Dedicated Funding Formula Perplexing
Department of Banking and Insurance Agrees to Working Group
By Robert J. Tartaglia
On July 1, the new Dedicated Funding Act for the New Jersey Department of Banking and Insurance became effective, mandating that funds for operating the banking portion of the department be generated by the examination fees collected from state-chartered and regulated banks.
Prior to its enactment, NJBankers, along with the New Jersey League of Community Bankers and other interested parties, participated in forums outlining how the new process would affect the state-chartered institutions’ examination fee structure. We were assured that it would benefit the banking industry and would create a less costly environment.
Since its enactment, many of our bank members are complaining that isn’t the case and that they will experience substantial increases compared to the old formula. While we don’t believe that was DOBI’s intention, something must be done to correct the new formula.
NJBankers contacted DOBI and had an initial meeting to express our serious concerns. It was a very good meeting, in that DOBI has agreed to a working group that will consist of a few CFOs from NJBankers and the New Jersey League of Community Bankers, along with our counsel, Mary Kay Roberts. The most significant change in the fee structure is based on asset size of the financial institution. Previously all banks were charged a flat fee. While that does make some sense, it has created a situation where 50 percent of the state-chartered banks in the state are seeing increases while the others will receive a decrease.
In combination with the fee increase, with the potential property-tax burden shift to business, state-chartered institutions could be forced to explore a potential federal charter switch. DOBI recognizes this and wants to work with NJBankers and hopefully rectify the situation quickly.
PROPERTY TAX REFORM
Gov. Jon Corzine and the Legislature have heard the people’s cry about New Jersey’s highest-in-the-nation property taxes. Beginning late last month, committees began meeting to make recommendations and debate ways to change the school funding process, entice local governments to either consolidate or share services and recommend changes to the state’s public employee benefits, all of which have a big impact on residential property taxes.
The committees have until Nov. 15 to devise reform recommendations and enact them by the end of the year. Gov. Corzine has asserted he wants to cut projected property-tax growth by about 20 percent, and wants to do that by 2010.
One disturbing proposal was discussed recently, which would require a constitutional change mandating businesses and property owners pay the same rate. NJBankers strongly opposes any attempt to change the uniformity clause and believes any change should be providing relief to all parties. New Jersey businesses have been bearing the burden of high corporate business taxes since 2002. Those particular taxes have had a negative effect on all business in New Jersey.
A statement from Gov. Corzine was met with optimism from business leaders as the governor voiced concern over changing the clause.
Said Corzine, “I believe it is absolutely essential that we grow our economy if we are to have long-run financial success, and we need to be doing those things that enhance it, not limit it.”
One need not look too far to understand the difficulties facing the New Jersey property tax payers. A recently released survey indicated that, since 2000, there have been 59,000 new local, state and county government jobs created, while private sector job gains remained flat. If we’re going to get true property tax reform, that trend must stop.
The New Jersey Legislature still has unfinished issues that were discussed at length in spring into early summer. One very problematic issue for banks that NJBankers successfully fought back was S-547 (Buono), which would have prevented a financial institution from marketing their products to potential customers. NJBankers is concerned that the enactment of stricter “opt-in” provisions, as required under S-547, which prohibit sharing of customer data unless the customer gives explicit permission, would deny customers access to certain financial products and would be costly, burdensome and unnecessary. We will be monitoring the bill, which is pending in the Senate Commerce and Assembly Financial Institutions Committees.
Another bad bill that continues to worry the business community is S-477 (Sweeney), a health care mandate that would have a dramatic impact on our larger bank members in New Jersey. NJBankers testified in opposition when the bill was released by the Senate Labor Committee in the spring. The Healthcare Mandate will hurt New Jersey businesses and the economy. The skyrocketing cost of employer-based coverage has begun to have a profound and negative impact on many companies’ abilities to compete. This measure will negatively influence companies’ decisions to locate or to expand in New Jersey. This will become just one more reason why New Jersey is less competitive than our neighboring states.
ATM 911 Alert legislation still is pending. The bill is a wrong approach to ATM security. While it’s a well-intentioned legislative effort, it could actually prove dangerous to an individual using an ATM. Law enforcement officials have continually indicated that any person acting outside of the directions of the assailant greatly increases their chances of physical harm or even death.
COUNCILS MEET WITH RISING STARS
The Action Banker Council’s mission of introducing the NJBankers message to key industry leaders across New Jersey continues with successful breakfast meetings. The regional ABC chairmen, Mike Quick, Pat Ryan and Norm Beatty, have done an outstanding job of assisting NJBankers efforts in this area.
NJBankers met in early summer with Assemblywoman Jennifer Beck, R-12, and Assemblyman Sean Kean, R-11, who, as two rising stars in the Assembly Republican caucus, listened to our Action Banker Council members discuss issues important to the banking community.
On the government relations front, Assistant to the Director of Government Relations Sabrina Younossi has been working hard to complete the first-ever NJBankers Legislative Guide. We will be using the guides to distribute to legislators, the governor’s office, DOBI staff and for anyone who may be interested in our legislative positions and bill guide. Keep an eye out for them in the early fall.
Finally, at President Cameron’s urging as he had done years before, I was very fortunate to be able to attend the Institute of Organization Management at Villanova this summer. There was a very good course study on issues affecting associations around the country. It was a tremendous experience as far as meeting other association lobbyists and executives from around the country and hearing their stories and ideas on membership recruitment, as well as development and maintaining a strong innovative program for members. Outstanding professional development!
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.