Platform Update

March 2, 2009

ACTION ITEMS

Treasurer to Detail Efforts to Stimulate Economy: State Treasurer David Rousseau will provide Chamber members with an update on the economic crisis, the state budget, the impact of the federal stimulus on New Jersey, and the State programs and services available to assist businesses. This briefing is scheduled for March 20 from 8:30 a.m. to 10 a.m. at the Forsgate Country Club in Monroe . Register online at http://www.njchamber.com/Events/Rousseau08.asp. Thank you to Verizon for sponsoring this event.

New Platform Agenda: Last month, the Platform Economic Development Coalition met to review our priorities and discuss future activities. Participants shared their thoughts on ways to stimulate economic growth in New Jersey and suggested activities for the Coalition to pursue. The participants recommended that the Coalition focus on radically streamlining the permitting process to ensure timely approvals, advancing business friendly tax policies, linking the growth of government to the growth of the economy, promoting a more business friendly image of New Jersey, and providing policymakers with economic data that demonstrates the importance of pro-business policies.

Coalition members are in the process of formulating a plan to implement these recommendations. Please contact me at Maryellen@njchamber.com with your suggestions.

The Governor also took the opportunity to highlight steps he is taking to replenish the Unemployment Insurance Trust Fund in order to prevent a payroll tax increase on the employer community. The Governor announced plans to add an additional $270 million to the UI Trust Fund by March 31 in order to avoid a payroll tax increase of roughly 25 percent on businesses in New Jersey . The federal economic stimulus package will provide the balance of the money needed to shore up the fund.

Fiscal 2009 State Budget

State spending hit a high of $33.5 billion in the fiscal 2008 budget, and since that time the government has reduced expenditures considerably. State spending as proposed by Governor Corzine in his budget address last year was $33 billion, an amount that was dropped to $31.6 billion because of reduced revenues.

Specifics of the $3.6 billion in budget cuts and other announced actions taken in January and February to balance the fiscal 2009 budget include:

• An 18-month wage freeze for state employees expected to save $130 million. The Governor announced that continued union opposition to this wage freeze would result in the pursuit of other cost saving measures including a mandated two-day worker furlough to save $35 million, as well as possible layoffs if needed;
• $1.3 billion in spending cuts. The Governor identified $472 million in additional cuts on top of the $812 million in spending reductions that were announced in January.
• $450 million from the Rainy Day Fund;
• $500 million from the Long Term Obligation Fund;
• $156 million in balances redirected from trust funds;
• $208 million in fiscal year 2008 closing surplus;
• $850 million from the federal economic stimulus plan;
• A request of the Legislature to enact a Tax Amnesty Program, expected to generate roughly $100 million.

As previously stated, these cuts and additional steps are a direct result of a deepening recession and depressed revenue collections. For January, revenues were $526 million below projections, with the income tax (down $230 million), the Corporate Business Tax (down $111 million) and the sales tax (down $120 million) all tracking below budget. The most significant shortfall in the January collections was the Corporate Business Tax, which, at only $13.7 million, was 89 percent under projections. Revenues through January were $1.33 billion under target for the current fiscal year, due in large part to a $635 million shortfall in the income tax.

Fiscal 2010 State Budget

The projected shortfall for the fiscal year 2010 budget is estimated to be at least $6 billion. The Governor and members of the legislature are reviewing their options and focusing on spending cuts in addition to looking at the federal stimulus package as a way to increase revenues in this difficult time. While the Governor and legislature said that all options are on the table, they also said that they did not expect major tax increases. One of the initial items that the Governor mentioned for possible reduction or elimination is the property tax rebate program, which costs $1.7 billion. He has stated that he would like to preserve the rebates for seniors. The Governor is also considering a reduction in aid to municipalities, a major source of contention during last year’s budget debate.

The Governor presents his budget proposal to members of the legislature on March 10. We will continue to keep you informed of the budget situation as we move closer to the end of the fiscal year and as we continue negotiations on the specific components of the fiscal 2010 budget.

