Under current law, New Jersey uses a formula that applies the CBT to a company's New Jersey sales, total payroll and value of its property. NJBIA supports a reform bill, S-2314 (Kyrillos, Kenny)/A-3420 (DeCroce, Gibson), that would apply the tax only to a company's New Jersey sales, thereby lifting the tax penalty on its employment and physical plant.

The study, entitled Single Sales Factor Apportionment: Potential Economic Impacts on New Jersey, concluded that moving to a single sales factor would create 46,000 to 67,000 new nonmanufacturing jobs and 11,000 to 16,000 additional manufacturing jobs. The surge in employment would generate higher tax revenues, with an increase of $39 million to $45 million in personal income tax collections and $41 million to $59 million in additional sales tax revenues. At the same time, revenues from the CBT would only drop by $50 million a year initially.

New Paid Leave Proposal Places Unfair Mandate on Employers, Imposes Severe Penalties for "Interfering"
Legislation was recently introduced that would impose a mandate on employers with 50 or more employees to provide additional job-protected family leave to parents with "special needs" children in school. The bills would let parents themselves determine whether their children have "special needs," making them eligible for time off to attend school functions. The bills might also impose severe penalties if an employer even asks whether an employee could reschedule a school meeting for after work.

The bills, S-2620 (Bennett, Cafiero)/A-3817 (Conaway, Doria), would entitle employees to 24 hours annually of job-protected paid leave if they have children in school. Leave can be taken over as many days as the employee wishes, until the total equals 24 hours in a year, thereby disrupting up to 24 work days. This leave is in addition to months of unpaid leave already mandated under the state and federal family leave laws, as well as leave time the employee receives through employer policies or collective bargaining agreements, such as sick leave, and vacation.

The proposal would give parents the authority to determine if their child fits the "special needs" category. The bill effectively allows them to take time off even if their child only exhibits common, vaguely defined behavior or social problems such as "lateness." The bill does not require parents to obtain any formal determinations by a child study team or medical certifications that a child has a disability.

The bill prohibits an employer from "interfering" with an employee taking such leave, but does not explain what might constitute interference. As a result, any employer who questions or objects to the leave could be fined $2,000 for the first offense, and $5,000 for each subsequent incident. The bill also makes employers liable for punitive damages up to $500,000 or 1 percent of the value of their business.

Most employers make arrangements for parents who need to attend parent-teacher conferences, especially in cases where the child is disabled. But employers must have the ability to set work schedules and manage employees' time during working hours. With the economy contracting, the timing could not be worse to impose costly new mandates on business. For more information, contact Jeff Stoller at jeffstoller@njbia.org or at ext. 209.

McGreevey Pledges No Tax Increase
In his first policy announcement following the election, Governor-elect Jim McGreevey pledged not to raise taxes and has turned to the private sector for advice on closing a budget gap that could exceed $1 billion.

McGreevey ruled out tax increases in a post-election news conference on November 7 and pledged to take a fiscally conservative approach to government spending. He has asked outgoing-Governor Donald T. DiFrancesco to freeze discretionary spending and make budget cuts prior to leaving office.

On November 13, McGreevey announced the formation of a budget advisory panel that will review the $22.9 billion state budget and recommend future budget cuts and spending freezes. Twenty-one of the 28 members come directly from the private sector, including 10 from financial corporations such as Fleet Bank and First Union National Bank.

As of November 9, the state Treasury Department reported that October tax revenues were 9 percent below projections for the month, citing the September 11 terrorist attacks as the biggest factor in the shortfall.

NJBIA Education Committee Members Meet US Represenative Holt On Education Issues
On September 28, more than 50 New Jersey employers exchanged views on education issues with US Rep. Rush Holt (D-12) at a joint meeting of NJBIA's Education and Human Resources Committees. Many employers expressed concern about the education of entry-level workers from the state's school system. Holt, a former educator and current member of the House Committee on Education and the Workforce, said that education was a priority for Congress, but a wide variety of opinions on how to shape federal education policy makes forming a consensus difficult.

Committee members also said there was a lack of skilled workers, particularly in the areas related to science, math, engineering and technology. Holt agreed that more should be done to provide incentives for students to enter these critical academic fields.

