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MonthlyNewsletter July-August 2002 Issue
Legislative News
Governor Signs $1 Billion Business Tax Increase after NJBIA Gains Improvements Read.
Governor's Order Steers State Contracts to Unions Read.
School Anti-Subcontracting Bill Clears Assembly Read.
Legislature Passes Union-Only Contracts Legislation for Public Buildings Read.
Law Makes New Jersey the Most Expensive State for Fees on Regulated Emissions Read.
Technology Education Bill Advances Read.
Quote of the Month
NJBIA Executive Vice President Philip KirschnerRead.
NJBIA In Action
NJBIA Forms Women Business Leaders Network Read.
More Than 300 Enjoy NJBIA's 32nd Annual Golf and Tennis Day Read.
NJBIA Reaches New Milestone with 18,000 Member Companies Read.
Site Visit
Everything Old is New Again as West Trenton's Homasote Company Finds New Uses for a
   Century Old Product Read.
Calendar of Events
Friday, September 6-2002 New Jersey Conference on Economic Development Read.
Wednesday, September 18-Briefing Breakfast with Speaker Albio Sires Read.
Wednesday, September 25-NEW JOBS Night at the Meadowlands Read.
Tuesday, October 22-Awards for Excellence Dinner Read.
November-Made in New Jersey Day Read.
2002 NJBIA Sponsorship Opportunities Read.
Governor Signs Corporation Business Tax
Increase After NJBIA Gains Improvements
Concluding a chaotic budget session, Governor James E. McGreevey on July 2 signed legislation that will increase business taxes by $1 billion annually.

At NJBIA's urging and with the help of Senator Robert Littell, the Legislature amended S-1556 (Kenny)/A-2501 (Sires, Roberts) to lighten the burden on employers, particularly small and medium-sized businesses. While the amendments improved the bill, NJBIA still vigorously opposed the tax increase.

"No matter how you look at it, the Governor and the Legislature are hitting New Jersey employers with a $1 billion tax increase in a weak economy," said NJBIA Executive Vice President Philip Kirschner, noting that the state's private sector lost a net 36,000 jobs between July of last year, when the recession started, and May of this year.

While the law imposes new taxes on business, it was not as dramatic as the Governor's original proposal. In March, McGreevey proposed a tax of up to 1 percent on gross receipts that would have raised taxes far more than the final bill. Here are the details of what the Governor and Legislature have approved.

Gross Receipts Tax: All C corporations must pay the larger of the current Corporation Business Tax (CBT) on net income or the new alternative minimum tax on gross receipts or gross profits. Companies may choose to use either gross receipts or gross profits when calculating the minimum tax. The gross receipts/gross profits tax does not apply to S corporations, LLCs, partnerships, professional corporations, or sole proprietor-ships. The tax is retroactive to January 1, 2002, and will expire on December 31, 2006.

The gross receipts tax is assessed at rates of:

  • no tax for companies with receipts of $2 million or less;
  • 0.125 percent for companies with receipts of between $2 million and $20 million;
  • 0.175 percent for companies with receipts between $20 million and $30 million;
  • 0.3 percent for companies with receipts between $30 million and $50 million;
  • 0.35 percent for companies with receipts between $50 million and $75 million; and
  • 0.4 percent for companies with receipts above $75 million.
There is an exclusion for the first $2 million in receipts, which phases out between $2 million and $20 million.

Gross Profits Tax: CBT filers can choose to pay their alternative minimum tax on gross profits (gross receipts less the cost of goods) instead of gross receipts.

The gross profits tax is set at:

  • No tax for companies with $1 million or less in gross profits;
  • 0.25 percent for companies with between $1 million and $10 million in gross profits;
  • 0.35 percent for companies with between $10 million and $15 million;
  • 0.6 percent for companies between $15 million and $25 million;
  • 0.7 percent for companies between $25 million and $37.5 million;
  • 0.8 percent for companies with more than $37.5 million.
A $1 million gross profits exclusion is provided and phases out between $1 and $10 million of gross profits.

Small Business Tax Cut: C corporations with net incomes below $50,000 will see their tax rate on net income drop from 7.5 percent to 6.5 percent.

LLCs, PCs, Partnerships: Each owner of an LLC, PC and Partnership that has three or more partners (so-called "pass through entities" because all business profits are passed through to owners and taxed as personal income) will pay a new $150 annual fee. This fee is retroactive to January 1, 2002.

S Corporations: S corporations are not subject to the new taxes. However, the scheduled phase-out of corporate income taxes on S corporations with more than $100,000 in net income is delayed. The tax rate for these S corporations remains at 1.33 percent until 2006, when the rate drops to 0.67 percent until elimination in 2008. While S corporations are not subject to the gross receipts/gross profits tax, they are subject to a $500 minimum tax (an increase over the current $210).

