A constitutional convention to reform New Jersey 's property tax system could result in businesses paying a higher property tax rate than homeowners, while ignoring the spending that causes property taxes to increase, NJBIA President Philip Kirschner told a task force reviewing the issue. A constitutional convention also would be dominated by delegates representing special interest groups that depend on high levels of government spending.

The Property Tax Convention Task Force was created by the Legislature and former Governor McGreevey to investigate whether or not a New Jersey Constitutional Convention should be convened to enact property tax reform and, if so, how such a convention should be structured.

NJBIA maintains that a convention is not necessary. Legislators should do the job they are elected to do and enact meaningful property tax reform now, without taking the drastic step of changing the State constitution.

NJBIA believes that a special session of the Legislature should be called to reform property taxes. No other business would be conducted until this critical issue is addressed.

Currently, the State constitution requires that residential and commercial property be taxed at the same rate. A constitutional convention could remove this clause, allowing local governments to impose even higher taxes on employers.

Testifying before the Task Force on October 26, Kirschner pointed out that skyrocketing property tax rates impact businesses as well as homeowners.

"People tend to view property taxes as an issue that only impacts homeowners," Kirschner said. "The fact is, rising property taxes are a critical problem for employers as well. While businesses directly pay about 25 percent of the property taxes in New Jersey or have the cost reflected in their rents, they get none of the rebates or tax relief programs provided to homeowners and renters."

Business owners are also concerned about the ability of workers to afford to live in New Jersey , as this impacts their ability to find and retain quality employees.

Furthermore, no plan to reform property taxes will work unless it addresses the high level of government spending.

And while supporters may have the romantic notion that a convention will be made up of ordinary citizens working in the public interest, NJBIA believes that it will be dominated by delegates from special interest groups who depend on high levels of government spending. These delegates will not approach the subject with an open mind, but instead will push for a system that allows for continued spending increases.

The Association does recognize that the Legislature has been deadlocked over the issue of property taxes and that some type of catalyst is needed to move the issue forward. Rather than convening a time-consuming and complex constitutional convention dominated by special interests, NJBIA recommends a special session of the Legislature. The session should last as long as necessary to resolve the issues and no other business should be conducted during that time. Legislators should come to Trenton every single day if need be. Seventeen other states have addressed property tax reform through special legislative sessions.

Meaningful property tax reform proposals are available. NJBIA believes that school districts and municipalities should look to consolidation, cooperative purchasing alliances, and shared public services as a way to reduce spending without reducing services.

We urge all NJBIA members to oppose a constitutional convention by contacting the Property Tax Convention Task Force. Contact the Task Force on the Web at www.nj.gov/convention / or write to:

The New Jersey Property Tax Convention Task Force
CN 001
Trenton , NJ 08625

For more information, contact Libby Vinson at ext. 201 or lvinson@njbia.org.

The Assembly Environment Committee on November 4 took testimony on a proposed 2.5-cent- per-gallon tax increase on diesel fuel to subsidize a proposal, A-3182 (McKeon), which would require the retrofitting of diesel engines in trucks. The committee did not release the bill but is expected to bring it up for consideration in the future.

Jim Sinclair, NJBIA first vice president, testified in opposition to the tax increase but did acknowledge that fine particulate pollution (PM2.5) was a serious health threat, particularly in urban areas. New federal standards require New Jersey to develop a State implementation plan for areas with the worst air quality.

Sinclair urged the committee to accept NJBIA's recommendations, which would focus retrofit requirements on the vehicles with the worst emissions problems. NJBIA encouraged the committee to target government-owned vehicles, such as New Jersey Transit buses and trains, municipal vehicles, school buses, and garbage trucks. These vehicles have defined routes in densely populated areas that repeatedly expose children and others to higher levels of diesel exhaust. After the hearing, it remained unclear which private vehicles would be covered by the bill.

Sinclair said if the committee believes that this is the most important environmental public health threat facing the State, then the $25 million annual cost should be reallocated out of the existing $28 billion dollar State budget. Increasing fuel taxes at a time of rising gas prices and strong competition from companies in other states is bad economic public policy. Trucking companies often sign contracts with their clients and could not change their rates to compensate for the increased costs of such a tax increase.

