John Sarno: Employers Advocate
John Sarno is the president of the Employers Association of New Jersey, a Livingston-based advocacy and policy group with a major worry this year — an increase in employer contributions to the state’s badly deflated unemployment insurance trust fund. Unless Chris Christie can stave it off, employers around the state will be paying more into the fund by July.
The fund, which pays for unemployment benefits, is in a nearly $800 million hole — the amount Christie has pledged to trim from the budget — after 15 years of bipartisan legislative reshuffling that has redirected the fund toward charity care and healthcare for the poor.
The $4.7 billion worth of reshuffling has saddled employers with picking up the difference. State law dictates that if the fund gets too low, an automatic increase in employer contributions kicks in.
One increase kicked in earlier this year, though its impact was relatively minor. Without some sort of fix, however, that increase could seem like the carrot before the stick, as employers could be asked to contribute as much as $700 per employee more next year.
Christie’s transition team is already at work on ways to halt the automatic increase. In July, 2008, Governor Jon Corzine signed a $260 million bill to ward off the impending contribution increase.
But New Jersey, a state of 8 million, faces an almost 10 percent unemployment rate, thereby increasing the demand for resources in the fund. On top of that, the state is looking to cut $800 million from the budget this year. Where Christie will find the money is one of his biggest challenges as he enters the Statehouse.
New Jersey faces short and long-term economic challenges and potential opportunities. The two-year recession has accelerated long- term trends, and its aftershocks will leave a permanently altered business environment for the state. Chief among these trends are the depletion of manufacturing, the decline of private sector labor unions, outsourcing, and the consolidation of big corporations.
Additionally, the federal health care reform will most likely permit New Jersey to opt out of whatever government-sponsored health care plan is likely to emerge. This decision will be enormously complex and will have a big impact on the health and welfare of the workforce.
Governor-elect Christie has an opportunity to refocus on job training and workforce health, wellness, and productivity. His new labor commissioner should look carefully at how existing job training money is being spent and begin an immediate dialogue with Washington, D.C.
The Department of Labor has a big fund for worker retraining, so there cannot be an adversarial relationship with the Obama administration. There has to be a close working relationship in order to transform the state’s unemployment insurance program into a reemployment program.
Likewise, the small employer health insurance market is broken. Insurance companies, hospitals, and health care providers dominate policy making in New Jersey. A public plan is anathema to these interests, but it deserves consideration if health insurance is to remain affordable to small business.
Philip Kirschner: Business Advocate
Philip Kirschner is president of the New Jersey Business & Industry Association in Trenton, an advocacy group representing more than 23,000 companies in the state.
The business community is among the most optimistic about Chris Christie’s governorship. Christie’s campaign made much of the need for New Jersey to back and grow its business community.
From the business community’s perspective, Governor-elect Chris Christie is off to a great start. From the beginning, Christie pledged to cut taxes and reduce the red tape that drags down our economy, and he made it clear that helping businesses create jobs in New Jersey would be a top priority. Since winning the election he has hit the right notes and already taken action to signal that the Christie Administration is going to be business friendly.
One of the first acts of his transition was to form a task force to analyze New Jersey’s burdensome regulatory system and put his Lieutenant Governor-elect, Kim Guadagno, in charge of it. Christie has also said that once in office he will sign an executive order suspending the implementation of any new regulations for 90 days.
On taxes Christie has said he will let expire a number of temporary corporate and income tax increases enacted last year.
Among other things, he wants to let expire an $80 million surcharge on corporate income taxes that was supposed to end last year, as well as a one-year income tax increase that hit small S corporations and LLCs particularly hard.
Christie also wants to tackle New Jersey’s notoriously high property taxes by getting rid of unfunded state mandates that drive up costs for local governments.
These are all the right moves to get New Jersey’s economy growing again. There is an another important issue looming on the horizon — payroll taxes.
New Jersey’s unemployment insurance fund is running out of money and could be facing a deficit of $1 billion.
If something is not done by the end of March employers in New Jersey will get hit with a huge payroll tax increase that will make it much harder to hire people and create the jobs we need.
Unlike other taxes, payroll tax increases do not receive an up or down vote in the Legislature, nor do they get signed or vetoed by the governor.
Federal law requires that once the fund’s balance dips below a certain level taxes on employers are raised automatically. And because the tax rate is tied directly to an employer’s payroll, it will directly affect each employer’s ability to hire new people, or simply hang on to the ones they have.
Employers have already absorbed a $400 million payroll tax increase this year. The only way to fix the problem is to put more funding back into the unemployment insurance fund to keep it from triggering a tax increase.
It’s another tough issue brought on by decades of short-sighted policy decisions by past administrations. Since 1993, the state has diverted $4.7 billion worth of unemployment insurance payroll taxes to the general fund.
Had past elected officials simply left the fund alone, it would have more than enough reserves to cover today’s high unemployment benefit claims, even as our unemployment rate hits a 26-year high.
As U.S. attorney for New Jersey, Chris Christie successfully handled many tough cases. Fixing the state’s fiscal mess, including the unemployment insurance fund, is another tough one.
Debbie Hart: New Jersey Biotech
Debbie Hart is the president of BioNJ, the state’s leading voice for the biotechnology industry, based in Hamilton.
In Princeton, where biotech and pharma still reign, though with a slightly tarnished scepter, the state’s interest in high-tech business could have far-reaching effects in and beyond the area.
As you wrestle with the tasks of addressing a significant budget crisis and growing New Jersey’s economy, the companies of the state’s biotechnology community — which have seen their numbers triple in a little more than a decade — encourage you to continue to support the economic incentive programs provided by the state Economic Developemnt Authority, the New Jersey Commission on Science & Technology, and the Department of Labor and Workforce Development that have helped drive this burgeoning economic engine and to work with us to find new ways to enhance and expand these proven programs.
In doing so medical discoveries and economic returns will surely follow. Now composed of more than 240 companies, New Jersey’s biotechnology industry includes such recognized names as Celgene Corporation, Genmab, Amicus Therapeutics, PTC Therapeutics, and Chromocell, and represent promising therapies and cures as well as high-paying jobs and tax and other revenues to the state.
We also encourage you to look for new and innovative ways to support the industry and would be pleased to work with you to do so.
Finally, your visibility and active engagement of the industry here and abroad will greatly assist retention and attraction efforts. We at BioNJ stand ready to assist and support you and wish you well in your very difficult, but exciting new post.Here’s to a more economically sound New Jersey.