NJ Business Outlook Plunges as Expectations Fall to Recession Levels Read
NJBIA Thanks Its Sponsors Read
Ask the Experts: Small-Business Bail-Outs? Read
Getting the Full Benefit: NJBIA's 2008-09 Compensation Report Read
Employers Face Tax Withholding Changes for 2009 Read

Senate President Richard Codey Read

The economic outlook among New Jersey employers has fallen to recession levels, and businesses’ expectations for sales, profits and employment are as bad as they were in the 2001 and 1991 recessions, according to NJBIA’s 2009 Business Outlook Survey. 

Whether evaluating actual conditions in 2008 or anticipating what 2009 will bring, the survey's 1,450 respondents presented a mostly gloomy assessment of current and future economic conditions. 

"Our survey indicates that New Jersey has been in the grip of a recession for much of 2008," NJBIA President Philip Kirschner said at a November 25 press conference releasing the results. "Many businesses are struggling, and they expect things to get worse in 2009."

The 2009 survey was conducted in September 2008.  The findings are based on the first 1,450 responses.  Of this group, 83 percent were companies with 1-49 employees.  Responses came from New Jersey businesses in all 21 counties and every major industry.

Employers reported a sharp drop in sales, profits and employment over the past year, and 69 percent of companies said their industries were already in a recession or heading into one.

The employment picture is even darker.  The past year also produced the biggest gap between employment expectations and actual employment in a quarter century of survey data.

In last year’s survey, 25 percent of businesses said they expected to hire more workers in 2008 while 12 percent said they anticipated making layoffs.  But, as shown in the current survey, only 13 percent of businesses actually hired more workers in 2008, while 33 percent decreased the size of their workforce.

Not surprisingly, the economic slowdown can also be seen in the State’s official employment data, which shows that private-sector employment growth in New Jersey came to a near standstill in 2007, and then collapsed with a loss of 25,000 jobs in the first ten months of 2008. 

Looking forward, only 17 percent of companies said they expect to expand employment in 2009, with another nearly 20 percent saying they expect to shrink their payrolls.  The net percentage expecting to hire more workers, at minus 3 percent, is at the second lowest level of the past 25 years. Only the 1991 survey produced a more negative employment outlook.

Likewise, the outlook for sales and profits at individual companies has fallen dramatically from last year’s levels, retreating to lows seen in earlier recessions. Forty-one percent of companies said they expect their sales to increase over the next 12 months, down from 57 percent of companies having this expectation last year. And 29 percent expect their sales to decline over the next 12 months, compared with 21 percent who had this expectation last year. 

This subdued outlook for sales and profits comes out of a painful year in which business conditions were more difficult than anticipated.  For example, 57  percent of companies responding to last year’s survey said they expected their sales to increase in 2008. However, the current survey shows that only 34 percent in fact saw an increase, while 48 percent experienced a decrease.  Similarly, 51 percent expected their profits to improve heading into 2008. However, only 28 percent enjoyed an increase, while 56 percent suffered a decline in profits.

Businesses are no more likely to increase spending either.  The outlook for business purchases in 2009 is essentially flat, with 32 percent expecting to spend less on purchases in 2009, and 33 percent of businesses expecting to spend more.  This is the weakest outlook for business spending in 18 years.

The survey also shows that the pullback in business spending began in 2008.  Forty-five percent reported spending less on business purchases in 2008 than they did in 2007, compared with 30 percent who reported spending more. This was the lowest level in nearly 20 years.

The negative outlook cuts across all industries.  A majority of respondents in every industry sector except healthcare said their industries were in a recession or heading into one.  The retail and housing construction sectors have been hardest hit, with 87 percent and 85 percent of respondents in these sectors reporting, respectively, that their industries were in a recession or heading into one. 

The short-term outlook for individual industries has fallen to the lowest level since the 1992 survey.  Forty percent expect conditions in their industry to deteriorate in the first six months of 2009, while only 22 percent expect conditions to improve. 

Survey participants reserved their bleakest outlook for the New Jersey economy, with nearly six in ten saying business conditions here will get worse before they get better, a more negative view than was seen in the 2001 recession.  This follows three consecutive years of declining business confidence and business conditions as measured by this survey. 

Although respondents expressed more confidence in the national economy, they nonetheless said they believe national economic conditions will get worse before they get better.  Forty-two percent said they expected US business conditions to worsen in the first half of the 2009, while only 25 percent said they expected those conditions to be more expansive.

Similarly, only 12 percent of survey participants said New Jersey is a "good" place for expansion of their business facilities, the lowest level in 25 years.  They also said the overall cost of doing business in this State, along with the cost of health insurance, is their most troublesome problem.

In conclusion, New Jersey employers have not only lost confidence in the economy, but also in the State’s business climate.