Net Operating Losses: CBT taxpayers currently are allowed to carry forward net operating losses for up to seven years. The new law suspends this loss carry-forward for two years. The loss carry-forward period will be extended two years to compensate for the two-year suspension.

Accelerated CBT payment schedule: CBT taxpayers with $50 million or more in gross receipts will have to make their 2003 third quarter tax payments at the same time as their second quarter tax payments.

Return of excess CBT collections: If the revised CBT generates more tax revenue than the projected $1.8 billion, excess collections would be placed in a reserve account and used to reduce business tax rates.

Other provisions: The law also limits tax deductions and exclusions for dividends, interest and royalty payments and the taxability of out-of-state sales where no corporate tax applies. NJBIA was able to make improvements over the Governor's original proposal in all of these areas. For information on any of the tax changes, contact Art Maurice at 609-393-7707, ext. 247.

Governor's Order Steers State Contracts to Unions
Governor James E. McGreevey issued an executive order requiring contractors supplying uniforms, apparel and footwear to state agencies to comply with a long list of new requirements designed to steer contracts to union-only firms. Executive Order #20, issued on June 11, is the Administration's latest effort to give unions a virtual monopoly over state contracts at taxpayers' expense. Executive order #20 also sets an ominous precedent that could eventually extend to vendors supplying other products and services to the state and other public bodies.

Under the executive order, a vendor cannot win a contract unless it:

  • waives its right to resist a union drive to organize its workforce;
  • recognizes a union automatically, waiving an election by employees, whenever a majority of workers sign cards indicating an "interest" in union representation;
  • agrees to only layoff employees for cause, thereby eliminating layoffs due to economic conditions; and
  • pays an hourly wage high enough to support a family of three, as determined by the U.S. Department of Health & Human Services.
Like union-only project labor agreements, the Governor's executive order effectively shuts out competition from qualified nonunion bidders and hands hundreds of thousands of dollars in state contracts to union-only firms. The inevitable result is higher costs for New Jersey taxpayers. For more information, contact Art Maurice at or jeffstoller@njbia.org.


School Anti-Subcontracting Bill Clears Assembly
Legislation that would severely restrict the ability of public schools and colleges to subcontract noneducational services to private employers was approved by the full Assembly on June 13. The bills, A-1714 (Friscia)/S-1537 (Charles, Ciesla), would require public school districts, state colleges and universities, and community colleges to obtain union agreement before subcontracting noneducational services with private-sector companies. Currently, this is a management decision.

This proposal would severely limit the ability of school districts and colleges to save money by seeking competitive bids. Private businesses can provide noneducational services such as custodial services, food services, and busing at reduced costs with better service. In 2000, the ability of local school districts to make these subcontracting decisions independently saved an estimated $28 million, according to a survey by the New Jersey School Boards Association. Similarly, higher education institutions saved approximately $20 million by partnering with private employers.

Enactment of this legislation would hamper the ability of school districts and colleges to deal with severe budget shortfalls. In the new state budget, aid to local school districts will be at or near last year's levels, and state colleges and universities face a 5 percent across-the-board cut in state aid.

School districts must retain the ability to shop for the best quality of services for the lowest possible cost. For more information, contact Art Maurice at ext. 247 or amaurice@njbia.org.

Legislature Passes Union-Only Contracts
Legislation for Public Buildings
State and local government entities will be authorized to limit construction contracts for public buildings to firms that only use union labor under legislation that passed both houses of the Legislature on June 24. Governor James McGreevey is expected to sign the measure.

The bill, S-1044 (Sweeney, Cafiero)/A-1926 (Egan, Malone), provides that governments can require these union-only project labor agreements on public buildings.

The bill was amended to exclude roads and other infrastructure projects as well as any project costing less than $5 million. While these amendments are beneficial, the bill still permits discrimination against nonunion contractors.

The amendments do nothing to change employers' strong opposition to these union-only deals. In fact, exempting large complex highway projects from the bill undercuts proponents' arguments that project labor agreements are needed on large-scale, complex projects. Similarly, the $5 million threshold would not help many nonunion contractors since very few public buildings cost less than that.

Furthermore, the amendments do not address the fundamental flaw of the bill-discrimination against nonunion contractors.

To see how your legislator voted, go to Here.

