By Rod Hirsch

Business leaders throughout Union County concede the $29.3 billion budget proposed by Gov. Chris Christie is lean and extreme but maintain that his predecessor’s unwillingness to grapple with rampant spending, entitlements, high property taxes and ballooning debt service left the Republican governor with little choice.

They support Christie’s no-nonsense approach. Sacrifice is both long overdue and needed.

Christie made it clear during his campaign against incumbent Jon Corzine that his top priority would be an all-out assault against the state’s fiscal irresponsibility. When he took office he inherited a deficit of $11 billion, a budget laden with fixed costs, mounting debt service and contractual obligations with state workers.

The governor crafted a no-frills budget that targets schools, government workers, entitlements and homeowner programs like the popular Homestead Rebate. The proposal also includes a proposed capped increase of 2.5 percent on all municipal spending.

In short order Christie’s approval rating plummeted. A Fairleigh Dickinson University survey showed the governor’s approval rating dipped by nine points to 43 percent following release of his budget.

Business experts from a variety of industries in Union County believe sound business practices found in the private sector which have allowed them to survive the recession will work in the public sector. They also are confident their businesses will benefit long term, having already taken steps to ensure their future by trimming, condensing and cutting costs – steps they see needed at the state level.

“I think the governor is being very honest about the state’s fiscal challenges,” said Bruno Genova of Allegiance Title Agency. “He’s making tough choices that need to be made and that have been neglected too long. His biggest challenge is persuading us it’s good for business, but in general any time a state puts its fiscal house in order it’s good for business.”

One of the areas targeted for cuts by Christie is aid to public schools, where teachers historically have enjoyed generous benefits. The school boards in Scotch Plains and Berkeley Heights are clients of Ed Gunther, owner of Centric Benefits Consulting in New Providence.

The one area where he’s right on is the level of benefits on the health plans,” Gunther

said. “They are so unbelievably rich, it just has to change.”

Christie’s hard ball approach has already brought tangible results. Nearly 100 of the state’s 600 school districts have been able to wrangle concessions from teachers’ unions and to implement some form of wage freeze while some teachers have agreed

to contribute more toward their health premiums. In return, Christie has agreed to increase levels of state aid to those districts, some of which have been cut upward of 25 percent.

“It will be interesting to watch the school district budget votes (statewide school board elections and budget votes were held April 20),” Gunther said. “How many of them will go down? School boards are faced with an impossible task. They’re locked into benefit levels that are so rich. There’s no way these medical plans are only going up 2.5 percent and you can’t waive that out of your budget. How do you manage that?”

Gunther recently received word from his health insurer that rates for Centric’s health insurance plan, which covers six employees, is due for a 35 percent increase. “We play by the same rules as everybody else,” he said. “We’ve had to make massive changes to get it to a level where it’s affordable. No one got pay raises last year and I had to shift one person from full- to part-time.”

According to the governor, while the private sector lost 121,000 jobs in 2009, New Jersey’s local governments added 11,300 new municipal and school employees.

Eric Segal of Security Business Solutions suggests both Christie and state lawmakers can learn a lesson from the pain and sacrifice suffered by the state’s small business community in the economic downturn.

“They’ve all faced crisis before and those who have ignored it are no longer in business,” Segal said. “Those who changed (and) adapted are the survivors and are those who will grow. We’re in this for the long haul. The cuts he is proposing have to be made, we can’t continue to operate the way we have before.

“Something has to be done. Christie is right in recognizing it but how we get there is the question. We can’t correct everything overnight.” Woody Erhardt, regional vice president of Enterprise Rent-A-Car in Cranford, also views Christie’s proposals as the proper route for the state.

“I’ve lived here my whole life and this is the most positive thing to come out of Trenton in my lifetime,” Erhardt said. “Times are tough for business people right now but these cuts are necessary. It’s not fun for any of us and it’s tough on the auto business but you know what, it has to happen. Otherwise we won’t be around too much longer. “It’s not a treat for me or my guys, but I’m glad to see the state jumping in here with the rest of us.”