Diesel retrofits could cost as much as $8,000 per vehicle. Vehicles made before 1991 cannot be retro-fitted, so new engines would have to be installed at a cost of about $50,000 each. Under the original bill, New Jersey trucking companies and other businesses would simply have to absorb the cost of these retrofits, putting them at a sharp competitive disadvantage with out-of-state companies that could still drive and deliver in New Jersey , but would not have to comply with the costly new mandate.

Proponents proposed the new tax, which would bring in an estimated $25 million per year to pay for the retrofitting, as a way to mitigate the cost. They claim that this would help New Jersey businesses since out-of-state trucks would have to pay the tax whenever they bought fuel in New Jersey . NJBIA believes that the fuel tax would still fall predominantly on New Jersey companies, and it is highly uncertain that the revenues generated would be enough to cover the costs.

For more information, contact Jim Sinclair at ext. 236 or jsinclair@njbia.org.

Property owners who purchased environmentally contaminated land after January 6, 1998, would in most cases not be liable for natural resources damages or cleanup of surrounding properties, under legislation released October 18 by the Senate Environment Committee.

The bill, S-1374 (McNamara)/A-2444 (Bateman, McKeon), would ensure that those not responsible for causing pollution would not be forced to conduct expensive off-site cleanups just because they became owners of a contaminated property. NJBIA supports this common sense measure.

The NJ Department of Environmental Protect (DEP) is currently suing companies for natural resource damages (NRDs) if contamination at their sites has caused environmental harm to lakes, groundwater or other public natural areas. Similarly, other property owners can seek cleanup costs from their neighbors if it can be proven that contamination has migrated from one site to another.

Under this measure, property owners who purchased their properties after January 6, 1998 and did nothing to pollute the property would not be penalized for the actions of the previous owners. For more information, contact Jim Sinclair at ext. 236 or jsinclair@njbia.org.

Labor Committee Votes to Expand Layoff Notification Requirements, Considers Business Assistance Restrictions

The Assembly Labor Committee on October 18 released legislation expanding layoff notification requirements and took testimony on legislation that would gut State and local business assistance programs.

The committee released A-3417 (Van Drew, Johnson, Egan), which would require employers with 50 to 199 employees to provide at least 90 days notice prior to laying off 50 or more employees. Companies with more than 200 employees would have to provide 180 days notice. Under current federal law, employers with 100 or more employees have to give 60 days notice.

The bill would apply regardless of whether the layoffs were caused by poor economic conditions, a plant closing or business relocation. Additionally, the 50-employee threshold is cumulative, meaning that a 200-employee company that, for instance, lays off 10 workers a month for the next six months would be required to give notice in the first month. Businesses that fail to provide notice would be required to pay employees an additional week of severance for each year worked.

NJBIA strongly opposes this bill because it would exacerbate a company's financial problems. Additionally, it is not always possible for employers to make accurate economic predictions six months into the future. Employers who experience sudden economic downturns, lose a major contract or fail to get financing would be unfairly penalized. For more information, contact John Rogers at ext. 209 or jrogers@njbia.org.

The committee also heard testimony but took no action on A-3398 (Van Drew, Egan), which would impose such onerous conditions on State and local business assistance programs that no employer could afford to use them. These conditions would apply to tax abatements, Economic Development Authority loans, Business Incentive Employment grants and dozens of other programs. An employer who receives even one dollar of government assistance would be subject to:

. a mandate that total company employment be maintained for at least five years and as long as 20 years;

. a convoluted formula that could force businesses to pay an average annual salary of as much as $59,600 per employee; and

. the release of proprietary information such as merger, acquisition and employee hiring plans.

NJBIA strongly opposes this bill. Putting these outrageous restrictions on employers would blacklist New Jersey as a relocation site and drive away companies that now provide quality jobs, benefits, and tax revenues.