The Governor and Legislature must continue to follow through on their commitment to improve the State’s business climate by lowering taxes and removing other barriers to business expansion and job creation.  Only in this way can New Jersey emerge stronger from what many believe will be a long and deep recession.

A Licensed Site Professional (LSP) program could help clear thousands of backlogged brownfields cases, leading to more cleanups of contaminated properties and speeding their redevelopment as productive sites, NJBIA Vice President David Brogan told the Senate Environment Committee last month.

The program would speed up the process by giving private-sector engineers and site-remediation professionals the authority to oversee cleanups.  The committee took testimony on developing a committee substitute for S-1897 (Smith). 

With more than 20,000 contaminated sites, the NJ Department of Environmental Protection (DEP) has more applications for approval than it can handle on its own.  Part of the problem is DEP’s cumbersome process, which requires a redeveloper to submit applications and receive approvals for each step of a site remediation as it occurs. 

Under an LSP program, such as the one successfully implemented in Massachusetts, the LSP would be responsible for all actions taken at the site and submit the approved paperwork to the DEP.  Instead of waiting months and even years for DEP approvals, redevelopers could get answers right away.  For more information, contact at ext. 236.

Companies with State contracts have to comply with more restrictions on their campaign contributions under new pay-to-play executive orders that took effect Nov. 15.  

Under New Jersey’s pay-to-play law, any company seeking a contract with State government worth more than $17,500 is prohibited from making campaign contributions of $300 or more to any candidate for Governor or the State Committees. 

Governor Jon Corzine recently issued two executive orders extending the ban to contributions to legislative leadership committees, the new Lieutenant Governor position, and county committees.  Also, all partners, shareholders, or officers of a company, as well as members of their immediate families, are now prohibited from making contributions.  Previously, only those with at least a 10 percent share in the company were restricted. 

Corzine also extended the ban to “redevelopers” and their consultants.  Anyone with a contract for a State or municipal redevelopment project and their immediate family members are prohibited from contributing to any candidate or elected official involved in awarding the projects.  Consultants, lawyers, lobbyists or other third parties hired by the redeveloper, and their immediate family members, are also prohibited from making contributions.

For more information, NJBIA members can order at no charge NJBIA's Fast Facts compliance briefs on New Jersey’s pay-to-play laws by contacting at 609-393-7707, ext. 216.

NJBIA would like to thank its Premier and Grand sponsors and acknowledge their generosity.  Please visit their Web sites to learn more about these outstanding companies.

Premier
NJM Insurance Group
The Port Authority of New York & New Jersey

Grand
BP
Horizon Blue Cross Blue Shield of New Jersey
Jackson Lewis LLP
Jersey Central Power & Light Co., a FirstEnergy Company
United Water New Jersey
Verizon

Governor Jon Corzine on November 24 signed legislation, S-2130 (Codey)/A-3124 (Greenwald, McKeon), to increase New Jersey’s net-operating-loss carry forward period to 20 years from the previous seven.  New Jersey businesses that pay the Corporation Business Tax will now be able to deduct a loss in one year from income received for 20 future years.

Speaking at a bill signing ceremony in the Governor’s office, NJBIA President Philip Kirschner said the measure would help make New Jersey more competitive with other states.  "The federal government and more than half of the states that have a corporation business tax, including our regional competitors, allow the longer deduction period," Kirschner said.The bill takes effect for any tax year ending after June 30, 2009.

Even as Governor Jon Corzine was signing a bill extending net-operating-loss deductions at one end of the Capitol, the State Senate was at the other end sending him another round of economic stimulus bills for his signature.  The Senate gave final legislative approval November 24 to legislation that would provide new sources of business credit, make the tax system more competitive, and offer grants for job creation and business investments.  Loans for Working Capital, S-4 (Sarlo, Turner)/A-3377 (Schaer, Fisher).  This measure would implement the Governor’s Main Street Business Assistance Program, providing $50 million in loans and loan guarantees to help small and medium-sized businesses cope with the “credit crunch.”  The program would be administered by the NJ Economic Development Authority (EDA).

Elimination  of  "Throw-Out"  and  "Regular-Place-of-Business"  Tax Rules, S-3 (Codey)/A-2722 (Vas, Greenwald).  This legislation would eliminate taxation on sales that have nothing to do with New Jersey.  It would also eliminate the costly "regular-place-of-business" rule.  Together, these two provisions would save New Jersey businesses $150 million annually.  The throw-out rule taxes the out-of-state income of New Jersey corporate taxpayers in situations where no other state taxes it.  The regular-place-of-business rule requires companies to have a staffed out-of-state location in order to have its income apportioned for New Jersey tax purposes. 