State Budget Axe Draws Local Blood

Why Should We Care About "Green"?

“Green” in this conversation refers to reducing environmental impacts. So why should we care about this? Because the environment provides for the basic necessities of our lives – the air we breath, the water we drink, the food we eat, our shelters and clothes, as well as supporting our lifestyles. If we do not take care of the environment, it will not take care of us.

Do the “Green” math:

  1 earth

  + 6.7 billion people

  + Decreasing land area with rising sea levels

  + Depleting natural resources and increasing loss of ecosystems

  + Increasing air and water pollution

  = Less environment to support life

Having grown up in cities where a large patch of green was an excursion away and clean rivers even further, the “Greener” environment was just a fairy tale for me. Transportation emissions, concrete, pavement and plastic products were my environment.

Life in the United States has been great. Now I live in a beautiful rural town with fresher air, sights of trees and green lawns overshadowing the concrete and pavements.

It is so easy to get used to living in this wonderful setting. It also would be easy to not care about where the garbage goes as long as it is out of our house, to not care where the oil comes from as long as it makes our car run, to not care about the carbon dioxide created by the power plants as long we can turn on the TV. It is so easy to feel safe in our own environment and unaffected by what’s happening outside our towns, state or country.

But are we?

  • Three grapefruits from Florida

  • One gallon of Poland Spring water from Maine

  • One half-gallon of organic milk from Wisconsin

  • One gallon of oil from Saudi Arabia

  • One pair of jeans from China

Sooner or later we all realize our own local environment is the earth.

“If success or failure of this planet and of human beings depends on how I am and what I do, how would I be? What would I do? – R. Buckminster Fuller

More than four decades ago the forefather of modern day sustainability, Buckminster Fuller, challenged the world to start creating a more sustainable planetary society. Five years ago I read his quote above and started examining my own life.

Many of us want to do the right thing environmentally and make a difference. Yet it is not easy when greener products and materials seem to be costly and limited in options. Getting away from a fossil fuel economy appears to be impossible when everything is run on or made with fossil fuel. Navigating through which materials are really recyclable and where to take them is equally confusing.

What I came to realize is that a more sustainable lifestyle is not just about purchasing products that are labeled as green or installing a solar panel on the roof. There are numerous opportunities in our daily lives that allow us to choose to act differently that will add up to making a big difference.

Each year the average American is responsible for one of the highest levels of consumption in the world when compared to other countries. For example:

  • 32,000 gallons of potable water

  • 8,600 kilowatt-hours of electricity

  • 1,600 pounds of municipal solid waste

This means we can start to make a difference environmentally by changing how we  live without it costing a dime. If anything, it will save us money in utility bills. We can brush our teeth without the water running, turn the lights off when we exit a room and think twice when pulling out the disposable tableware to be used just once and thrown out.

All it takes to live with the mindset of living more sustainably is to choose to do so. We can examine what we can do differently each day. When it is time to purchase new products, we should make our choices based on where they come from, how they are made and what kind of garbage will be created as a result of our choosing them.

______________________________________________________________________

The Urban Enterprise Zone (UEZ) program is one of those really good ideas that didn’t work out quite right.

A legislative act in 1983 created the UEZ program. Initially 10 municipal zones were created. In 1993 these were expanded to 20.

Subsequently more zones were created and they now stand at 32 covering 37 municipalities. About two thirds of the UEZs also are Abbott School Districts.

The purpose of the legislation was to lure business and customers back to blighted urban areas by providing very specific incentives. For a qualified business that operates in a UEZ, the primary benefits are an exemption from paying sales tax on most products the company purchases, and for those engaged in retail operations, the ability to charge half the sales tax (currently 3.5 percent) on most products except food, alcohol, tobacco, vehicles and energy.