Holt pointed out that Congress was considering an extensive expansion of the federal government's role in K-12 education. Two versions of the Elementary and Secondary Education Act have passed the House and Senate and are now part of a House-Senate conference to reconcile them.

Holt said one of the key issues conferees have to address is the standard for accountability. Both the Senate and House bill provide for annual testing for children in grades 3-8, but determining how schools and districts will be judged on results (and the corresponding rewards and consequences) is the critical issue. NJBIA strongly supports accountability measures.

Employers on NJBIA's Education Committee make recommendations to the Association on education policy and meet regularly with key decision makers at both the state and federal level. For more information on the Education Committee, contact Libby Vinson at ext. 201 or lvinson@njbia.org.

Election 2001
McGreevey Wins Big, Senate Splits 20-20
Democrats Take Control of Assembly
Democrat Jim McGreevey culminated his run for the Governor's office with a sweeping election-day victory, defeating Republican Bret Schundler by 14 percentage points, while his party nearly seized control of both legislative houses. Democrats won the Assembly by a 44 to 36-seat margin from Republicans, who had controlled the lower house for ten years. For the time being, the state Senate is evenly split, with Democrats and Republicans each holding 20 seats. That result is pending a court-ordered recount of the District 1 Senate race, where incumbent Republican Jim Cafiero defeated Democrat Bill Hughes Jr. by 481 votes.

McGreevey's win puts the Governor's office in Democratic control for the first time since 1993. McGreevey won the Democratic nomination in 1997 and came close to upsetting then Governor Christie Whitman. McGreevey used his nearly successful 1997 campaign as a launching pad for this year's run.

In the Legislature, Democrats had been whittling away at Republican majorities ever since the Republican landslide of 1991. This year's redistricting-the redrawing of legislative districts to reflect population shifts in the 2000 US Census-is widely viewed as having cost Republicans four Assembly seats and two Senate seats, with another Senate seat going to the Democrat column with the retirement of Republican Jack Sinagra. Democrats picked up five more Assembly seats in close elections to grab a 44-36 majority in the Assembly and knocked off two incumbent Republican Senators to earn a 20-20 split in the upper house.

Unlike the US Senate, where the vice president casts the deciding vote in case of a tie, New Jersey's constitution does not provide for a tiebreaker. Consequently, a 20-20 Senate is evenly split, with neither party controlling enough votes in its own caucus to choose a Senate President and committee chairs. As a result, the two legislative leaders-John Bennett for the Republicans and Richard Codey for the Democrats-are thought to be negotiating with members of the other's party to change party affiliation or at least vote for them as Senate President.

If they are unable to sway any votes, some sort of power-sharing agreement must be struck. Following are the outcomes of some critical legislative races.

In District 1, Democratic Freeholder Jeff Van Drew beat incumbent Assemblyman Jack Gibson by about 1,500 votes. As of November 8, Cafiero had won reelection over Democrat challenger Hughes by 481 votes, but the tally is now subject to a court-ordered recount. Should the results be overturned and Hughes be declared the winner, Democrats would control the Senate 21-19.

Democrats swept the hotly contested Third District. Gloucester County Freeholder Stephen Sweeney upset 28-year veteran Senator Ray Zane, while Cumberland County Freeholder Doug Fisher and Paulsboro Mayor John Burzichelli defeated Republican Freeholders Mike Facemyer and Hal Johnson.

Incumbents won District 14, with Republican Senator Peter Inverso fending off a strong challenge from Mercer County Sheriff Sam Plumeri Jr. Democratic Assembly members Linda Greenstein and Gary Guear came out on top in their rematch with former Assembly representatives Paul Kramer and Barbara Wright.

In District 36, Democratic Senator Garry Furnari narrowly won reelection, while Republican Majority Leader Paul DiGaetano retained his seat, and Democrat Paul Sarlo picked up the second Assembly seat.

In District 38, Democrat Joe Coniglio defeated incumbent Republican Lou Kosco for the Senate seat and Democrat Matt Ahearn beat incumbent Republican Nick Felice in the Assembly. Incumbent Republican Rose Heck held a 397-vote edge to retain her Assembly seat.

