“If you were to take all of the issues that are important to our members—the things they complain most about and the things that NJBIA spends most of its time working on—you could group them under one big heading: the high cost of doing business in New Jersey when compared with other states,” said NJBIA Senior Vice President Melanie Willoughby, a breakfast speaker. The high cost of doing business was the program’s theme. As Willoughby pointed out, New Jersey has the highest health insurance costs in the nation (according to the Mercer Report); the most unfair tax environment (according to CFO Magazine); and the highest air and water permit fees (according to data from the NJ Department of Environmental Protection).

What’s more, these high costs are having a negative impact on employment. According to the US Department of Labor, New Jersey ranked 41st in the nation in the rate of private-sector job growth in 2004, behind New York and Pennsylvania.

Part of the problem is government spending, which has grown dramatically in recent years and created huge deficits that have had to be closed, usually at the expense of the business community. Fast-rising government spending caused business taxes to double in recent years. That’s why the business community has been supportive of Governor Richard Codey’s proposed budget, which would actually cut spending by $600 million from last year.

One of the biggest costs of doing business is health insurance. NJBIA’s 2005 Health Benefits Survey shows employers’ insurance costs rising at a double-digit rate for the third year in a row. Also, for the first time in the survey’s 12-year history, significant numbers of employers were forced to drop coverage. While 90 percent of survey participants still provide health benefits to their employees, this is down from 94 percent in the previous survey. This is an ominous sign, since 5 million New Jersey residents receive their health benefits from private sector employers.

NJBIA has proposed a comprehensive health insurance reform plan designed to offer small businesses more affordable choices, permit health savings accounts, provide tax incentives to employers who do provide health benefits, and curb legislatively imposed health coverage mandates. A recent example of such a mandate is the proposed vast expansion of mental health coverage. (See related story on page 2.)

NJBIA Vice President John Rogers touched on other legislative proposals that would also increase business costs, such as a bill that would create a property tax convention. This would almost certainly lead to higher business taxes, as convention delegates could only consider tax changes, not government spending. A likely convention outcome is that some of the property tax burden would be shifted onto other taxes, such as business taxes.

Rogers also pointed to new lobbying regulations that would turn thousands of business owners and their employees into lobbyists for routine activities like getting an environmental permit, bidding on a government contract or even sitting on a government advisory panel. Many employees involved in such activities could be required to register as lobbyists. Employers would have to pay a $425 annual registration fee for each employee.

NJBIA also opposes the proposed diversion of $250 million from the Unemployment Insurance Trust Fund. The amount of money in the fund has dropped from a high of $3.1 billion to about $900 million. If the fund cannot meet its unemployment insurance obligations, employers could face higher payroll taxes.

Mental Health Mandate Bill Would Increase Employers’ Health Insurance Costs

Legislation that would require employers to provide unlimited insurance coverage for a wide variety of behavioral disorders and substance abuse treatments was released by the Senate Health Committee on May 5. S-544 (Vitale, Buono) would implement a recommendation of Governor Richard Codey’s Task Force on Mental Health by mandating coverage for any condition in the Diagnostic and Statistical Manual of Mental Disorders (DSMD) that is not a biologically based mental illness.

NJBIA opposes this mandate. New Jersey employers already pay exorbitant health insurance rates and cannot afford the massive expansion of benefits in this legislation. Respondents to NJBIA’s 2005 Health Benefits Survey reported an 11 percent average increase in the cost of providing health insurance to their employees in 2004. Their average cost was $7,300 per employee. This came on top of a 13 percent increase in 2003 and 15 percent in 2002.

What’s more, the survey indicated that double-digit rate increases were forcing employers to drop health insurance coverage for the first time in the survey’s 12-year history. This bill will cause thousands of people to lose health insurance coverage altogether. Not only will they have no mental health or substance abuse coverage, but also no coverage for hospitalization, doctor visits, or anything else. Mental healthcare and substance abuse treatment are already covered under employer health plans. These coverages, however, include reasonable limits that will keep costs from rising faster than they already are. The bill now heads to the Senate Budget and Appropriations Committee for consideration. For more information, contact Christine Stearns at ext. 260.

In Brief...

Small-Group Health Insurance Reform Clears Assembly Committee

Legislation that would implement key components of NJBIA’s health insurance reform plan by providing for more flexibility in the design of health plans for individuals and employers with two to 50 employees was released May 2 by the Assembly Insurance Committee.

A-3359 (Cohen, Weinberg) would make several changes to the State-regulated Small Employer (SEH) and Individual (IHC) Health Insurance markets. The bill would institute a modified community rating for IHC plans, allowing insurance companies to vary rates by up to 200 percent, but they could only do so based on age, gender and geography. This would allow insurers to offer lower priced plans to younger, relatively healthy people. For more information, contact Christine Stearns at ext. 260.

Bill Maintains Local Tax Exemption of Machinery

NJBIA-backed legislation that would reaffirm the long-standing exemption of business machinery and equipment from local property taxes was released by the Assembly Housing and Local Government Committee on May 2.

A-3335 (Vas, Cryan) would clarify and maintain this exemption in the face of a misguided Tax Court ruling that undermines it. For more than 40 years, business machinery and equipment have been exempted from local property tax assessments in New Jersey. However, the buildings that house that machinery and equipment are subject to the tax. For more information, contact Arthur Maurice at ext. 247.

The Senate Labor Committee on May 5 released S-2064 (Sweeney), which would require employers to provide up to six months notice before employee layoffs are made. Employers with 50 to 199 employees would have 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. Businesses that fail to provide notice would be required to pay employees an additional week of severance for each year worked. Call John Rogers, ext. 209.

NJBIA Members Learn Basics of Disaster Prevention & Recovery

In today’s uncertain world, employers should take the time to plan for the worst, whether it’s a flood, fire, electrical blackout, computer virus or a terrorist attack.

That was the message delivered to 200 NJBIA members at a recent half-day conference titled, “From the Unpredictable to the Unthinkable: How to Deal with Business Emergencies,” held in April at the AT&T headquarters in Bedminster. The conference was presented by the New Jersey Business & Industry Association (NJBIA) and sponsored by AT&T in partnership with the New Jersey Commerce, Economic Growth and Tourism Commission.

J. Michael Schweder, president of AT&T NJ, revealed statistics from a report issued by AT&T and the International Association of Emergency Managers that ranked New Jersey companies 8th in disaster preparedness out of 12 US markets surveyed over the past year. “We will do something about that,” said Schweder.

Conference presenters said that even small businesses should have business continuity plans to ensure they can continue to operate after a disaster.

Dr. Edward Amoroso, chief information security officer at AT&T, said that small businesses should use the same basic principles employed by large companies such as AT&T to implement a business continuity plan. Setting time aside to prioritize company assets and play out different disaster scenarios can be important if the worst should happen.

Virginia S. Bauer, secretary and CEO of the New Jersey Commerce, Economic Growth & Tourism Commission, said her department is committed to addressing the needs of small- and mid-sized businesses. This year, her department released a checklist for small businesses entitled, “A Blueprint for Emergency Preparedness.”

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