This 3.5 percent sales tax also is supposed to be the big draw to get wealthy suburban customers to come shop in the UEZs. However, given that most mall shopping is for clothing, which is already tax free, outside the occasional specialized, big purchase, few people have changed their shopping habits for the lower tax rate.

Thus we have not seen developments like Jersey Gardens and IKEA in Elizabeth spring up in other UEZs and their development in Elizabeth had less to do with tax rates and more to do with great location and really, really low prices, especially for visiting shoppers from New York and other points outside New Jersey.

The second aspect of the UEZ program is what really makes it popular with local mayors and councilmen, however. The 3.5 percent sales tax that is collected is returned by the state Treasury to the town to be used for broadly defined economic development. In the past decade or so, this has approached nearly a billion dollars given with almost no oversight to some of the most corrupt cities in New Jersey. What a slush fund!

For years I have expressed concern that these funds are, for the most part, wasted on patronage jobs and payback contracts to political contributors. The deal has been so sweet that even more recent pay-to-play regulations have not been applied to these funds. They also are not part of the municipal budget, so they receive negligible oversight from city council, and no public review or disclosure.

My office happens to be in the middle of one of the biggest UEZs, in the city of Elizabeth. After more than 15 years of being a close observer, I can see no difference that the millions and millions of dollars spent have made to the business climate or appeal of the city. It has been money wasted on buying political favors.

Gov. Christie, through necessity, has proposed a change to the UEZ program. Under his proposed budget, the tax benefits of the UEZ to both businesses and consumers would remain unchanged. However, the 3.5 percent sales tax collected in the UEZs would be used for the state general fund rather than as a slush fund for city mayors. In the FY 2011 budget, this is estimated to be $91 million.

This is a very good idea. This money has been so misspent for so many years that there is little reason not to change the program. Though I have not come across any, I am sure there may be some programs out there that are worthwhile. If so, these towns should be willing to fund the project out of their own budgets, as do the other 600-odd municipalities around the state.

The governor also should conduct a complete review of all the projects that have been undertaken with UEZ funds. There are a lot of skeletons to be dug up.

James Coyle

President

For one, the governor’s proposed expiration of the 4 percent corporate business tax surcharge was a welcomed development, as it will help make us a more competitive and attractive state for business. So, too, will the total reduction in state spending. Couple these advances with the work of the governor’s Red Tape Review Commission, which has its eye on streamlining the state’s regulatory practices, and businesses can be optimistic.

But just below the surface are other issues which can cloud that optimism.

Topping that list is property taxes. Under law, there is no difference between residential and commercial property – the tax rate is applied equally to all. With the governor’s slashing of both school and municipal aid, property taxes – including those for business – are going to continue to rise. Further, as a direct result of lost state aid, many municipalities are considering fee-based services, such as garbage pick-up, that also would directly increase costs on business.

The governor’s budget would spell the end for several business tax credits. One of those is the tax credit for film and digital media production. Oddly, this tax benefit – which rewards productions that not only highlight New Jersey’s locale, but also patronize our restaurants and hotels – is the type which other states have been practically falling over themselves to institute.

Tax credits available to high-tech industries would likewise be reduced. And the budget also would gut the Commission on Science and Technology, removing $10 million in grants to facilitate science and technology start-ups. At a time when New Jersey is focused on retaining its core pharmaceutical industries while growing its portfolio of alternative energy and other new technologies, reducing these incentives for businesses is troubling.

The governor also is proposing cuts to programs that reward companies that create new jobs. Specifically, the InvestNJ program, which provided a $3,000 per-job tax credit to expanding businesses and offered tax breaks to companies making capital investments, is slated for elimination. Along the same line, $19 million for the Business Employment Incentive Program that provides grants for companies that create new jobs would be cut.

At a time when New Jersey’s unemployment rate continues to hover near the 10 percent mark, cutting back the potential for these programs to boost employment while helping businesses expand seems counterproductive. This is especially true for the endangered InvestNJ program, which actually had a backlog of companies eager to participate.