American Recovery and Reinvestment Act: On Feb. 23, Governor Corzine named his chief of staff Ed McBride and the state comptroller Matt Boxer to lead a group that will oversee the execution and implementation of the $787 billion American Recovery and Reinvestment Act in New Jersey. The Center for American Progress has estimated that New Jersey will receive some $17.4 billion from the federal stimulus program, including $7.2 billion in tax cuts that will provide relief to more than 3.5 million taxpayers in New Jersey beginning as early as some people's next paycheck. The stimulus package also contains much-needed assistance for the growing burden on state Unemployment Insurance funds as well as other social safety net programs and substantial investments in roads, bridges, dams and other infrastructure that will create billions of jobs across the nation.

Areas where New Jersey will receive funds include:

• $1.1 billion in state fiscal stabilization aid to avert layoffs in public schools and modernize schools and college buildings;
• $651.8 million for highways and bridges. This money could also be used for rail and port infrastructure at the state’s discretion;
• $524.2 million in Transit Formula Funding for investments in mass transit;
• $361.5 million for special education funding, raising the federal contribution for special education to roughly 40%;
• $296.5 million in Supplemental Nutrition Assistance Program (SNAP) benefits (formerly food stamp program);
• $253.3 million in Title I funding for poor school districts;
• $208.1 million in new Unemployment Insurance funding;
• $162.6 million for Clean Water State Revolving fund to address the backlog of clean-water infrastructure needs;
• $121.9 million from Weatherization Assistance Program for low-income families;
• $104.7 million from Public Housing Capital Fund to fund capital projects at public housing projects;
• $74.8 million from State Energy Program funding energy efficiency projects for cities, towns and counties;
• $60.8 million in HOME Funding to build affordable housing and provide rental assistance for poor families;
• $49 million in grants to support law enforcement efforts, such as drug courts and gang prevention;
• $43.5 million from Drinking Water State Revolving Fund to address the backlog of drinking water infrastructure needs;
• $41.1 million from Homelessness Prevention Fund to be used for short- or medium-term rental assistance, first and last month’s rental payment or utility payments;
• $34.1 million in Child Care and Development Block Grants to provide quality child-care services for low-income families;
• $27.6 million in Community Services Block Grants to local agencies for services to low-income families;
• $26.5 million in Dislocated Workers State Grants, particularly training and grants aimed at addressing shortages of skilled workers;
• $21 million for Department of Labor Youth State Grants;
• $12.8 million for Head Start expansion of programs;
• $12.7 million in education technology funds to purchase modern computers and software and provide professional development to ensure the technology is used effectively in the classroom;
• $10.8 million in State Employment Service Grants to match unemployed individuals to jobs;
• $9.5 million for DOL’s Adult State Grants program;
• $9.5 million for vocational rehabilitation to help individuals with disabilities to prepare for and sustain employment;
• $4.6 million in Violence Against Women Grants to help victims in need of housing assistance and other support services;
• $2.8 million for Emergency Food and Shelter Program, providing grants to local nonprofit groups providing emergency food and shelter for the homeless;
• $2.2 million for senior meals programs;
• 2.2 million for the Emergency Food Assistance Program;
• $2 million for National School Lunch Program Equipment Assistance; and
• $986,810 in Internet Crimes Against Children Grants to help law enforcement improve investigations into Internet users seeking to sexually exploit children.

EDANJ Meeting: The Economic Development Association of New Jersey (EDANJ) will host a meeting to discuss the State programs and financing opportunities available to New Jersey businesses. New Jersey Economic Development Authority staff will provide information on the different types of incentive programs that they administer and how to benefit from these programs. This meeting will be held on March 6 from 8:30 a.m. to 11 a.m. at the Forsgate Country Club. For additional information visit the EDANJ website at www.edanj.com.

Click here for the previous update.

MaryEllen Peppard
Government Relations Manager
New Jersey Chamber of Commerce
216 West State Street
Trenton, NJ 08608
Phone: (609)989-7888 Ext. 125
Fax: (609)989-9696
Maryellen.Peppard@njchamber.com