New Law Makes Corporate Tax Changes that Benefit Employers

Additionally, the bill would give manufacturers a tax deduction for domestic production activities limited to 50 percent of a company's wages, and relief from the federal Alternative Minimum Tax (AMT). Also, S corporations would be allowed to expand the number of eligible shareholders from 75 to 100. These provisions are all slated to take effect on January 1, 2005. In addition, small businesses would get an extension through 2007 of the existing deduction for up to $100,000 of equipment purchases. The deduction was due to expire at the end of this year. For more information, contact Art Maurice at ext. 247 or amaurice@njbia.org.

Quote of the Month

"Any process that does not address spending cannot achieve meaningful property tax reform. Spending is what drives the need for ever-increasing property taxes."

NJBIA President Philip Kirschner, testifying before the Property Tax Convention Task Force.

Small Businesses Think Big at NJBIA Financing Seminar

Jim Kocsi, New Jersey district director for the SBA, noted that nearly 3,000 loans worth $600 million have already been issued in New Jersey this year. SBA offers small businesses several options, including loan guarantees under its 7(a) program and maximum flexibility under the the SBAExpress loan program.

Caren Franzini, CEO of the EDA, said that in addition to a wide variety of small business assistance programs, EDA also offers technical assistance through its Entreprenurial Training Institute. This program helps entrepreneurs learn the ins and outs of financing their small businesses.

Participants also got plenty of practical advice. Lorraine Allen, Regional Director of the College of New Jersey Small Business Development Center, explained how to craft a successful financing proposal. Michael Downes, executive vice president of Unity Bank, presented case studies on loan evaluation and layering. And Paul McArthur, president of Trillium Realty, explained the importance of understanding real estate financing. For more information, contact Art Maurice at ext. 247 or amaurice@njbia.org .

NJBIA thanks the "Financing Your Small Business" seminar sponsors:

NJ Business Finance Corporation
NJ Commerce & Economic Growth Commission
PNC Bank
Trillium Realty Advisors

A periodic profile of the people who make NJBIA the State's premier business Association.

Edd Hogan
Environmental Partner
Norris, McLaughlin, & Marcus

Few members of NJBIA's Environmental Quality Committee would be surprised to learn that Edd Hogan has been listed in the Environmental Law section of the Best Lawyers in America since 1993.

For the last 16 years, Hogan has commented on virtually every State environmental proposal to come down the pike, providing insightful analysis on everything from the Industrial Site Remediation Act (ISRA) to natural resources damages.

As a member of the law firm of Norris, McLaughlin and Marcus, Edd has been sailing the turbulent waters of New Jersey environmental law for some time. And the members of NJBIA have been the beneficiaries of his expertise.

Edd offers his expert analysis on proposed legislation and NJ Department of Environmental Protection regulations, giving NJBIA the information it needs to protect the business community's interests.

He is also a regular speaker at NJBIA seminars, offering members practical advice on compliance with the Clean Water Enforcement Act, ISRA and underground-storage-tank- removal laws. He was also instrumental in helping to educate NJBIA members on the basics of environmental law through the Environment 101 seminar.

"I became involved with NJBIA because of the interaction between other business leaders and policymakers," Hogan explained. "The thing I enjoy most about NJBIA is working with others who share the common goal of advancing and making New Jersey a better place to live and work."

"Edd Hogan has helped many businesses that have no idea he even exists," said NJBIA First Vice President Jim Sinclair, who handles environmental issues. "He has been instrumental in fighting for reasonable environ-mental standards based on sound science."

Hogan has been a member of the Environmental Quality Committee for 16 years, serving as chairman from 2001 to 2003.

'Value Streaming' and Lean Manufacturing Help Belmar's Air Cruisers Succeed in a Hard Hit Industry

Its industry (airplane manufacturing) was devastated economically by the September 11 terrorist attacks.

It makes a product (inflatable evacuation slide rafts used in passenger airplanes) that absolutely must work each and every time.

And it must ship the product within four days of ordering but cannot carry any inventory.

Yet, Air Cruisers is not only surviving, it is growing. The company recently upgraded its employee-training program and is currently building an addition to its facility.

