For Senate Majority Leader Stephen Sweeney and Assembly Deputy Majority Leader Joseph Cryan, the proposed fiscal year 2010 budget treats business very well considering how deeply revenues have plunged in New Jersey.
For Senate Republican Leader Tom Kean and Assembly Republican Leader Alex DeCroce, the State could do a lot better. That was the assessment of Governor Jon Corzine's spending plan presented April 17 at NJBIA's Meet the Decision Makers. Corzine proposed his budget in March, and the two legislative budget committees are holding hearings on it before crafting their own budget proposal in May or June. The State constitution requires a balanced budget to be enacted by July 1.
Cryan noted that the economic crisis was driving the main policy decisions, as plunging tax revenues force legislators to look at how to plug a budget hole that could be as much as $7 billion. While cuts and tax increases are not what legislators want, circumstances have forced their hands, he said. "Nobody likes to deliver bad news," Cryan said. "I don't like it, especially in an election year. But the fact is, we are in very sobering times, very difficult times." While both spending cuts and tax increases are necessary, he said, the Legislature is leaning more heavily toward cost cutting. So far, the budget calls for $4 billion in spending reductions, but only $1 billion in higher taxes.
Businesses are facing a 20 percent increase in payroll taxes (about $90 per employee) to replenish the Unemployment Insurance (UI) fund. The Governor has also proposed a one-year income tax increase on incomes over $500,000 a year and extending for one year a temporary surcharge on the Corporation Business Tax that was supposed to end this year.
On a positive note, Sweeney said the economic crisis would force legislators to cut spending and look for ways of running government better. He called it a resetting of the budget. "The positive is that the government is spending less," he said. One way to run government better is to protect payroll-tax revenues from budget raids. The UI fund is running out of money because past governors and Legislatures diverted $4.7 billion in payroll taxes intended for the Unemployment Insurance fund. Sweeney is sponsoring legislation with Kean to constitutionally dedicate payroll taxes so they cannot be diverted.
Kean agreed that the State should do a better job of protecting UI funds. "People who pay these taxes expect to have these funds available to them in their time of need," he said. The State should not stop there, but make a fundamental change in the way government carries out economic development, he said, adding: "You've had interactions with government at all levels. Often, they are an impediment rather than a help." Kean said he wanted to change that, beginning with legislation that would consolidate and streamline the State’s economic development activities.
DeCroce argued that all of the talk of reform and spending cuts are a little misleading. He said the State budget was really $45 billion, not $33 billion, once all of the federal funding and off-budget items are added to the total, and that number has been increasing exponentially. "The budget process in this State is really strange," DeCroce said. "I'd like to know what happened to that money."
2. Meet NJ's Decision Makers in Energy and Health Insurance
NJBIA will hold two more Meet the Decision Makers events this spring focusing on healthcare and energy. Meet the Decision Makers: Energy Policy will be held on Wednesday, April 29 and feature Jeanne Fox, President, Board of Public Utilities; Upendra Chivukula, Chair, Assembly Telecommunications and Utilities Committee; Steve Oroho, Senate Economic Growth Committee; Jeanne Herb, Department of Environmental Protection; and Kenny Esser, Governor Corzine's Chief Energy Advisor.
Meet the Decision Makers: Healthcare Policy will be held Wednesday, May 6 with Heather Howard, Commissioner of the Department of Health and Senior Services; Steven Goldman, Commissioner of the Department of Banking and Insurance; Joseph Vitale, Chair of the Senate Health Committee; Gary Schaer, Chair of the Assembly Financial Institutions and Insurance Committee; Louis Greenwald, Chair of the Assembly Budget Committee; and Robert Singer, Senate Republican Conference Leader.
Both programs will be held at Forsgate Country Club, Monroe Township, NJ (Exit 8A, NJ Turnpike) and begin with registration and a buffet breakfast at 7:45 a.m. and end at 10:00 a.m. The cost is $75 per person for NJBIA members and $125 for nonmembers. For more information, contact Stacy Wichner at 609-393-7707, ext. 213, or register online. To become a high-visibility sponsor, contact Sherry Esteves at ext. 219.
3. NJ Businesses Shed 91,000 Jobs in Six Months, Unemployment Rate Climbs to 8.3%
New Jersey lost another 17,400 private-sector jobs in March, bringing the total loss for the first quarter to 42,700 and compounding already heavy losses sustained in 2008, according to the State Department of Labor's most recent employment report. The first quarter decline brings the total loss for the last six months to 91,100, a staggering number that rivals the heavy employment losses seen in the State's 1989-92 recession.
Meanwhile New Jersey's unemployment rate continued to climb, hitting 8.3 percent in March, up from 7.3 percent in January and the highest level since December 1992. The national unemployment rate in March was 8.5 percent, the highest since the early 1980s. Since peaking in January 2008, total private-sector employment in New Jersey has fallen by 135,800 jobs to 3,305,400, a decline of nearly 4 percent. More than two-thirds of that loss has occurred in the past six months. The public-sector (federal, state, and local government) has added 900 jobs over this same 14-month period. The private services sector, which includes everything from retail to computer services, continues to suffer the biggest losses, shedding 14,300 jobs in March and 24,700 so far this year, a decline of nearly 1 percent. Read full report. |
