit.

"Over the past decade New Jersey has developed a national reputation as a state with a stable business climate," Maurice said. "By painting New Jersey employers as tax cheats and by ignoring the high cost of doing business in New Jersey--including substantial property taxes ($3.1 billion) and payroll taxes ($1.2 billion)-this budget proposal does a grave disservice to New Jersey's employer community. This slap-dash proposal will lead employers here and across the region to question whether New Jersey is a place to grow a business."

In his March 26 budget address, the Governor proposed a $711 million increase in CBT revenue, claiming that businesses were using unspecified "loopholes" to "avoid paying their fair share." McGreevey's speech was short on details about how the revenues would be raised, but some details were included in the budget document.

Maurice explained that McGreevey's plan would impose three new taxes: a payroll tax, a property tax and a gross receipts tax. Under the new scheme, employers would pay a tax of up to 1 percent of their gross receipts with a $5 million cap on the taxes paid by a company. Businesses would pay the greater of the current tax on net profits or the new assessment. Under the current system, where net income is taxed, businesses are able to deduct legitimate expenses like salaries, employee health insurance, pensions, utilities, interest on business loans, property taxes and charitable contributions. Under the Governor's plan, employers would be taxed on gross receipts, regardless of whether or not their business makes a profit. Businesses that lose money would still have to pay the new tax.

In response to widespread criticism of the plan, legislators on the budget committees took the unusual step of forming a task force to study the impact of the proposed tax increase on the business community. Said Senator Robert Littell, co-chairman of the Senate Budget and Appropriations Committee, "A poorly planned and destructive (tax) increase to our state's business community is the wrong direction to travel during a recessionary time."

For more information, contact Art Maurice at ext. 247 or amaurice@njbia.org.

Tax Amnesty Ends June 10
Under the state's tax amnesty plan recently signed into law, businesses that owe overdue state taxes have until June 10 to pay them and avoid penalties and interest. To get more information, employers should call 1-800-781-8407 or visit www.taxamnesty.com.

The amnesty program applies to all taxes that were due on returns filed between January 1, 1996, and January 1, 2002. After June 10, businesses that have not paid their overdue tax bills will face an additional 5 percent penalty in addition to all other penalties and interest.

For more information, contact Art Maurice at ext. 247 or amaurice@njbia.org.

Quote of the Month
"A poorly planned and destructive (tax) increase to our state's business community is the wrong direction to travel during a recessionary time."

Project Labor Agreements and a Business Tax Increase
Top the Agenda at NJBIA's Annual Briefing Breakfast Series
As New Jersey struggles to emerge from its first recession in a decade, NJBIA is pursuing an agenda that will help employers be more competitive. As part of its annual Legislative Briefing Breakfast series, NJBIA's government affairs staff is traveling across the state to explain to employers and legislators what the state should do, or not do, to bolster its economy.

The briefing breakfast series brings legislators and employers together for a discussion of the issues that are most important to the business community. About 250 members and 28 legislators have turned out for breakfasts in Mount Laurel, Monroe Township and Teaneck. Breakfasts also are scheduled for Whippany (April 19), Tinton Falls (April 30) and Newark (May 3). Contact Stacy Wichner at 609-393-7707, ext. 213, for more information.

This year's program is being conducted in a far different economic climate. As NJBIA Executive Vice President Philip Kirschner noted at the Mount Laurel briefing, businesses today are far less optimistic about the economy than they were last year.

NJBIA's 2002 Business Outlook Survey found that only a net 11 percent of employers expected sales to increase this year, down from a net of 41 percent last year. The net percentage that expected to hire more employees dropped from 23 percent in 2001 to 8 percent in 2002. The net percentage expecting higher profits in 2002 is zero.

Kirschner also pointed out that the bulk of New Jersey employers are small businesses. Ninety-two percent of NJBIA's 17,780 members have between one and 99 employees, with 74 percent having between one and 24 employees.

"The bulk of our members are small businesses that get hit really hard by new government mandates and higher taxes," Kirschner said.

NJBIA Vice President Jeff Stoller told the crowd that project labor agreements would give unions a virtual monopoly on government construction contracts while shutting out qualified nonunion contractors and undermining New Jersey's competitive bidding laws.

On the subject of the Corporation Business Tax, Vice President Art Maurice said the Governor's proposed plan to raise revenues by 64 percent means businesses would pay new taxes on their property, payroll and gross receipts, regardless of whether they make a profit.

On the subject of soaring healthcare costs, Vice President Bryan Markowitz said employers are seeing double digit inflation in the cost of their insurance premiums. More than 90 percent of NJBIA member companies responding to a recent survey said they provide health benefits to their employees, but businesses are responding to high inflation by requiring employees to pay a share of the increase through higher deductibles, copayments and premium cost sharing.

Environmentally, New Jersey is one of the least polluting states in the nation, according to First Vice President Jim Sinclair. New Jersey ranks 35th in the amount of air pollution it generates, and New Jersey companies have reduced toxins by 76 percent between 1988 and 1999--a rate of reduction that is twice the national average. Sinclair said employers are concerned that the DEP's new emphasis on enforcement will turn into a fund-raising effort designed to generate new fees for the agency.

Finally, Assistant Vice President Libby Vinson said a survey of employers conducted over the summer indicated displeasure with the education of high school graduates. The survey, she said, indicates a need for formal technology education standards.