Governor Signs Bill Making NJ the Most Expensive State for Regulated Emissions Fees
Legislation that more than doubles the fees on regulated emissions was signed into law by Governor McGreevey on July 1, one day after it was approved by the Legislature during a marathon Sunday session to vote on the state budget. The bill, S-1508 (Codey)/A-2506 (Cohen), would increase the rate from $35 per ton of regulated emissions to $85 per ton, giving New Jersey the highest such rate in the nation by $30 per ton. The bill also allows NJDEP to increase permit renewal fees up to a total of $50,000.

This is a grossly unfair tax increase on pharmaceutical, auto manufacturing, petrol-chemical, utilities, and food processing facilities. New Jersey industries have reduced air pollution emissions by 75 percent, and New Jersey now ranks 34th in the nation in the amount of air pollution emissions from industry. The rate of compliance of New Jersey facilities is over 99.94 percent, based on actual field inspection data.

Industry's successes in pollution prevention have not been matched by a proportional improvement in the management of the NJDEP Title V program, which regulates air pollution emissions. Staffing and fixed costs remain at a level designed for four times the amount of pollution and two times the number of facilities that now exist. Managerial philosophy, procedures and rules are a carryover from a time when New Jersey had many more industrial facilities.

NJBIA believes the answer to the present problem is not to blindly pour large amounts of additional taxes into this troubled program, but to demonstrate environmental and managerial leadership by dramatically changing the existing system. For more information, contact Jim Sinclair at ext. 236 or jsinclair@njbia.org.


Technology Education Bill Advances
The Assembly Education Committee on June 17 released legislation that would make technology education part of the core curriculum content standards that all public school students must be taught.

A-2169/A-1350 (Conaway, Connors, Geist) would require the state Board of Education to develop technology education standards and implement them within one year. Currently, technology education is included as a workplace readiness standard, but teachers are not accountable for teaching technology education and students are not assessed in the subject area.

Making technology education part of the core curriculum content standards would establish technology education as one of the fundamental subjects taught to all New Jersey public school students.

NJBIA has been pushing for technology education standards in response to employers' concerns that high school graduates do not possess the technological and problem-solving skills they need. Even with rising unemployment, employers are still struggling to find employees with a strong understanding of technology and how to use it in the workplace.

Under the bills, a committee of educators, businesspeople, parents and Department of Education personnel would develop technology education standards after reviewing the Standards for Technological Literacy developed by the International Technology Education Association and standards already adopted by other states.

Many states that compete with New Jersey for technology companies and skilled workers have already adopted the national standards for technological literacy for grades K-12. If New Jersey does not support technology education as a field of study, it will not be able to supply a workforce for the growing technology-based industries that are driving the economy.

Quote of the Month
"No matter how you look at it, the Governor and the Legislature are hitting New Jersey employers with a $1 billion tax increase in a weak economy."


NJBIA Forms Women Business Leaders Network
In an effort to encourage NJBIA's women business owners, top executives and business leaders to take a more active and visible role in Association and legislative activities, NJBIA has formed the Women Business Leaders Network.

More than 120 women business owners and executives attended meetings in Mount Laurel on July 10, Teaneck on July 18 and Jamesburg on July 25.

The network aims to better organize the women business leaders in NJBIA and improve the services NJBIA provides for women business executives.

Women make up half of the workforce and are becoming an increasing percentage of the number of business owners and top executives of New Jersey companies. Approximately 1,800 NJBIA member companies are women-owned businesses and New Jersey is ranked 10th in the nation in the number of women-owned businesses located here.

"By coming here today, you have identified yourself as a dynamic leader, someone within the business culture that is a player in the corporate community," NJBIA Associate Sara Bluhm told the group gathered at Teaneck.

The network is aimed to ensure that women business leaders have their voices heard in Trenton on such key business issues as business taxes, healthcare costs and paid family leave.

For more information on the network, contact Sara Bluhm at ext. 204 or sbluhm@njbia.org or Peggy McGough at ext. 221 or pmcgough@njbia.org.


More Than 300 Come Out for a Day of Sports, Contests and Networking at NJBIA's 32nd Annual Golf and Tennis Day

Gallery of Photos

Two hundred and eighty-eight golfers teed it up, 18 tennis players took to the courts and 23 more-including 11 state legislators-attended the awards banquet for NJBIA's 32nd Annual Golf and Tennis Day at Forsgate Country Club in Monroe Township and the East Brunswick Racquet Club in East Brunswick on July 16.

Golfers competed for low net and low gross scores as well as closest to the pin, longest drive and straightest drive prizes. NJBIA also presented a Women's Golf Award for the lowest net score from among the 16 women who played. The tennis players competed at an indoor, round robin tennis tournament at the East Brunswick Racquet Club.

