Governor McGreevey Presents Budget
By Robert J. Tartaglia
Gov. James E. McGreevey has presented his proposed $26.3 billion budget to the legislature and indicated that the state needs to borrow $1.5 billion to help close the shortfall in the 2004-05 budget. The proposed budget will be partly financed by borrowing against revenues raised from increasing the cigarette tax for a third straight year. It is an overall increase of 9 percent in spending which promises, among other things, to enhance programs for seniors, municipalities, state colleges and the arts community.
The budget presented in the Assembly chamber is up $2.3 billion from last year and is providing some much-needed relief, especially to the municipalities, who have bitterly complained about not getting enough assistance from the state during these difficult fiscal times. The municipalities will be receiving an anticipated $24 million more in the budget and another $5 million to reward towns who have kept their spending and costs down.
A list of some of the other proposed budget enhancements follows:
• $1.52 billion from motor vehicle surcharges and from a 45-cent increase in the cigarette tax, which is expected to raise $135 million;
• $275 million from suspending the Corporation Business Tax-Net Operating Loss provision for two more years;
• $199 million from pollution-related sources; a new Petro-Chemical Environmental Impact Fee ($150 million), an increase in the Spill Compensation Fund ($20 million) and surcharges on the sales of tires ($12 million), disposal of hazardous waste in New Jersey ($11 million), and air emissions of suspected carcinogens ($6 million);
• $115 million from a funding package related to charity care: an assessment on ambulatory medical facilities;
• $90 million from the prepayment of four years’ worth of registration fees when a new car is purchased, the same as the inspection period for new cars;
• $70 million from an increase in the realty transfer tax based on a three-tiered structure tied to the sale price of eligible or deeded sales, including residential and commercial property. (Homes $150,000 or less would not be affected);
• Assessment on houses greater than $1 million ($24 million) – The establishment of a new 1 percent fee on the purchase of homes in excess of $1 million would generate approximately $24 million. The fee on a $1 million home would be $10,000. This fee would differ from the current Realty Transfer Fee because the purchaser of the home, not the seller, would pay it. New York State has a similar fee arrangement.
The proposed enhancements will be considered when the legislature convenes budget hearings and negotiations at the end of March.
GOVERNOR ENACTS NJBANKERS UNSECURED CLOSED-END LOAN LEGISLATION
NJBankers has been working closely with the legislature and the administration to have its unsecured closed end loan legislation enacted. Following the legislature’s overwhelming support for the NJBankers initiative, the governor signed A-2294 into law as P.L. 2003, c. 291, on Jan. 14, 2004, effective immediately.
The new law will permit lenders to collect fees and charges on unsecured closed end loans. These loans are typically a fixed amount of money used to finance a specific purchase, such as autos and homes, for a preset time period.
Under this new law, consumers remain protected, as lenders are required by the Truth-in-Lending Act to disclose every loan’s finance charge, in dollars and as an APR. They also must inform the consumer of other fees, service charges, credit insurance premiums and processing fees.
FINANCIAL PRIVACY BILLS HEARD
The Senate Commerce Committee heard testimony on the S-362 (Turner) and S-495 (Buono) for purposes of discussion only on Feb. 5, 2004. Both bills will affect the way an individual’s financial information is shared and will restrict what banks, credit card and insurance companies do with information they compile on consumers. Federal law requires financial institutions to notify all customers of how their personal information is shared, and give customers the chance to “opt out” if they oppose the sharing of financial information. Both bills that were before the Senate Commerce Committee will change the current law by allowing customers the ability to “opt in,” meaning that unless someone specifies they want their information shared with a third party, companies would have to keep it private. NJBankers position is “oppose with qualifications.”
NJBankers testified that the bills fail to exclude all transactional or operational uses of information (i.e., data processing, credit card services, check clearing services, marketing of the bank’s own financial products to its customers etc.) In addition, failure to do so would adversely affect the ability to deliver electronic services to their customers.
The bills will impose “opt-in” requirements on the marketing use of information by affiliates providing financial products pursuant to a joint marketing agreement. Among other things, the bills will also restrict the sharing of public information and impose disclosure requirements that duplicate federal law. In effect, this would place New Jersey financial institutions in the position of bearing the cost of complying with separate federal and state standards on the same transaction. Finally, NJBankers testified that the two bills, if enacted, would significantly affect the free flow of information by financial institutions and their affiliates.
NJBANKERS SPONSORED BILL GOES TO FLOOR OF ASSEMBLY Assembly Bill 757 (Cohen) was reported out of the Assembly Financial Institutions and Insurance Committee for second reading on Feb. 4, 2004. A-757, an NJBankers-sponsored bill, would allow a financial institution to disclose information regarding an electronic fund transfer, or an account in which an electronic fund transfer is permitted, to a third party when the disclosure is permitted by the privacy provisions of the federal Gramm-Leach-Bliley Act and the regulations adopted. If required by federal law, a financial institution that shares nonpublic personal information about customers with nonaffiliated third parties must provide consumers with an opt-out notice and a reasonable time period for consumers to opt out of the sharing of the information.
ACTION BANKER COUNCIL READY FOR LAUNCH
Government Relations Committee Chairman Michael Quick, along with the rest of the task force overseeing the implementation of the Action Banker Council (ABC), have set an April date for the South Jersey ABC to meet. The ABC will focus on a grass roots outreach to the governor, legislators, cabinet members, consumer groups and other interested parties who may be interested in knowing how valuable our banks are to the community.
Chairman Quick has worked hard at obtaining information that we can use to distribute to the above-mentioned participants. The chairman’s survey contains relevant information that will demonstrate the importance of the banks to the communities located in their market. We look forward to working with the South Jersey ABC and would like to offer thanks to Chris Abeel, Alan Fellheimer and Tom Holt for their efforts in helping to organize the group.
Robert J. Tartaglia is vice president and director of government relations for the New Jersey Bankers Association. He can be reached by e-mail at email@example.com.