For more information on NJBIA's legislative agenda, contact Philip Kirschner at ext. 210.

NJPRO Honors Menendez, Sires, Vas
The New Jersey Policy Research Organization (NJPRO), an NJBIA research affiliate, on March 26 held a reception to honor US Representative Robert Menendez, Assembly Speaker Albio Sires and Perth Amboy Mayor Joseph Vas. The reception honored the three Latino political leaders for rising to leadership positions in national, state, and local government. More than 150 people attended the packed reception, which was held in Trenton.

As a 13th District congressman, Menendez is Vice Chairman of the Democratic Caucus, a key leadership position in the US House of Representatives. In only his second term in the NJ General Assembly, Sires has been elected Assembly Speaker, making him one of the two most powerful members of the Legislature. As Mayor of Perth Amboy for more than a decade, Vas has engineered one of the most extraordinary urban turnarounds in the country. For more information about NJPRO, contact Art Maurice at ext. 247 or amaurice@njbia.or.

APRIL/MAY
Briefing Breakfast Series:
Learn About the Issues Facing Your Business
In April and May, NJBIA will hold the final three events in its Legislative Briefing Breakfast series. Take advantage of this great opportunity to meet with legislators in your district and learn about proposed legislation that could have a big impact on your cost of doing business. Each breakfast begins at 7:30 a.m. with registration and ends promptly at 9:30 a.m. Network with colleagues and legislators in a relaxed atmosphere. The cost is $39 per person per breakfast for NJBIA members and $49 for nonmembers. To register call Stacy Wichner at 609-393-7707, ext. 213. See below for dates and locations of the remaining three Briefing Breakfasts.
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April 19-Hanover Marriott, Whippany April 30-Holiday Inn, Tinton Falls May 3-Sheraton Newark Airport

May 7 -- Meet the New Assm. Leader, Speaker Albio Sires
Sheraton at Woodbridge Place
At this special issue briefing breakfast, the Hon. Albio Sires, Speaker of the NJ Assembly, will present his legislative priorities to NJBIA members. He will discuss issues impacting your cost of doing business in New Jersey, such as increased business taxes, paid family leave, and health insurance costs. He'll talk about how you can work with the new Assembly majority and will be available to answer your questions. Cost for this briefing breakfast is $49 per person for NJBIA members and $89 for nonmembers. To register, call Lisa Figatner 609-393-7707, ext. 239.

TUESDAY, MAY 14
NEW JOBS South Jersey Legislative Reception
Sponsored by NEW JOBS, the state's largest political action committee for the business community, and the Chamber of Commerce Southern NJ, this event is South Jersey's regional fund-raiser for probusiness candidates for the state Legislature. Remember, it is important to support candidates who advocate economic growth! This reception will be held at The Mansion on Main Street in Voorhees from 6:00 p.m.-8:00 p.m. The cost is $175 per person. To register, call Sherry Esteves at 609-393-7707, ext. 219. For details on NEW JOBS, contact Jim Sinclair at jsinclair@njbia.org.

WEDNESDAY, MAY 29
Family Leave Seminar
This half-day program will help you sort through the bewildering levels of leave regulations and avoid costly mistakes regarding length of family leave, job protection, benefits and discrimination issues. Two of New Jersey's top employ-ment law specialists will explain how to avoid the many legal pitfalls involved. Human resource mana-gers will share the lessons they have learned from years of struggling with leave requests. The seminar will be held at Sheraton at Wood-bridge Place, Iselin, from 8:30 a.m. to 12:00 p.m. The cost is $99 per person for NJBIA members and $129 for nonmembers. To register, call Lisa Figatner 609-393-7707, ext. 239.

TUESDAY, JUNE 11
New Good Neighbor Awards Luncheon
NJBIA's 42nd Annual New Good Neighbor Awards Luncheon will be held at the Sheraton at Woodbridge Place in Iselin. Awards will be presented to New Jersey businesses that have made an outstanding contribution to their communities through job creation, the quality of their architecture, and community involvement. The luncheon will be held from 11:30 a.m.-2:00 p.m. Cost to attend is $65 per person. For more information, contact Stacy Wichner at 609-393-7707, ext. 213. For sponsorship infor-mation, call Sherry Esteves at ext. 219.

TUESDAY, JULY 16
Golf & Tennis Day
NJBIA will hold its 32nd Annual Golf & Tennis Day at Forsgate Country Club in Monroe Township. The event is one of the state's major business outings and one of New Jersey's largest amateur golf tournaments. Cost per person: $250 for golf and dinner, $140 for tennis and dinner and $95 for dinner only. Sponsorships are available by contacting Sherry Esteves at 609-393-7707, ext. 219. To register or for more information, call Stacy Wichner, ext. 213.

WEDNESDAY, SEPTEMBER 25
NEW JOBS Night at the Meadowlands
New Jersey Organization for a Better State (NEW JOBS), the largestprobusiness political action committee in New Jersey, will hold its annual Nightat the Meadow-lands event in the Pegasus Restaurant at the racetrack in EastRutherford. Come meet New Jersey's probusiness legislators! The eventbegins with cocktails at 6:00 p.m., followed by a buffet dinner at 7:00 p.m. Theprice is $200 per person, and tables of 10 are available. To register, call SherryEsteves at 609-393-7707, ext. 219.
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