State Budget Picture Improves
$1 Billion Windfall Much Needed
By Robert J. Tartaglia
Acting Gov. Richard Codey announced the unexpected windfall of $1 billion to the state coffers. A strong economic upturn has given the state some sorely needed relief to the budget picture. Codey announced that some will be used for property tax relief, but cautioned the Legislature to be wise with the good fortune.
“Simply because revenue is up does not mean it is party time at the State House,” said Codey. The surge in revenues is primarily due to the income tax that has exceeded projections made two months ago when the acting governor introduced his budget. The state Treasury expects $500 million to come in by June 30 and another $500 million in the next fiscal year. He also indicated that a portion of the money must be saved as surplus to assist next year’s budget deficit, which could be more than $2 billion due to the soaring costs of pensions, health benefits and salaries.
Codey’s budget planned a $600 million spending cut that was going to mostly take away the homestead rebates, but now looks like it can be restored. With the Assembly and the governor’s race up in November, there are public opinion polls demonstrating the importance of the rebates in a state that pays the highest property taxes in the nation. The Assembly Democrats may look for full restoration, but Codey may take out the red pen as he has the final say with the power of line items veto.
Action Banker Councils Meeting Often
The NJBankers Action Banker Councils are in full swing with meetings being held monthly. The ABC recently met with gubernatorial candidate John Murphy, who discussed his goals if elected as the Republican to take on Democrat U.S. Sen. Jon Corzine. With six other Republicans locked in the primary, recent polls suggest that Doug Forrester and Brett Schundler are the front-runners.
The ABC also had a great breakfast meeting with Sen. Tom Kean Jr., who will, by all accounts, be the Republican nominee for U.S. senator next year. Kean announced he has already started fund-raising and was looking forward to beginning his campaign for the Senate seat. The senator was very gracious and discussed many issues of importance to the industry.
Also, the NJBankers’ unique Legislative Alert Center tool is in full operation and can be accessed from our NJBankers Web site by going to the Government Relations section. The grass-roots device is very user-friendly and will help in our government relations effort in Trenton and Washington.
A Busy Legislature
The Legislature has been operating at full speed with many issues coming at NJBankers from all angles. NJBankers counsel, Mary Kay Roberts, and I have literally been lobbying non-stop since the Legislature has returned from budget break. Financial privacy, breach of security, payroll wage cards and many other issues that would have a negative impact are being considered, mostly due to pressure from consumer groups, whose agenda has been strongly anti-business.
The IOLTA issue is starting to gain some much needed attention. NJBankers’ IOLTA Ad Hoc Committee has engaged in extensive communication with the IOLTA Board regarding its interpretation of Court Rule 1:28-A-2 and its mandate that financial institutions offer a set return or 75 percent of the 90-day constant maturity Treasury rate to attorneys on trust accounts. The New Jersey Department of Banking and Insurance also met with the IOLTA board to communicate concerns with respect to safety and soundness issues of the proposed deauthorization of banks who do not comply with the indexed rate. Not only does bank de-authorization have serious implications on banks, it could potentially have a serious impact on attorney-bank relationships and grossly inconvenience attorneys who regularly use those financial institutions affected.
Assemblyman Neil Cohen, chairman of the Financial Institutions and Insurance Committee, has also weighed in with his concerns. NJBankers feels strongly that the issue has serious implications going forward and has tried very hard to communicate those concerns to the IOLTA Board, without much success. We are expecting to next meet with Justice Roberto Rivera-Soto on the issue. I would hope the dialogue continues as we try to get a better understanding of the method used by the IOLTA Board in setting the current standard.
Acting Gov. Codey recently signed Outsourcing S-494 (Turner) A-2133 (Gusciora/Manzo) against the wishes of a large coalition of interests opposed to the new law that will require every state contract, primarily for the performance of services, to provide that all of the services performed under the contract or any subcontract be performed in the United States.
NJBankers opposed the bill citing that procurement costs will triple and that the taxpayers would be the ones left holding the tab. One could say that politics once again was the driving force due to the unions’ belief that jobs in New Jersey were being lost overseas. There was no actual data to support that assertion, but then again, in Trenton you can never confuse facts with politics. The coalition is now looking at litigation as a means to overturn the newly signed law.
The Identity Theft Prevention Act was considered by the Senate Consumer Affairs Committee on May 19. The bill is actually a combination of six bills that were turned into a Senate Committee Substitute. The bills, S-1914 (Turner), S-2154 (Kavanaugh/Ciesla), S-2155 (Kavanaugh/Ciesla), S-2440 (Turner), S-2441 (Baer) and S-2524 (Vitale) essentially deal with large-scale breaches of security, use of social security numbers and credit freezes. The substitute was marked up by consumer groups, who believed that the bill was too industry friendly and took out a section that provided a so-called trigger mechanism as to when a bank has to notify a customer when a breach occurs. That particular language was what forced the coalition members to oppose the substitute. The bills were all held.
There will be further discussion on the Identity Theft Prevention Act at the next Senate Commerce Committee meeting, but one benefit which came out of the Senate Commerce Committee was there would be no consideration of the privacy legislation at least until the California 9th Circuit Court of Appeals presents the decision on preemption from California SB 1.
A-3981 (Cohen) was released from the Assembly Financial Institutions and Insurance Committee in May. The bill strengthens the enforcement powers of the Department of Banking and Insurance with respect to state-chartered banks, savings banks and savings and loans and provides for more consistent enforcement authority across charter types. NJBankers was neutral on the bill and had worked with the sponsor to include friendly amendments.
A-3932 (Cohen) was released from the Assembly Labor Committee on May 5 and referred to the Assembly Financial Institutions and Insurance Committee. The bill regulates the practices of employers who pay wages to employees in the form of a “payroll card,” through which an employee can access wages by using an automated teller machine, or a credit card or debit card terminal.
It also requires employers to allow employees to retain the right to be paid wages in cash or by check, instead of through a payroll card, consistent with existing wage payments requirements. The bill requires the employer to provide notifications of these payment options to the employees. It prohibits an employer from charging service fees or otherwise allowing a reduction in wages in connection with the payroll card program. NJBankers opposes the bill and was successful in having the bill sponsor refer it to the Assembly Financial Institutions and Insurance Committee.
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 rtartaglia@njban