By Robert J. Tartaglia
Four-part plan aims to halve state debt
Gov. Jon Corzine has introduced his plan to cut the state debt in half by creating a Public Benefit Corp. (PBC). The governor’s financial restructuring plan was unveiled at his State of the State speech in Trenton and would require a steep increase in tolls over a 75-year period. The PBC would essentially borrow up to $38 billion to cover the cost of paying down half the state debt, which is $32 billion total at this time.
Other components to this four-part financial restructuring plan include:
Introducing a budget that freezes current spending at current levels (this component enabled former Congressman Bob Franks to come out and not only support the plan, but chair the group that will oversee its implementation);
In future budgets, prevent spending growth from exceeding current revenue growth; and
Require all future debt issued without a dedicated revenue source to be approved by the voters.
Corzine has challenged the opponents to come up with a better plan.
“To accomplish these broader goals would require a 20 percent across the board increase in income taxes. I am not recommending that,” Corzine said in his State of the State speech. “That 20 percent increase would be permanent and apply to every taxpayer – not just millionaires.”
Senate President Richard Codey is already questioning the spending freeze, saying he doesn’t believe it is the correct course of action.
“You cannot plead poverty, raise $40 billion and then say you’ve got to cut the budget,” said Codey.
Codey has even offered up his own proposal to Corzine, suggesting that the state could lease the New Jersey Lottery Commission, rather than increase tolls. Many believe this could be the straw that breaks the political camel’s back and provides the backlash needed for the Republicans to regain power in New Jersey. The Republicans are adamantly opposed and have condemned the idea publicly. NJBankers has not seen the legislation and will wait to review the bill before making any decision.
The HOPE Hotline, operated by the Homeownership Preservation Foundation, is a 24/7 hotline staffed by trained foreclosures counselors. NJBankers, the Mortgage Bankers Association of New Jersey, the New Jersey League of Community Bankers and the New Jersey Credit Union League are participating in the creation of an 800 number to be advertised and promoted to New Jersey residents who are facing serious difficulties due to their inability to make mortgage payments and who are already facing foreclosure.
The counselors, who are experienced in crisis intervention, would utilize their expertise in evaluating each caller’s issues and could make immediate recommendations to the consumer. At that point, the consumer may be referred to a local community organization in New Jersey, which would then refer the consumer to a volunteer designated by the associations.
We will be providing further information as the HOPE Hotline soon begins its mission of assisting our New Jersey residents in this critical time.
NJBankers is strongly opposed to S-786 (Sweeney), which would require a new payroll tax on all employees and would make New Jersey the second state in the country to impose paid leave benefits. New Jersey’s unstable economy cannot afford this sort of mandate at this time. While it may be well-intentioned, the cumulative affect would be disruptive to small businesses.
Small employers have a difficult time trying to hire and retain good employees. Allowing this mandate would essentially make a bad issue worse as the small employer must look to a temporary hire to fill the skilled employee’s position. It will obviously create a significant burden for the employer and will lead to further disruption in the workplace.
The NJBankers board of trustees has continued to ask why the Legislature would consider this mandate at a time when our economy is suffering and the surrounding states are looking to pick off businesses looking to relocate. In many instances, we are seeing the small-business loan market continue to falter. In fact, results from a recent survey of our members showed numerous clients leaving the state due to difficult regulatory and financial burdens in New Jersey.
S-786 was released from the Senate Budget and Appropriations Committee with the entire Republican side opposing it. Please continue to contact your lawmaker and express your opposition to this bill.
By a vote of 11-10 along party lines, the Senate Banking Committee approved legislation that would ban commercial ownership of industrial loan companies (ILC). The Industrial Bank Holding Company Act of 2008 would prohibit applications for ILC charters by commercial entities and would place restrictions on existing ILCs. However, the bill, sponsored by Committee Chairman Christopher Dodd, D-Conn., would grant an exemption for ILCs owned or operated by durable goods manufacturers, such as automakers. Another provision of the legislation would give the FDIC more regulatory authority over certain ILCs and subject applications to acquire an ILC to the requirements of the Community Reinvestment Act.
Ranking Member Richard Shelby, R-Ala., opposed the bill for a number of reasons. In particular, Shelby objected to a provision in the bill that would give the Securities and Exchange Commission statutory authority as a consolidated supervisor of insured depository institutions. Shelby said any entity that wishes to own a bank should have to comply with the current regulatory structure. He also complained that provisions that would apply new management tests and capital requirements on savings and loan holding companies for engaging in certain activities have never been discussed in a hearing.
The Action Banker Council met with Congressman Scott Garrett to discuss important issues facing our industry in Washington, D.C. NJBankers Chairman Roger Bosma hosted the breakfast, which attracted 15 CEOs.
NJBankers’ JebPac Campaign has begun. A letter outlining our goals and the solicitation authorization forms were sent to our entire membership. Last year we broke the previous record by more than $6,000! It was an outstanding achievement and I believe we are going to successfully reach our goal of $100,000 this year. Please keep a look out for the letter and send back the form along with your request for JebPac forms.
Robert J. Tartaglia is director of government relations for NJBankers. He can be reached by e-mail at email@example.com.