The fiscal year 2008 State budget that the Legislature is expected to adopt sometime between now and the end of the year shows the State to be in good fiscal shape, according to NJ Treasurer Bradley Abelow. But high debt and unfunded pension and health-benefit liabilities loom in New Jersey's future, and these problems will not be solved easily, Abelow told more than 100 business people at NJBIA's Meet the Decision Makers event on May 1.

"This year is a little bit different" from the budget showdown of last summer, Abelow said. "The budget is a good way to talk about where we are as a State, and we're in better shape than last year." He did not anticipate anything dramatic in the budget debate because the budget is balanced and provides a large amount of direct property tax relief as well as increases in State school aid and municipal aid.

While the State is on solid financial footing for now, the future is foreboding as debt payments and pension and health-benefit obligations will eat up a growing portion of State revenues. For instance, debt service (interest payments on $30 billion of State debt) will grow to $2.7 billion next year, Abelow said. At the same time, New Jersey's pension system has a $25 billion unfunded liability, and the unfunded liability for retiree health benefits could be as high as $80 billion. That leaves no money for new schools, transportation projects, and other capital improvement projects that are essential for economic growth. "These are places that we have completely disinvested in," Abelow said. "We have no money for them."

Such financial constraints are the reason the Corzine administration is investigating asset monetization—leasing a State toll road like the Turnpike to a private company for a one-time upfront payment. The alternatives to asset monetization are not practical, Abelow said. New Jersey really cannot raise taxes much more, at least not in a way that would meaningfully address long-term finances. Likewise, so little of New Jersey’s State budget is discretionary that any effort to cut spending would be limited.

Abelow was accompanied by Maureen Adams, acting-director of the New Jersey Division of Taxation, which is the agency administering changes to the Urban Enterprise Zone (UEZ) sales- tax program. Qualified UEZ businesses are exempt from the State sales tax when purchasing equipment for their place of business. Last year, Governor Jon Corzine’s Administration asked the Legislature to change it to a rebate program where businesses pay the sales tax and then apply for a rebate from the division. The change has been unpopular among UEZ businesses because of the delay in getting the savings and the complicated paperwork requirements.

"This is usually the point where I say I don't write the bills, I don't sign the bills, I just implement them," Adams told the group. She reassured businesses that the staff and procedures to implement the program were in place and rebate applications would be processed efficiently.

North Jersey Legislators Debate Likelihood of UI Tax Hike at Legislative Leaders Event—Three northern New Jersey legislative leaders—Senate Labor Committee Vice Chair Joseph Doria, Assembly Republican Leader Alex DeCroce, and Assembly Majority Conference Chair Joan Quigley—assessed the prospects of an unemployment insurance tax increase and debated health insurance reform at NJBIA’s Meet the Legislative Leaders event, held on April 25.

News that the balance in New Jersey’s Unemployment Insurance (UI) fund has fallen to $280 million led to speculation about a possible payroll tax increase. If the fund cannot pay unemployment benefits, employer payroll taxes will increase automatically. But Doria said that a low fund balance (it was more than $3 billion about four years ago) does not necessarily mean a payroll tax increase will be triggered. UI tax collections vary widely from month to month, and May is traditionally when many collections take place. "I'm optimistic that we're not going to have a problem," Doria said. DeCroce, however, predicted that New Jersey will fall into a recession soon, putting a bigger strain on the fund as unemployment rises. "I think you will see a recession and it will activate the trigger (for an automatic payroll tax increase)," DeCroce said. "You will be paying more if you are an employer."

On health insurance reform, Quigley indicated that reform legislation was not as far along as some people might think. Asked what plans the Legislature had for health insurance reform, the Assemblywoman said: "I think 'plan' is too strong a word…. I think we have a thousand concepts, but no one knows how to pay for it." But DeCroce said the proposals that have been introduced amounted to socialized medicine. "There is nothing in this proposal that is going to be good" for business, he said. "If the Democratic Party puts this through…you (employers) are the ones who are going to pay for it."

Make a Difference! Join NJBIA's Rapid Response Team—NJBIA members who have a personal relationship with a State legislator can make the difference between the defeat or passage of an antibusiness bill. That's why NJBIA wants you to become part of our Rapid Response Team, a group of NJBIA members who will reach out to legislators whom they know personally when a critical issue arises. NJBIA will alert you to the issue and provide you with background on the issue and arguments bolstering the business community’s point of view. We know your time is valuable, so we will ask for your help only when it is essential. To sign up, please fill out the confidential online form or contact at 609-393-7707, ext. 225.

Taking Charge of Your Workers’ Comp Costs, Wednesday, May 16—Would you like to lower your company’s workers’ compensation insurance costs? Learn workplace safety strategies and get money-saving tips from other businesses that have lowered their workers’ comp costs. There’s still time to register for NJBIA’s Taking Charge of your Workers’ Compensation Costs seminar, which will be held from 8:30 a.m. until 12:30 p.m. on Wednesday, May 16 at the Pines Manor on Route 27 in Edison. The cost is $109 per person for NJBIA members, $139 for nonmembers. You can register online or contact at 609-393-7707, ext. 239.

Nominate Your Company for an Award for Excellence by May 25—NJBIA annually presents its Awards for Excellence to member companies that excel in job creation, environmental protection, human resources management, and public service. Don't miss this opportunity to have your business's accomplishments recognized. The deadline for nominations has been extended to May 25, and all NJBIA member companies are eligible.

Nominations are being accepted in four categories: Job Creation, for contribution to the New Jersey economy through the creation of new jobs; Environmental Quality, for work in preserving or enhancing the quality of the environment in New Jersey; Outstanding Employer, for creative and forward-looking approaches to managing human resources; and Public Service, for outstanding service to the community. For more information, contact at 609-393-7707, ext. 239. You can also download the nomination forms online.

New Good Neighbor Awards Advertising and Sponsorship Opportunities—The New Good Neighbor Awards annually recognize the best and most exciting commercial and industrial development projects in the State of New Jersey.

Capitalize on the high visibility of this prestigious award by taking advantage of the Advertising and Sponsorship opportunities we are offering for 2007.

• Co-sponsor the June 1, 2007 luncheon honoring the winners.

• Advertise in the June 2007 issue of New Jersey Business Magazine.

• Maximize your visibility and save money by signing up for both.

For more information on sponsorship contact at 609-393-7707, ext. 219. For more information on advertising opportunities, contact at 973-882-5004, ext. 110.

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 at 609-393-7707, ext. 219.