Job Creation Grants, S-6 (Buono, Turner)/A-3294 (Milam, Albano).  This bill would create the InvestNJ Business Stimulus Program, providing employers with five or more full-time employees grants of $3,000 per new employee hired and/or up to 7 percent of capital investment and equipment purchases.  No employer may receive more than $500,000 in job creation grants or $1 million in capital investment grants.

Businesses with up to $10 million in annual gross receipts, up from the current exemption of $3 million, would be exempt from the Urban Enterprise Zone’s (UEZ) ill-advised sales tax rebate program under legislation that cleared the Senate on Nov. 24.  The bill, A-2720 (Vas, Burzichelli)/S-5 (Stack, Turner), goes back to the Assembly.

The UEZ program exempts qualified businesses from paying the sales tax on any purchases used at their UEZ business location.  Historically, the sales tax was waived at the point of sale.  Since 2006, UEZ businesses have had to pay the sales tax in full and apply for a tax rebate, which is a cumbersome process. 

While NJBIA supports the bill, the Association believes all qualified businesses should have the sales tax waived at the point of sale. 

"The elimination of the 'throw-out' rule will help struggling companies during this (economic) crisis and create a more business- friendly environment for New Jersey to compete with other states."

-- Senate President Richard Codey on a key corporate tax reform that has cleared the Legislature.

Congress is bailing out the big Wall Street businesses, but what about small businesses like mine?  Are there any government programs out there to help me get the credit I need?

Answer: Yes. The State of New Jersey has valuable programs for getting businesses financing.

The NJ Economic Development Authority (EDA), an independent agency that is part of State government, has a number of loan and loan guarantee programs designed to help all types of New Jersey businesses.

In addition to providing its own funding, the EDA works closely with banks, private investors, underwriters and other entities to provide New Jersey-based businesses with more financing opportunities.   Here is a summary of some of their programs.
•           The Direct Loan Program.  This plan offers financing for companies with insufficient bank credit to obtain needed funding on their own.  The program offers loans of up to $1.25 million for fixed assets or up to $750,000 for working capital for up to 10 years, with the option of either a fixed or variable below-market interest rate.
•           Fast Start for Small Business.  An expedited approval process helps the Fast Start for Small Business Program provide low-interest financing to applicable businesses through direct loans or guarantees of up to $300,000, with the choice of a variable or fixed interest rate.  Funds may be used for business expenses not related to rent, capital construction, utilities or other indirect costs.
•           Loan Guarantees.  An alternate source of funding for companies who cannot receive financing through other programs, the Loan Guarantees program provides a financial boost for businesses that represent an important economic sector of the State.   Loan guarantees are available for eligible companies for up to $1.5 million for working capital or fixed assets.  
•           Local Development Financing Fund (LDFF).  The Local Development Financing Fund loans are available to businesses located in Urban Aid municipalities.   This program requires the applicant to demonstrate that financing under the program is critical to the project’s success.   Up to $2 million is available for fixed assets.
•           Statewide Loan Pool.  Under the Statewide Loan Pool Program, the EDA can participate in or guarantee up to 50 percent of a bank loan, up to a certain amount.  Terms generally match that offered by the bank, but are limited to 10 years with amortization up to 20 years.

For information on all of the State's loan and loan-guarantee programs, visit the business portal Web site.

NJBIA Members receive discounts on valuable publications

NJBIA Compensation Report (2008-2009)

Wages.  Salaries.  Bonuses.  Annual compensation increases.  In hiring qualified employees or retaining talented staff, you want to ensure that your pay scale is competitive with that of employers in your field and
within your region.

Dealing with these issues can be confusing and unnerving.  Avoid unnecessary anxiety!  

NJBIA has a cost-effective remedy.  The NJBIA Compensation Report (2008-2009) is the most complete guide to salary and wages in your region.  It contains valuable information on over 200 job classifications within 13 job families. The report also contains breakdowns by five geographic regions within the State for most jobs listed, along with statewide totals for all jobs.

NJBIA members can purchase this handy and invaluable reference guide at a discount!  The cost is $105 for NJBIA members and $225 for nonmembers, plus 7 percent NJ sales tax.  To purchase a copy, contact at 609-393-7707, ext. 224.

Call for Nominations DEADLINE: February 2, 2009
NJBIA's 2009 New Good Neighbor Awards Competition

The 49th Annual New Good Neighbor Awards competition, sponsored by NJBIA and New Jersey Business magazine, recognizes newly built or renovated commercial development projects.  Winning projects must show economic benefit, architectural merit, and community involvement.  Plants, offices, commercial buildings, and shopping centers may be nominated.  Construction or capital expenditures at the nominated facilities must have been completed between January 1, 2007, and December 31, 2008.

The nomination deadline is February 2, 2009.  Download the nomination forms online, or call at 609-393-7707, ext. 239, for more information.