According to Vice President Neil Cavaleri, the key is "value streaming," a process by which Air Cruisers' 250 employees constantly review their performance and, as he explained during an October 21 Site Visit with Assemblyman Sean Kean, "get rid of everything that does not add value" to the process.

For instance, Cavaleri used to insist on approving every employee pay raise personally, even though he did not work side-by-side with most of them and had to rely on the recommendations of supervisors. Personally approving raises gave him a sense of control but did not add value to the process, so he stopped doing it.

"That's how we have been able to survive," Cavaleri said. "That's the level of detail we go into."

Cavaleri and Scott Ernst, director of human resources with Air Cruisers, ushered Assemblyman Kean into a large open area on the manufacturing floor. On a platform about 20 feet above the floor, workers prepared to test one of the inflatable evacuation slide rafts for a new Boeing 777.

Compressed gases flooded the inside of the urethane raft, ballooning it to full size in about five seconds. Should a plane "ditch" over water, the slide raft becomes a life raft that is equipped with a survival kit, a water kit and a fishing kit.

Air Cruisers, founded in 1935, manufactured the world's first inflatable life vest and then went on to design the first inflatable one-person life raft and the first inflatable evacuation slide raft. Today, Air Cruisers has offices in California , France , Singapore and China and supplies major airline manufacturers like Boeing (including the new 7E7 Dreamliner), Airbus, and Lockheed.

As Cavaleri explained, Air Cruisers' customers not only demand a quality product, but constantly evaluate the company's process. Consequently, Air Cruisers has refined its operation to the point that it can manufacture, test and ship each raft line within four days of receiving an order.

"(Boeing) does not want to see you carry a lot of inventory because they know you build that into your overhead and they are paying for it," Cavaleri said. "They want us to be a lean manufacturer."

One cost that Air Cruisers' does not trim is its employee-training program. With a grant from the NJ Department of Labor, Air Cruisers created an employee-training center right in the middle of their main manufacturing operation. Cavaleri said it takes 30 to 45 days of training before a new employee becomes productive-an investment Cavaleri believes pays off many times over.

Training is also mandatory for every employee, regardless of how long they have worked at Air Cruisers. Cavaleri said employees work smarter when they are taught not just how to do their job, but also why they must do it a certain way.

Cavaleri gives New Jersey 's State government high marks for its job-training program, but says that state government bureaucratic delays make it too hard for employers to respond to the needs of their customers. Air Cruisers continually fights to get permit approvals for minor changes to its plant, which hampers its ability to develop and test new products.

Assemblyman Kean promised to do what he can to help. "I hear you. On those big picture things, I'm with you and that's how I vote," Kean said.

New Jersey voted for John Kerry by a 6 percentage-point margin over George Bush and reelected all 13 Congressmen by large margins on November 2.

Fifty-three percent of voters in New Jersey chose Democrat Kerry over 47 percent for Bush. While the margin was not close enough to make New Jersey the "battleground" State that some pundits had predicted, it was still closer than the 16-point margin Al Gore enjoyed in 2000. This was George Bush's largest improvement in the country.

Going into the election, polls had shown the presidential race to be much closer than anticipated and brought some unexpected campaigning in the Garden State by Bush , US Senator John Edwards, Vice President Dick Cheney and First Lady Laura Bush.

In Congress, only two races were expected to be competitive. Incumbent Republican Mike Ferguson handily defeated challenger Steve Brozak 57 percent to 41 percent in the 7th Congressional District encompassing parts of Union, Somerset , Middlesex and Hunterdon counties. In the 12th Congressional District, Democrat Rush Holt easily defeated Republican Challenger Bill Spadea 59 percent to 40 percent. The 12th District, encompasses parts of Hunter-don, Mercer, Somerset , Middle-sex and Monmouth Counties .

In the only State legislative contest, Joseph Doria, who was endorsed by the NEW JOBS PAC, won a State Senate seat in New Jersey 's 31st Legislative District in Hudson County with 65 percent of the vote. Doria will serve out the remaining 38 months of the term of former Senator Glenn Cunningham, who died earlier this year.

