Governor Jon Corzine on February 22 proposed a $33.3 billion fiscal year 2008 budget that would not raise taxes, would eliminate the double taxation of S corporations, continue the elimination of the alternative minimum assessment, and provide a record amount of direct property tax relief to homeowners. In his annual budget address, Corzine also lamented New Jersey’s long-term fiscal outlook, pointing to structural problems and pledging to change the budget process for the future.

"The budget I present to you is in far better shape than it has been in years," Corzine said in his address. "There are no new taxes and no old gimmicks... But when we look to the long-term, the situation is filled with challenges. Now is the time to change the paradigm."

The proposed budget would increase spending by 7 percent over last year, mostly for direct property tax relief and increased State aid to municipalities and school districts. It funds property tax credits the Legislature passed earlier this year. That legislation, A-1 (Roberts, McKeon)/S-20 (Codey, Kenny), which would provide property tax credits of 10 to 20 percent to homeowners with annual household incomes of up to $250,000, awaits the Governor’s signature.

The budget also assumes savings from a tentative contract agreement with State employees that was announced on February 21. That contract would provide raises but also would, for the first time, require employees to contribute 1.5 percent of their salary towards health benefits and increase the amount they contribute to their pensions. The contract must be ratified.

It is also the first budget in six years that does not propose new taxes or tax increases. In fact, it would end the double taxation of more than 100,000 S corporations, saving them about $40 million a year. Right now, S corporations pay a corporate tax, and their shareholders pay income taxes on their shares of the profits. The budget also has to compensate for probusiness tax changes enacted last year. It assumes a loss of $35 million in revenues from fully restoring deductions for net operating losses and $160 million from elimination of the alternative minimum assessment. For more information, contact Art Maurice at ext. 247.

To keep you informed about how property tax reform will affect your business, NJBIA has created a Web page, Property Tax Facts.

NJBIA Warns of the Economic Impact of Arbitrarily Cutting Greenhouse Gas Emissions—Legislation mandating cutbacks in greenhouse gas emissions over the next 13 years is ill-timed and would do little to impact global warming, NJBIA told the Assembly Environment Committee on February 21. The committee held a hearing in West Orange on A-3301 (Stender, Vainieri Huttle), which would mandate a reduction in New Jersey’s greenhouse gas emissions to 1990 levels by 2020 (effectively, a 20 percent cut in emissions). The bill also is scheduled for a committee vote on Monday, February 26. The legislation comes on the heels of an executive order issued earlier this month by Governor Jon Corzine that would mandate similar reductions in greenhouse gas emissions.

Testifying before the committee, NJBIA Assistant Vice President Sara Bluhm said lawmakers should allow existing plans for regional regulations to go forward and wait until the State's Energy Master Plan (EMP) is completed, instead of enacting legislation that would impact only New Jersey energy consumers. "Make no mistake; we recognize that climate change policy is coming," Bluhm said. "In fact we have been participating stakeholders in the Regional Greenhouse Gas Initiative (RGGI) for the past several years and in Governor Corzine's EMP working groups. NJBIA wants to ensure that this policy is economically sensible."

Regulating greenhouse gas emissions is expected to increase the cost of electricity, as energy generation is one of the leading sources of those emissions. Commercial and industrial users consume about 60 percent of all electricity sold in New Jersey and already pay among the highest rates in the nation. According to the federal Energy Information Agency, New Jersey’s industrial users pay the 4th highest electric rates in the nation and commercial users pay the 11th highest. Attempts to regulate greenhouse gases would likely put limits on how much energy businesses can use, mandate use of more expensive building materials and techniques in construction, and increase taxes on the use of energy. For more information, contact Sara Bluhm at ext. 204.

Labor Commissioner Socolow Pledges Service for the Business Community—The NJ Department of Labor and Workforce Development plays a key role in promoting a healthy business climate, according to Commissioner David Socolow, who spoke to about 90 business people February 21 at NJBIA's Meet the Decision Makers briefing. The Department safeguards unemployment insurance funds, provides customized job training to help businesses get workers with the skills they need, and enforces the State labor laws to ensure companies compete on a level playing field. The commissioner outlined plans to target job training for occupations that will be more in demand in the future and create more detailed economic data in forms that will be more useful for individual businesses.

Socolow said he would be very surprised if Governor Jon Corzine proposed diverting contributions from the Unemployment Insurance (UI) fund to balance the budget (Corzine didn't). Last year was the first State budget in 14 years that did not divert UI funds. With a balance now below $600 million, such a diversion could trigger an automatic payroll tax hike. Socolow was joined by several members of his department, who set up information tables and talked one-on-one with attendees about job training programs, wage and hour compliance, unemployment insurance and other Department programs. For more information, contact John Rogers at ext. 209.

NJBIA Releases Fast Facts on Civil Unions—The State's Civil Union Act took effect February 19 giving same-sex partners who have entered into civil unions the same rights under State law as heterosexual married couples. To help employers comply with the new law, NJBIA has created a new Fast Facts explaining the policies employers should have in place to comply. Health benefits, taxes, domestic partnership policies, employee handbooks and general human resources policies could all be affected. Order your Fast Facts on civil unions.

Learn How to Manage Your Human Resources at NJBIA's HR101 Seminar, March 9—For the small or mid-size company, NJBIA is offering this seminar on how to manage your human resources. The seminar will run from 8:30 a.m. to 12:30 p.m. at the Sheraton in Eatontown, NJ (near exit 105 of the Garden State Parkway). The cost is $109 per person for NJBIA members, $139 for nonmembers. For more information contact Alex Hollywood at 609-393-7707, ext. 262, or register online now. Sponsorship opportunities are $1,000 for NJBIA members, $1,500 for nonmembers. For more information on sponsorship, contact Sherry Esteves at ext. 219.

Raise Your Visibility. Become an Event Sponsor—Golf & Tennis Day. NJBIA's Meet the Decision Makers series. First-rate events like these offer your company an excellent opportunity to reach their target audiences and heighten their visibility as an event sponsor. Learn more about becoming an NJBIA sponsor online or contact Sherry Esteves at 609-393-7707, ext. 219.