Chamber Applauds NOL Extension Bill Signing

By enacting legislation that extends the net operating loss (NOL) carryover period from seven to 20 years, the Governor and members of the Legislature are taking an important step to revise our corporate business tax code so that New Jersey is positioned to come out of this economic recession in a better competitive position in terms of job creation.

Today, more than ever, accountants and chief financial officers will be scrutinizing their balance sheets and seeking opportunities elsewhere where it makes financial sense. We are pleased our leaders are reviewing past policies and amending them, if necessary, so that our companies have a better chance to succeed and grow over the long-term.

NOL provisions allow businesses to weather economic fluctuations by allowing additional time for investment, growth and expansion, which is particularly important for small businesses and new ventures. Extending the time period for net operating losses will help struggling businesses survive the downturn and retain jobs.

Now that the NOL bill has passed, we are looking forward to the passage of other measures that will reform our tax code and encourage companies to stay here in New Jersey, as well as create jobs. This includes repealing the “throw out” rule and Regular Place of Business requirements, and providing a single sales factor formula. These are all recommendations included in the Chamber’s Corporate Business Tax Reform Package presented to the Governor and members of the Legislature.

In the midst of this current crisis, when all sized businesses are struggling, today's action sends a positive message that our government leaders are serious about putting a plan in place that helps us through this economic crisis and positions us well during the next upturn.

New Jersey's Economic Crisis

Members of the New Jersey Legislature met in a special session yesterday to discuss ways to provide relief to companies in order to spark the economy during these troubling times. The impression provided during the legislative session is that New Jersey became uncompetitive overnight as a result of the current economic woes plaguing the stock market and the rest of the nation’s economy.

In actuality, New Jersey's high taxes and past business policies have stifled job growth and investment in the state for quite some time. The Chamber has been warning for many years that New Jersey’s longstanding fiscal problems would multiply tenfold should a major national economic crisis occur. All indications are that that day has arrived and now our elected officials are scrambling to make some adjustments and undue policies that have resulted in us placing last or close to the bottom in almost every competitiveness poll.

We are pleased that some of the corporate business taxes implemented in 2002 might finally be repealed. It is unfortunate that it took a major crisis for some of these onerous policies to finally be reviewed and hopefully changed.

Click here to read more about the chamber's activities to reform the tax policies of New Jersey.

Chamber Applauds Corzine Ethics Reform Announcements

At 2:30 p.m. today, the Governor will be signing an Executive Order on the steps of the State House dealing with ethics reform.

Specifically the Executive Order will:

• Ban political contributions by state redevelopers and their consultants
• Tighten the current ban on state-contractor contributions to include those made by partners of professional service firms
• Appoint a task force to study whether the Local Government Ethics Law should be changed to match state law
• Update financial disclosure rules for members of newly created boards and commissions
  

In addition, he will be pushing for legislation that will:

• Ban contributions by county government contractors to municipal candidates and ban contributions by municipal contractors to county candidates
• Ban contributions by developers seeking development approvals
• Ban contributions from audit firms and partners to audit clients
  

By signing today's Executive Order and by calling for stronger legislative initiatives designed to dissuade government corruption, he is improving our state's reputation to investors and restoring residents' faith in our government institutions and leaders.

As business advocates, we see this as an economic issue. Financial commitments are made to the state when investors know they are working with elected officials at all levels of government that they believe to be honest. When the credibility of public servants is called into question, investment is chilled and our reputation is forever damaged.

The New Jersey Chamber of Commerce's Platform for Progress Government Reform Coalition applauds these initiatives. If nothing is done, the corruption stories that appear too often will only increase, as these activities become the norm - or the culture of the society.

What Do You Think of the New Transportation Proposal?

Yesterday, the New Jersey Turnpike Authority's board requested that tolls be raised starting in 2009 to help pay for much needed transportation projects. The increases will go towards widening the New Jersey Turnpike (Exits 6 to 8A) and the Garden State Parkway (Exits 63 to 80 and around Atlantic City); providing $1.2 billion over 10 years to fund a mass transit rail tunnel into Manhattan; ensuring bridge safety; and increasing funding to New Jersey Transit.

