By Robert J. Tartaglia
Property Tax reforms could produce problems for banks
The past six months, I have been given the privilege of running a dual role here at the NJBankers headquarters. As acting president and director of government relations, it was probably one of the most challenging tasks I’d ever accepted. I must admit there were some initial concerns, but with the support of our NJBankers executive board, the board of trustees and the NJBankers staff, it turned out to be an amazing experience.
I’d like to personally thank Chairman Michael Quick, Roger Bosma, Norm Beatty and Gerry Lipkin for their tremendous support in this time of transition. I am also thankful to have staff that responded to the challenge with me. Tim Doherty, Jane Eiseman, Sabrina Younossi, Mary Lou Hessman Lorraine Holcombe and Jane Swanson all are to be congratulated for a job well done! I would be remiss if I didn’t mention Mary Kay Roberts, whose due diligence and legislative insight helped keep the government relations program running better than ever! Thanks Mary Kay!
Gov. Jon S. Corzine has proposed his $33 billion budget to the Legislature with a $2 billion deficit right out of the starting gate. We here at NJBankers are hoping for an austere budget in the wake of a $1.8 billion tax hike last year. It was the largest hike by any state in the nation while spending has increased exponentially since 2000, which saw state budget costs go from $21 billion that year to over $30 billion in 2006. Last year’s budget process saw state government shut down for the first time ever. We are hopeful that negotiations between the two branches will go more smoothly this time and that spending cuts will be a priority. Stay tuned.
Property Tax Relief
After seven months of deliberations on the property tax relief issue and the development of nearly 100 proposals, the Legislature has passed and recently sent six bills to the governor’s desk for action. As of press time, the governor has already signed six bills and another two bills are close to reaching his desk for action, including S-17, which implements various recommendations of the Joint Legislative Committee on Public Employee Benefits Reform, concerning benefits and certain terms and conditions of public office and employment. Another measure, A-1, may have a significant impact on financial institutions.
The legislation would cap property tax increases at 4 percent per year and grant property tax credits to most homeowners – 20 percent for households with incomes under $100,000; 15 percent for $100,000 to $150,000; and 10 percent for $150,000 to $250,000. The percentage tax credit only applies to the first $10,000 in property taxes. The legislation establishes a homestead credit program for New Jersey homeowners and residential tenants.
These sections replace the current homestead rebate program for non-senior homeowners that provide benefits in set dollar amounts in ranges based on income. Further concerns have been raised by banks and the mortgage servicing industry that the “credit” process will confuse homeowners because they will expect that lenders and servicers will pass along the entire amount of the tax credit, but the funds will flow through the escrow account and if there is an overdraft in the escrow account, the amount the homeowner receives back will be less than the amount of the tax credit.
At the time when the third property tax payment is due, the old payment into escrow is still in place and the likelihood is that the escrow account will be in an overdraft position. People will not understand why they are not getting the full amount of the tax credit paid to them and will be angry at the lender or servicer. This may result in a high volume of calls to the lender or servicer asking, “Where is my tax credit?” NJBankers has a member on the working group and is watching the developments closely.
Paid Family Leave
The Senate Labor Committee met recently to discuss paid family leave. NJBankers, along with just about every business entity in the state, opposed the legislation that will look to create a new tax on employees. S-2249 (Sweeney/Buono) would provide 12 weeks of paid time off so an employee can stay home to care for a family member. It would be funded out of employee contributions to the Temporary Disability Insurance (TDI).
Unlike the existing unpaid leave laws, this proposal would apply to every business, no matter how small. Unpaid leave laws currently apply only to those with 50 or more employees. This paid family leave bill would hit every employer with two or more employees; there is no small-business exemption. As of press time, the bill had passed out of the Senate Labor Committee and was second referenced to the Senate Budget and Appropriations Committee.
No other state in the country has such a law, except for California, which only allows for six weeks. It also continues the perception that New Jersey is unfriendly toward business and will only create another regulatory hurdle. NJBankers urges you to contact your legislator to oppose the bill. You can also go to www.njbankers.com, to the Government Relations section to send an e-mail via our grassroots tool.
Prepaid Bank Cards
A-2258 (Wisniewski) regulates expiration dates and dormancy fees for certain prepaid bank cards, such as mall gift cards. The legislation was released from the Assembly Consumer Affairs Committee and, as of press time, will next go to the floor of the Assembly for full consideration. NJBankers opposes the bill and was successful at getting the sponsor to agree to amendments to the bill to, among other things, remove payroll wage cards and debit cards.
The Dedicated Funding Working Group has just about wrapped up its work on the new Department of Banking and Insurance (DOBI) funding formula that is based on a state-chartered bank’s assets. Thank you to those volunteered their time. NJBankers’ reservations about the new exam fee structure have been discussed and the Dedicated Funding Working Group tried its very best to mitigate the fee increases some of our members have experienced. We are hopeful DOBI can attract and keep new charters so the exam fees will be reduced over time. If not, NJBankers, along with other interested parties, will be pushing for dramatic changes to dedicated funding.
Jebpac and ABC
NJBankers’ 2007 JebPac campaign has just started and you should have received a letter from me discussing the importance of our political action committee. It also asks you to fill out the disclosure card and return it to me, indicating how many JebPac flyers you’d like sent. Please do this as soon as possible and thanks for your past support.
The Action Banker Council (ABC) recently met with Senator Martha Bark and Assemblyman Larry Chatzidakis and had a good discussion on issues important to our industry. Thanks to all of you who have helped make the program a continued success. Keep a look out for the upcoming ABC meetings.
Robert J. Tartaglia is acting president and director of government relations for NJBankers. He can be reached by e-mail at email@example.com.