Hold the date!
Friday, February 20, 2009
School Construction Seminar

Governor Corzine recently signed legislation providing $3.9 billion for new school construction.  At this seminar, to be held at the Pines Manor in Edison (Route 27), you will learn how the program will operate and how to capture school construction work.  Over one dozen school construction projects will be put to bid between March and September 2009!  Also, you can meet Kris Kolluri, the new Chief Executive Officer of the New Jersey Schools Development Authority.  For more information, call at 609-393-7707, ext. 213.  To become a sponsor, call at ext. 219.

Be a high-profile NJBIA Sponsor in 2009

Sign up now to participate in NJBIA’s Sponsorship Program.  Your company can reach high-level decision makers and increase your visibility at NJBIA’s popular events.  Put your name in front of key business and government leaders.  Sponsor one event or many.

Inquire about our sponsorship packages.  Sponsorships go quickly, so don’t miss out!  Reserve your valuable sponsorship today by calling at 609-393-7707, ext. 219. 

Some of the Great Events You Can Sponsor in 2009

January
Legislative Reception

February-October
Meet the Decision Makers Breakfast Series
(Including the Governor’s Key Staff and Commissioners such as NJDEP and the Treasurer)

March
Paid Family Leave Seminar

April
Meet the Legislative Leaders
(Including NJ Legislature’s Majority and Minority leaders)

May
Paid Family Leave Seminar

June
New Good Neighbor Awards Luncheon
Employer Legislative Committees Dinner

July
Golf and Tennis Day
Paid Family Leave Seminar

September
Energy Expo
Meet the Legislative Leaders
(Including the Senate President and Assembly Speaker)

October
Awards for Excellence Dinner

November
Health Insurance Seminar

December
Public Policy Forum

As an annual service to its members, NJBIA explains the changes in tax withholding rates and taxable wage bases that employers face in the year ahead.  For 2009, higher personal exemptions and standard deductions and revised tax brackets are reflected in new federal income tax withholding tables.  The Social Security (FICA) Tax will apply to an increased taxable earnings base.  On the State level, the maximum taxable wage base will rise for contributions to the State Plan Temporary Disability Insurance, Health Care Subsidy Fund, Unemployment Insurance Fund, and Workforce Development Partnership Fund.  The following rates and wage bases are applicable in 2009.

SOCIAL SECURITY (FICA)
•           Maximum taxable earnings — $106,800 (up from $102,000).
•           Employee and employer tax rate — 6.2% (.062).
•           Self-employed tax rate — 12.4% (.124).

MEDICARE (HI)
•           Taxable earnings — unlimited.
•           Employee and employer tax rate — 1.45% (.0145).
•           Self-employed tax rate — 2.9% (.029).

FEDERAL INCOME TAX
•           Modified federal income tax withholding tables will be mailed to employers in federal Circular E, reflecting tax bracket, standard deduction, and personal exemption annual cost-of-living adjustments. 

FEDERAL UNEMPLOYMENT (FUTA)
•           The employer FUTA tax will remain 0.8% (.008), after credits, of the first $7,000 of each employee’s earnings.  No Federal Unemployment Insurance Tax is imposed on employees.

NEW JERSEY WORKFORCE DEVELOPMENT, UNEMPLOYMENT INSURANCE AND HEALTH CARE SUBSIDY FUND TAXES
•           Employee and employer State Unemployment Insurance, Health Care Subsidy Fund, and Workforce Development tax rates will apply to the first $28,900 of an employee’s earnings (up from $27,700).
•           For 2009, employees are subject to a 0.0425% (.000425) Workforce Development Partnership Fund tax rate.  The employee Unemployment Insurance (UI) tax rate remains at 0.3825% (.003825) of taxable payroll.

NEW JERSEY TEMPORARY DISABILITY INSURANCE (TDI)
•           Maximum taxable wages — $28,900 (up from $27,700).
•           Tax rate for employees covered by the State Plan TDI — 0.5% (.005) of taxable wages.
•           Employer tax rate for the State Plan is based on each employer’s claims experience.

NJ GROSS INCOME TAX
•           Tax withholding rates for 2009 are unchanged.

Employee Benefits Rise in 2009
Employee maximum weekly benefits for Workers’ Compensation, Unemployment Compensation, and Temporary Disability are adjusted annually to reflect increases in average taxable wages of covered employees.  Amounts applicable in 2009 are set forth below.

NEW JERSEY UNEMPLOYMENT INSURANCE
•           Maximum benefit for benefit years commencing on or after
            January 1, 2009: $584 weekly (up from $560).

TEMPORARY DISABILITY INSURANCE
•           Maximum benefit (State plan) for periods of disability commencing in 2009: $546 weekly (up from $524).

WORKERS’ COMPENSATION
•           Maximum benefit applicable to temporary disability, permanent disability, permanent partial disability, permanent total disability, and dependency benefits awarded for injuries suffered in 2009: $773 weekly (up from $742).