NJBIA, Already the Nation's Largest State-Level Employer Association, Reaches 17,000 Member Milestone
For the first time in its 91-year history, the New Jersey Business & Industry Association now represents more than 17,000 member employers.

Already the nation's largest state-level employers association, NJBIA exceeded the 17,000-member mark for the first time in August and concluded October with 17,140 member companies.

"We are proud to reach this significant milestone," NJBIA President Joe Gonzalez said. "We have come a long way since a small group of industrialists formed the Manufacturers Association of New Jersey back in 1910."

"But size alone is not the important thing. Rather, our growth is a result of the business community recognizing the importance and value of the services we provide," Gonzalez said. "For that, we are grateful."

The growth is attributed to outstanding member services.

NJBIA is recognized for its first rate Government Affairs department, which lobbies state government to pass business-friendly laws and regulations. This year alone, NJBIA successfully pushed through new laws phasing out double taxation of S corporations, reforming the administrative procedures act, allowing small employers to obtain group discounts on health insurance, and creating a public database for healthcare information. The members of NJBIA's Government Affairs staff are among the most respected lobbyists in Trenton, and legislators frequently seek out NJBIA's perspective on issues affecting employers.

"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 represent our members before the new Governor and new Legislature."

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

NJBIA also offers members discounts through Shipping Plus and Worldcom Telecommunications Services.

In addition, NJBIA also hosts several annual seminars designed to give member businesses a competitive edge. Recent topics include buying health insurance, finding and keeping good employees, legal and human resources issues facing business, and complying with environmental regulations. In 2001, the Association added three seminars just to help contractors participate in New Jersey's $12 billion school construction program. The seminars featured some of the same government officials who are now implementing the program.

NJBIA's Annual Public Policy Forum, Awards For Excellence Dinner, and New Good Neighbor Awards Luncheon are also big draws.

Practical reference works designed specifically to help New Jersey employers manage their businesses are offered by the Association. NJBIA is currently offering the all-new A Practical Guide to New Jersey Employment Law: The Employer's Resource (2001-2002) as well as the updated Federal Employment Laws and Regulations: How To Comply (2001). NJBIA also offers its Rapid Finder Payroll Tax Deduction Tables, detailing employer withholdings for various salary ranges, and its 2000-2001 Compensation Report, which details salaries and wages paid in a variety of industries here in New Jersey. Go here to purchase publications online

"Our publications and seminars are developed based on member feedback," said Michele Glassburg, NJBIA's vice president of marketing. "We strive to provide members with the services and information they tell us they need. To be an effective organization, you have to be in constant contact with your members."

Nominate Your Corporate Neighbor for an Award
The 42nd Annual New Good Neighbor Awards competition, sponsored by NJBIA, recognizes organizations that have built new or renovated a commercial facilities in New Jersey. Winners will be chosen based on economic benefit and job creation, architectural merit, and community involvement. The nominating deadline is February 11, 2002. If you need further information or would like a nomination form, please call Lisa Figatner at 609-393-7707, ext. 239.

Many NJ Companies See Their Industries in Recession But Firms Leaving NYC Bump Up NJ's Job Count
A majority of New Jersey employers participating in a recent NJBIA survey say a recession has already descended on their industries or is on the way. A majority also anticipates that economic conditions will stay the same or get moderately worse in the first six months of 2002 before they get better.

Collectively, the 1,600 companies participating in the survey reported a glum outlook for sales, profits and employment in the year ahead, their optimism for the future falling to the lowest levels in at least eight years. NJBIA President Joe Gonzalez released the findings of the Association's 43rd Annual Business Outlook Survey in a November 20 news conference.'

"A newfound pessimism has replaced last year's durable optimism," Gonzalez said. "One year ago, a majority of New Jersey employers had every reason to believe that the prosperous 1990s would extend into the first year of the new millennium. Unfortunately, their hopes have been dashed."

The business outlook is in many respects similar to the out-look expressed in the Association's 1989 survey, which was conducted at the start of the 1989-92 recession, and to the surveys of the early 1990s, when New Jersey was emerging, slowly and haltingly, from that recession.

