Governor Corzine and the Budget: Looming Deficit Could Spell Trouble
By Robert J. Tartaglia
The current fiscal condition of New Jersey is shaping up to be at the forefront of serious issues that Gov. Jon Corzine will face in his first test as leader of our great state. It is no secret that the budget deficit could possibly reach as high as $6 billion, or less, depending upon with whom you last talked.
The positive component to this problem is that newly installed Assembly Speaker Joe Roberts has asked the Legislature to pursue spending reductions and then scour the state’s $28 billion budget for savings wherever possible before any new tax increases are considered. The Assembly Budget Committee, chaired by Assemblyman Louis Greenwald, has already begun meeting to discuss such proposals and Speaker Roberts has provided a Web site where potential savings plans can be suggested.
The governor has many priorities to contemplate, such as an increase in the property tax rebates by 10 percent, state aid for education, preschools, Medicaid, medical treatment for those without health insurance and a potential $2 billion pension payment. Let’s not forget the Transportation Trust Fund, which will go bankrupt come July 1.
On the positive side, state revenues are coming in much higher than expected and that can make the budget picture more manageable. The governor will release his plan on March 21. A new budget must be signed into law by July 1.
REAL ESTATE INVESTMENT TRUST
NJBankers successfully managed to avert a serious issue when the Division of Taxation had put forth regs that would have had a dramatic impact on many of our banks in New Jersey. Fred James, a CPA with KPMG and a member of the NJBankers Financial Officers Committee, alerted the committee to the pending reg that would have, among other things, retroactively taxed all REITs back to 2005. NJBankers, along with Fred James and other interested parties, met with former Treasurer John McCormac to discuss the issue. The outcome was very positive and again proved the invaluable assistance we gain from members serving on NJBankers committees. Read Fred James’ article on page 14 of this issue for more information on the REIT issue.
The Legislature has begun meeting and has been mostly consumed by the nominees of Gov. Jon Corzine, as he finalizes his staff that will help him shape the future of New Jersey.
S-1181/A-148 (Gill, Vandervalk/Roberts) was released from the Assembly Financial Institutions and Insurance Committee and the Senate Commerce Committee that would require a lender who applies for entry of a final judgment in a foreclosure action pursuant to the “Fair Foreclosure Act,” shall include a statement of the amount necessary to cure the default in the 14-day notice required of lenders prior to entry of final judgment.
NJBankers had opposed the original bill and was successful in getting the bill amended. The amendments provide to the debtor the amount necessary to cure the default, the name and address of the lender and the telephone number of a representative of the lender whom the debtor may contact.
Legislation that was discussed in the Senate Labor Committee, but not moved, was S-477 (Sweeney), which would force private companies to spend at least $4.17 per hour for their workers health care. S-477 could send health care costs for those companies soaring if signed into law. NJBankers has a number of member banks with more than 1,000 employees and all would be affected by this onerous legislation. NJBankers believes that the Legislature should be looking for ways to increase business interest in our state rather than putting up difficult hurdles to overcome. All of the state’s business advocates have come out in full opposition to the bill and see it as one of the most burdensome initiatives since the corporate business tax restructuring in 2002.
ATM EMERGENCY COMMUNICATIONS
Other potential bills that are rumored to be discussed in the near future are S-1072/A-2521 (Bucco, Cohen), which would mandate that all banks have emergency access phones installed at ATM’s. NJBankers has vehemently opposed the bills since their inception. We believe that it could make a bad situation worse if someone reaches for the phone during a robbery. Supporting our position is the New Jersey State Chiefs of Police Association, which has written the sponsors indicating their concerns.
The bank security committees of NJBankers and the New Jersey League of Community Bankers, along with Commerce Bank, held a joint meeting Feb. 22 to listen to the proponents of the technology and get a better sense of other technologies that exist.
It was, for all purposes, a good meeting in that we listened to the ATM SafeAlert spokesperson and also heard about the newest technology, a reverse PIN software alerting modification called the ATM SafetyPIN System.
The crucial argument of banks not wanting a mandate that has not proven effective still stands. The ATM SafeAlert device specifically is a very big concern because the manufacturer is still pushing the mandate language in order to sell its device, while the reverse PIN technology would only make it an option.
S-547 (Buono), which would create the New Jersey Financial Information Privacy Act and prevent a financial institution from disclosing or sharing a consumer’s personal information with non-affiliates, may be coming up for discussion in the upcoming session. NJBankers continues to oppose the bill.
NJBankers JebPac has had two record-breaking years and begins a new campaign to raise funds for the upcoming year. I would like to thank all of our participants and especially want to congratulate Jim Hyman on an exceptional job as the JebPac Chairman. NJBankers Chairman Ted Bessler will be the next JebPac Chairman for the 2006 JebPac Campaign.
NJBankers Action Banker Council has already begun meeting with interested legislators and had a great discussion with Assemblyman Michael Panter (D-12), who sits as the vice chairman of the Assembly Financial Institutions and Insurance Committee. The assemblyman was gracious and thanked NJBankers for our time and for helping him on issues important to our industry. We will continue to meet with interested legislators. A special thanks to Ted Bessler, Mike Quick, Jim Hyman, Pat Ryan, Bob Davis, Norm Beatty and all of the bankers who participated in our ABC meetings!
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.