New Whistleblower Notification Posters Available

The NJ Department of Labor has made sample posters available to help employers comply with the new Whistleblower notification law that took effect September 14.

A pdf version of the poster is available at www.njbia.org. Employers who wish to obtain a larger version of this poster, or who would like assistance translating this poster to another language may call the Department of Labor and Workforce Development at 609-777-3200. It can also be found at the department's Web site at www.state.nj.us/labor/.

The law requires all employers to display a poster in both English and Spanish regarding the Conscientious Employee Protection Act, commonly referred to as the whistleblower law. In addition, employers with 10 or more employees must annually distribute written or electronic notice of the whistleblower law to employees.

MONDAY, DECEMBER 13-Made in NJ Day - NEW DATE
As part of its Manufacturing Counts! Campaign for Manufacturing Renewal, NJBIA will hold its 8th Made in New Jersey Day at the State House in Trenton . If you are a New Jersey manufacturer, and a member of NJBIA, you can apply to participate in this high visibility event by either exhibiting your products or contributing a product to our "New Jersey Sampler Bag." To apply, contact Stacy Wichner at swichner@njbia.org. or at 609-393-7707, ext. 213. There is no cost to being an exhibitor or Sampler Bag contributor, but exhibit space is limited.

2004 PUBLIC POLICY FORUM

New Jersey -A State of Transition , Seeking New Leadership in Uncertain Times

Tuesday, December 14, 2004, Sheraton at Woodbridge Place , Iselin , NJ

7:45 a.m. Registration and Breakfast

8:50 a.m.
Presentation of the Leonard C. Johnson Award
Recipient: William Dalton, Clayton Companies

9:00 a.m.
Keynote Morning Speaker
Hon. Richard J. Codey, Acting Governor

9:25 a.m.
Presentation of the 2005 Business Outlook
Modest Recovery or Vigorous Expansion?
Philip Kirschner, President, NJBIA

9:40 a.m.
The Legislative Leadership
Election Year Challenges
Legislative Leaders: Albio Sires, Alex DeCroce,
Bernard F. Kenny Jr., Leonard Lance
Panel Moderator: Laura Jones of CN8

11:00 a.m. Concurrent Panel Discussions
Election 2005 Preview
Who Will Be New Jersey's Next Governor?
Moderator: Michael Aron of New Jersey Network

High Cost of Doing Business in NJ
What Can Be Done to Bring Costs Down?
Moderator: Jim Sinclair, NJBIA First Vice President

12:15 p.m.-2:00 p.m. Luncheon Program

1:00 p.m.
Presentation of Paul L. Troast Award
Recipient: Hon. Joseph A. Palaia, New Jersey State
Senate

Keynote Luncheon Speaker
To be announced

2:00 p.m. Adjournment

Registration Information: The cost is $160 per person for NJBIA members and $220 for nonmembers. To register, call Stacy Wichner at 609-393-7707, ext. 213.

Be A High Profile Forum Sponsor
Contact Sherry Esteves at ext. 219 for details.

Opening Breakfast: Co-Sponsorship @ $2,500 (includes one complimentary ticket to the event with reserved seating at breakfast).

Morning Panel Discussions: Co-Sponsorship @ $1,500.

Luncheon Program: Co-Sponsorship @ $2,500
(includes one complimentary ticket to the event with reserved seating at lunch).

Networking/Coffee Breaks: Sponsorship @ $500.

Sponsors will be recognized with event signs and announcements, publicity in the February issue of New Jersey Business Magazine, and with links to their corporate Web sites at www.njbia.org .

Purchase the NJBIA Compensation Report (2004-2005)
Find out if you are paying your employees competitive wages. This report is the State's most complete industry-wide guide to salaries and wages. It contains information on over 200 job classifications within 12 job families. The report also breaks down compensation rates by geographic region within the State for most jobs listed, along with statewide totals. Cost is $95 for NJBIA members and $200 for nonmembers. To purchase a copy, contact Chris Lopez at 609-393-7707, ext. 224, or clopez@njbia.org.