On Forsgate's links, Jim Schulz of Soaries for Congress, had low gross on the Banks Course with a 72, while Steve Lang of The Rose Group shot a 79 to win the low gross prize on the narrow Palmer Course. Yoshi Kawashima of Brother International shot a net 72 using the Calloway scoring system to grab the low net prize on the Palmer course, while on the Banks Course, Larry Powell of Frank B. Ross Company took home the low net prize with a 71. The Women's low net went to Debbie Kermisch.

In the tennis tournament, the team of Jack Zalarick of Youngworth Communications and Paul O'Brien of Degussa Corporation took first place and Walter Braswell of Elizabethtown Water Company and Sara Maurer of The Olde Mill Inn were runners-up.

The annual event is designed to allow business people and legislators to get together and just enjoy each other's company.

"This is the part of our event where we recognize those golfers who may have been a little luckier than everyone else," NJBIA President Joe Gonzalez said at the dinner. "But no matter what luck you had today, we are thankful that you decided to join us for a day when we could put work aside, and just enjoy a little sport."

"We view this event as a gathering of friends," NJBIA Executive Vice President Philip Kirschner added. "This is one event where everyone can relax and have a good time."

The event was made possible by the 80 NJBIA members who sponsored the tournament.


NJBIA Reaches New Milestone with 18,000 Member Companies
Less than one year after cracking the 17,000 member level for the first time in its 91-year history, the New Jersey Business & Industry Association reached a new milestone, garnering more than 18,000 members this spring.

NJBIA, already the nation's largest state-level employers association, exceeded the 18,000-member mark for the first time in May and concluded June with 18,257 member companies.

"This is a tremendous amount of growth that I believe reflects well on the job we are doing as an association," NJBIA President Joe Gonzalez said. "Between lobbying, seminars, insurance, shipping, and telecommunication, we have a great deal to offer employers of every size."

NJBIA is recognized for its first-rate government affairs department, which lobbies against antibusiness proposals and in support of policies that encourage economic growth and lower business costs.

"We are fighting every day to make New Jersey a better place in which to do business," Executive Vice President Philip Kirschner said. "We have helped get probusiness legislation enacted in the past, and we will continue to fight against those who attack the private sector with new workplace mandates, onerous tax increases and other antibusiness policies."

But NJBIA is more than just a lobbying organization. Association members are eligible to apply for workers compensation and commercial auto insurance through the esteemed New Jersey Manufacturers Insurance Group. Employees of member companies are eligible to apply for NJM homeowners and personal automobile policies.

Members can also participate in discount shipping and telecommunications programs.

NJBIA also hosts several seminars on such topics as buying health insurance, finding and keeping good employees, legal and human resources issues facing business and complying with environmental regulations.

Finally, NJBIA offers members the monthly New Jersey Business magazine, as well as reference works such as the all new A Practical Guide to New Jersey Employment Law: The Employer's Resource (2001-2002) as well as the ever popular Directory of the New Jersey Legislature.


Everything Old is New Again as West Trenton's Homasote Company Finds New Uses for a Century Old Product
Parts of Homasote Company's manufacturing facility were built in the 19th century.

In an age when companies contract out for many services, Homasote maintains its own shop of machinists, electricians, pipe fitters and welders.

And the raw material needed to make their product? Old New Jersey newspapers.

Homasote is not just the name of the company, but also the name of the product it has been making at its West Trenton facility since 1909. While Homasote may use an old but reliable way of doing business, they are constantly looking for new ways to market and use their unique fiberboard.

"The product is the same. The technology to make it hasn't changed. But we continue to upgrade the process, "Homasote President Peter J. McElvogue told area legislators during a July 19 site visit. "Our product is unique. No one does exactly what we do."

McElvogue and Plant Manager Chris Schulze guided state Senator Shirley Turner, Assembly members Linda Greenstein and Reed Gusciora, NJBIA President Joe Gonzalez and Vice President Frank Robinson through their facility. The tour was part of NJBIA's Site Visit Program, designed to give legislators a better understanding of local businesses.

Homasote begins with recycled newspapers, which are dumped into a vat that looks like a giant blender and mixed with water to form slurry. The slurry is then molded into a new paper board, which is placed inside a giant press. The press squeezes the water out of it until a one-and-a-half inch thick board is compressed into desired thickness.

The Homasote boards are then dried in a 400-degree oven roughly the size of a football field. The process creates a hard, gray, nonabrasive sheet that can be cut into any shape.

Originally, Homasote was used for walls and ceilings in early 20th century buildings. The proliferation of drywall, which is cheaper, forced the Homasote Company to find new uses for its product.