The current survey, which was conducted in the first three weeks of September, also found that the business outlook was largely unaffected by the terrorist attacks on the World Trade Center and Pentagon.

"Our survey provides clear evidence that the business outlook is grounded in disappointing business conditions that were firmly in place before September 11," Gonzalez said. (Details of the survey findings will be reported in the December issue of this newsletter.)

Even before the survey was distributed in September, the state's economic downturn had found expression in mounting job losses. In the first nine months of this year, the state's private sector lost more than 27,000 jobs, according to the latest state Labor Department data.

However, in a peculiar twist of fate, New Jersey recently has benefited from the World Trade Center disaster. The movement of white-collar jobs into New Jersey from lower Manhattan in the wake of the terrorist attacks resulted in a net gain of 10,800 private-sector jobs in the month of October and trimmed the losses seen earlier in September. As a result, the private sector now is down only 16,800 jobs for the first ten months of the year, about half of what the loss otherwise would have been. Rutgers economist Jim Hughes has said the migration of jobs to New Jersey from New York could add 20,000 permanent jobs to the state's employment base.

New Jersey's unemployment rate, reflecting a generally weak labor market (outside of the anomaly created by the Trade Center disaster), rose to 4.8% in October from 4.5% in September.

A good concurrent indicator of labor market conditions is first-time claims for unemployment insurance benefits, which are reported weekly.

In New Jersey, initial claims for unemployment benefits through the month of October were 16 percent higher than they were at this time last year, a significant increase. In the six weeks following the terror-ist attack, initial claims were 55 percent higher than in the same period last year, a very large jump. This shows that growing numbers of people are losing their jobs.

Ultimately, the fate of the New Jersey economy is tied to that of the nation. And recent economic data for the nation has been mostly negative over the last two months. Although many economists say they are confident that a recovery will take shape in the first half of 2002, the outlook is murky at best.

Quote of the Month
"Our growth is a result of the business community recognizing the importance and value of the services we provide. For that, we are grateful."

NJBIA President Joe Gonzalez on NJBIA reaching the 17,000-member milestone

Tuesday, January 29
Building the Schools: The Next Steps in New Jersey's School Construction Program
Managers have been selected for New Jersey's $12 billion school construction program and the process has been established. Now comes the hard part-building the schools. Get up-to-the-minute information on the program and what you need to know about bidding on contracts. NJBIA has tentatively scheduled a seminar for Tuesday, January 29, from 8:00 a.m. to 1:00 p.m. at Forsgate Country Club in Monroe Township. Cost to attend is $99 per person for NJBIA members and $129 for nonmembers. Preregistration is required. To register, contact Lisa Figatner at 609-393-7707, ext. 239.

Wednesday, February 27
HR 101 Seminar
This program, new for 2002, is a "crash course" in the key human resource issues facing New Jersey employers. Small business owners and first-time HR managers will have a special interest in hearing experienced labor attorneys and veteran personnel executives discuss the basics of managing employees. You'll learn how companies with limited resources can successfully avoid costly mistakes in the treacherous world of employment law. The event will be held at the Sheraton at Wood-bridge Place in Iselin. Cost is $99 per person for NJBIA members and $129 for nonmembers. To register, contact Lisa Figatner at 609-393-7707, ext. 239.

This NJBIA Publication Makes Payroll Tax Deductions Easy!
Rapid Finder Payroll Tax Deduction Tables (Jan. 2002)
This publication lists and combines New Jersey and federal tax deductions for employers with weekly pay periods. This all-in-one guide calculates tax deductions for five separate tax tables: Federal Social Security Tax, Federal Medicare Tax, New Jersey Gross Income Tax, Unemployment Insurance, Workforce Development Partnership Fund and Temporary Disability Insurance Taxes, and Federal Personal Income Tax. The Federal Withholding changes that go into effect on January 1, 2002, are included in this publication. Prices: NJBIA members $25 (plus 6% NJ sales tax), nonmembers $35 (plus 6% NJ sales tax). To order, call Dawn Miller at 609-393-7707, ext. 224.