Tolls on the Parkway would increase from 35 cents to 50 cents in 2009, 75 cents in 2012 and 85 cents in 2023. Drivers that today pay on average $1.20 on the Turnpike see tolls increase to $1.80 next year, $2.70 in 2012 and $3 in 2023.

While the State Chamber and the Platform Coalition have not taken an official position on the current proposal, the organization has supported the projects mentioned in order to improve our transportation infrastructure and boost our economy.

The last time Turnpike tolls increased was in 2000 and Parkway tolls have not gone up since 1989.

For the latest updates on this issue, when they become available, please visit www.njchamber.com.

Tell us what you think of this new proposal.

Click here to complete the survey.

Sign the Pension and Health Benefits Reform Act of 2008

It is almost Labor Day and Governor Corzine still has not signed into law the Pension and Health Benefits Reform Act of 2008, which was passed by members of the legislature back in June. As a result, the Associated Press is reporting that newly hired teachers and public workers are still getting the same generous benefits received in the past - the same ones that add to the cost of government and create a larger long-term debt load. These are also benefits that can't be taken away once offered. The chamber backed the reform measures and we urge the Governor to sign them into law immediately so that we can begin to realize some savings and put less burden on current and future taxpayers.

The reform act is only the first step in changing the system. In fact, the current modifications are pretty minor. The Chamber encourages the legislature to consider additional changes, such as increasing the retirement age of public employees to 65; replacing the defined-benefit hybrid plan for new hires with a defined contribution plan; negotiating one contract on behalf of all local workers where the state picks up the cost; and phasing out lifetime benefits for retirees, as has been done successfully in the private sector.

The state still has a long way to go to truly reform the system, but let's get started by having the Governor sign the Pension and Health Benefits Reform Act of 2008 into law.

New Jersey's Fiscal Problems

It was reported yesterday in the Star-Ledger and other newspapers that overall state debt grew by $2.2 billion last year to an astonishing $36.5 billion, nearly triple the level of a decade ago. Governor Corzine announced plans to make a small dent into this huge problem by paying down $650 million in outstanding debt, a move that will save taxpayers $130 million a year in bond payments.

The Governor should be applauded for this initiative to reduce debt, as well as his and the legislature's efforts to cut state spending. The fiscal 2009 state budget passed in June was unprecedented because it appropriates $600 million less than the fiscal 2008 budget, which breaks the pattern of significant yearly budget increases. The fiscal 1998 budget was $16.4 billion, compared to $32.86 billion in fiscal 2009.

The above examples represent just the beginning of a long process to repair our state's fiscal affairs. The employer community will know our elected officials are serious about undoing the mess left from past years if they continue efforts to reduce spending in future budgets, as well as figure out how to cut our debt load. Only then will we be able to focus solely on economic growth activities, as well as pay for badly needed transportation projects and other programs.

Let's give state officials much credit for recent activities, but let's also acknowledge that we have a long way to go, which will require much sacrifice from all. If the state returns quickly to poor spending and borrowing habits, New Jersey will only dig itself deeper in a hole.

New Jersey Transportation Funding

The State Chamber has been advocating for years that a dedicated, long-term, stable transportation funding source is desperately needed in New Jersey. That's because the key to a strong economy is having a transportation network that can adequately move people and goods around. If our transportation system is not properly maintained because dollars are not available, then New Jersey stands to lose much of its economic assets.

The chamber board and staff believe all potential options to fund our transportation trust fund should not be taken off the table during the current debate, including the implementation of a gas tax. The chamber has historically supported the gas tax concept for many reasons - one being that many of the dollars collected comes from out-of-state motorists passing through New Jersey.

Today, The Star-Ledger published an editorial urging our state leaders to act soon on the transportation funding issue and to consider the gas tax option.

Act on transportation now

Wednesday, August 13, 2008
The Star-Ledger

Two years ago, Gov. Jon Corzine and lawmakers took the usual Trenton way out when faced with a transportation funding crisis: They borrowed an additional $6.4 billion instead of raising the gas tax or other revenue to keep road, bridge and mass transit work going.

The financing "fix" was supposed to carry the so-called Transportation Trust Fund until 2011, at which point Cor zine would be well into his second term or some other governor would have the problem of replenishing the transportation money.