While more expensive than drywall, Homasote is stronger, water resistant, and sound deadening, McElvogue explained. Such qualities make Homasote an ideal material for under carpeting, hardwood floors and between walls to reduce noise-particularly in multi-family housing.

Homasote also took advantage of the product's nonabrasive surface to create forms for shipping glass. In fact, Homasote's PakLine division is devoted entirely to creating forms, molds and custom-made packaging for everything from rolls of steel to small electric motors.

Finally the company laminates Homasote with cork or up to six different kinds of fabric to create what it calls tack boards, which can be used as bulletin boards or walls in office cubicles.

This innovative approach to finding new uses for the company has paid off. No one has been laid off at Homasote since 1976.

McElvogue said that the company was coming to the end of a transition period where it was "trying to find a 101 uses" for Homasote. Now, the company will concentrate on having their product specified for use by architects. That means the company must convince architects to specify the use of Homasote in their buildings instead of other materials like light concrete or other materials.

"We have to do a good job of selling," McElvogue said. "We have to take our product from a commodity building product to an architect specified and building specified product. That's our challenge and that's our goal."


Friday, September 6
2002 New Jersey Conference on Economic Development
This conference on economic development is intended to stimulate forward-thinking discussions on key issues. This year's theme-Opportunities & Perspective on Economic Development-focuses on a diverse spectrum of business, government and community leaders who will offer their insights and experiences on successful economic development practices in today's changing environment. Hear firsthand from Governor James E. McGreevey and key members of his cabinet about state policies and initiatives that are designed to foster economic growth and attract and retain businesses. This conference at the Hilton Hotel in East Brunswick will be start at 8:00 a.m. with registration and will end at 4:00 p.m. For more information call 609-777-0885.
Register


Wednesday, September 18
Briefing Breakfast
Meet Assm. Leader, Speaker Albio Sires
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. This breakfast at the Sheraton at Woodbridge Place will begin at 7:30 a.m. with registration and ends promptly at 9:45 a.m. Cost is $49 per person for NJBIA members and $89 for nonmembers. To register, call Lisa Figatner 609-393-7707, ext. 239.
Register


Wednesday, September 25
NEW JOBS Night at the Meadowlands
The New Jersey Organization for a Better State (NEW JOBS), the largest probusiness political action committee in New Jersey, will hold its annual Night at the Meadowlands event in the Pegasus Restaurant at the racetrack in East Rutherford. The event begins with cocktails at 6:00 p.m., followed by a buffet dinner at 7:00 p.m. and live racing. The price is $200 per person, and tables of 10 are available. To register, call Sherry Esteves at 609-393-7707, ext. 219.
Register


Tuesday, October 22
Awards for Excellence Dinner
A select number of NJBIA member companies that have achieved excellence in activities related to environmental quality, human resources management and job creation will receive our Award for Excellence at a dinner banquet at the Westin Princeton on October 22. An Award for Excellence in public service will also be presented to an individual. The program will begin at 6:00 p.m. and will include a reception, dinner and the awards presentations. Tickets are $149 per person and tables of 10 are available. To register, call Stacy Wichner at 609-393-7707, ext. 213. For sponsorship information, call Sherry Esteves, ext. 219.
Register


November (Date to be announced)
Made in New Jersey Day
If your company makes a product in New Jersey, showcase it at NJBIA's 7th Annual Made in New Jersey Day. The event will be held in November. The date will be set when we receive the Legislature's fall schedule. If you are a member and would like to be an exhibitor, a Sampler Bag contributor or an event sponsor, contact Stacy Wichner at 609-393-7707, ext. 213, or Sherry Esteves at ext. 219.


2002 NJBIA Sponsorship Opportunities
Contact Sherry Esteves at 609-393-7707, ext. 219, to reserve the sponsorship(s) that best achieve your company's goals!

Awards for Excellence Dinner, October 22 - Westin Princeton
Associate your business with excellence by formally recognizing the distinguished achievements of your corporate colleagues through one of the following sponsorship opportunities.$2,000 Gold Sponsor includes: Reserved table of 10, recognition in the event program and signage, follow-up stories in the Business Voice and New Jersey Business magazine$500 Silver Sponsor includes: Recognition in event program, follow-up stories in the Business Voice and New Jersey Business magazine.

Made in New Jersey Day, November (date to be determined) - State House, Trenton
New Jersey manufacturers set up displays in the halls of the State House. Legislators and the Governor stop by and visit with the exhibitors. There is also a luncheon with Legislators. It is an enjoyable day.$1,000 sponsorship includes: One invitation to the luncheon, signage at the event, post-event publicity


 
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