Unfortunately for them, the crisis took the fast route back, arriving ahead of schedule. No matter how much Trenton would like to keep procrastinating, the federal government is forcing the governor and legislators to face up to the need for new transportation money now, not later.

State leaders must figure out a new, long-term funding solution before the end of the year or Washington will revoke its offer to contribute up to several billion dollars toward a badly needed new rail tunnel under the Hudson River. This is a deadline that Trenton cannot ignore.

The governor is once again keeping his lips zipped about where he thinks new rail, bridge, train and bus money can be raised. Corzine's unwillingness to release any proposal before early fall leaves New Jerseyans to speculate again that no one in the governor's office has a clue about what to do. And it gives legislators plenty of time to say what they're against -- although that could come back to haunt them.

Senate President Richard Codey (D-Essex) and Sen. Raymond Lesniak (D-Union) are doing just that by publicly declaring that a hike in the state's third-lowest-in-the-nation gas tax is a nonstarter.

Certainly no one wants a gas tax increase, especially with prices so high. But taking the gas tax off the table seriously limits potential transportation funding solutions.

That is a mistake because it means more money will have to be raised some other way -- say, through toll hikes, installing tolls on Routes 80, 78 and other highways or letting private investors build and operate lanes on the New Jersey Turnpike. But none of those ideas will be particularly popular either, no matter how intriguing Lesniak and Codey find the possibilities.

Republicans aren't helping. Their insistence that money can be freed up for roads and mass transit by slashing aid to towns and urban school districts, finding "efficiencies" and cutting government jobs and benefits doesn't add up.

Cutting municipal aid further will only raise property taxes more. Efficiencies never turn out to be as valuable as any administration of any party suggests. And the state is under court order to fund urban schools. Corzine is correct when he calls the GOP plan make-believe math.

Lesniak made more sense yesterday when he said it's likely some combination of money-raising strategies will be needed to replenish the Transportation Trust Fund. Which is why it is foolish to place even a minor gas tax increase off limits. The more options available, the less the increase needed in any one.

Early 2009 Gubernatorial Polling

Once the presidential election has ended, New Jerseyans will have no time to recover because we will be thrown immediately into the 2009 gubernatorial race. Should Governor Corzine decide to run again, his most likely GOP opponent is U.S. Attorney Chris Christie, although it is certain many more will throw their hats into the ring. Here's the latest Quinnipiac University poll on a potential Corzine-Christie race. It shows that at this point and time the gubernatorial race has the potential to be very competitive.

August 12, 2008 (Quinnipiac University) - Christie Ties Corzine In Early Look At NJ Gov Race

New Jersey Gov. Jon Corzine, plagued by ongoing budget problems, is locked in a dead heat with federal prosecutor Christopher Christie, a possible Republican challenger in the 2009 Governor's race, with 41 percent of registered voters for Christie and 40 percent for the Democratic incumbent, according to a Quinnipiac University poll released today.

Christie wins independent voters 42 - 37 percent and Republicans 76 - 10 percent, while Democrats go with Gov. Corzine 64 - 17 percent.

View the complete poll by clicking here.

New Jersey Highest Tax Burden

The Tax Foundation of Washington, D.C released a study today announcing that New Jerseyans have the heaviest state-local tax burden in the nation. This should come as little surprise since our residents - as well as employers - have traditionally paid some of the highest taxes in the U.S. Hopefully, new policies will be enacted to ease the tax burden so that we can focus on growing our economy and creating much needed jobs. High taxes compared to the rest of the nation - and world - is often cited as the number one issue negatively impacting New Jersey's economic growth efforts, according to chamber studies and surveys conducted over the years.

Key findings of the Tax Foundation study include:

• Tax burdens are down from 9.9 percent of income in 2007 to 9.7 percent in 2008, mostly because income growth outpaced tax growth as the macroeconomy slowed.

• In 2008, the residents of New Jersey pay the most, 11.8 percent of their income. New York and Connecticut are the only other states where residents pay more than 11 percent, compared to a national average of 9.7 percent. Maryland and Hawaii round out the top five.

• Alaskans pay the least, 6.4 percent in 2008, Nevadans pay 6.6 percent, and residents of Wyoming, Florida, New Hampshire and South Dakota pay between 7 and 8 percent of their income in state-local taxes.

To view the complete study visit, click here.