The budget also includes a $20 million tax on insurers, with nothing prohibiting them from passing that cost on to their policyholders – including other businesses. Also buried in the budget’s line-items is a 25 percent increase in business filing fees.

Apparently not only will the cost of owning a business increase, so will the cost of opening one.

New Jersey’s hospitals are one of the state’s leading employers. Many of New Jersey’s hospitals already exist on shaky financial ground, yet the administration has proposed nearly $38 million in increased hospital taxes.

State tourism also would see its funding held flat. Tourism pumps nearly $39 billion in total economic activity into the state. And with many families regionally and nationwide seeking less expensive, closer-to-home vacation opportunities, New Jersey should be expanding the draw to its hotels, restaurants, cultural and historic sites, and retail centers. This is one area of the budget where the state would actually make money by investing money.

New Jersey is facing its greatest fiscal challenge and a budget that benefits the business community will be key to economic growth and placing the state on solid fiscal ground. Surely tax cuts and lower overall spending are concepts that industry has long-championed. But a deeper analysis shows this budget is not a boon to New Jersey business, as some have argued.

On March 16, Gov. Chris Christie delivered a budget address that lays a strong foundation for a better and more prosperous New Jersey. It was a watershed moment that fundamentally changes the way the state maintains its finances and provides an opportunity for long-term economic growth, job creation and a more affordable New Jersey.

A Look at the Numbers – New Jersey is required by our state’s constitution to operate on a budget in which revenues and expenditures are in balance. If New Jersey were to maintain the status quo, we would need to spend $38.4 billion during the next fiscal year. That is without adding any new programs, property tax relief or tax reductions.

New Jersey, however, is expected to take in only $28.3 billion in revenue next year. That leaves a gap, or structural deficit, of over $10 billion – a staggering amount of money that we do not have.

Past Practices – Over the past decade the state has papered over deficits and allowed itself to significantly increase spending one year after the next with a risky and unpredictable combination of tax increases, accounting gimmicks and outright money diversions.

Taxes were raised over 115 times on everything from income to home heating bills and cell phones to motor vehicle fees, leading to the affordability crisis we now face.

Billions of dollars in bonds were sold to fund excess spending. New Jersey’s debt burden is now one of the top five in the country with 8.5 percent of the budget going toward debt service.

Billions more were raided from the Unemployment Insurance fund. Money that was sorely missed when unemployment in the state rose to the highest in the region.

Christie’s Solutions – Gov. Christie and Republicans in the Legislature realize these past decisions were wrong and are preparing to take New Jersey in a better direction. The governor is committed to rebuilding our budget with a new foundation that is a smaller and smarter use of the people’s money. Closing a deficit that is one-third of the entire state budget is tough work and requires shared sacrifice, but it can be done.

Each and every department of state government had their budgets reduced, some by up to 39 percent. This reflects the call for shared sacrifice.

Pension reform measures were passed and signed into law that will rein in a broken system and ensure that it is sustainable for rank and file workers while protecting taxpayers.

A constitutional amendment was proposed that would cap the growth of property taxes at no more than 2.5 percent per year. As state government needs to live within its means, so should every level of government.

The budget proposal also protects the most vulnerable. For the first time, the budget includes $2.3 million to support day programs for young adults with developmental disabilities, increases funding for New Jersey’s hospitals and ensures funding of all eligible children in New Jersey family care.

What Happens Next – Since Gov. Christie’s election last November, citizens across New Jersey have become more optimistic that Trenton has gained the maturity to make reasonable decisions that enhance the long-term prosperity of our state.

The false choice advocated by the governor’s opponents of surprisingly-permanent “temporary” tax increases versus long term affordability is a losing attempt to maintain the status quo – a status quo that would cripple the state we are proud to call home.

With a long list of tough choices, it is going to take cooperation and compromise to pass a balanced budget by the July 1 deadline. Actions and proposals to date have already put New Jersey on a new and better path. With a renewed sense of common purpose I am confident that Gov. Christie and the Legislature will meet the challenges ahead and move New Jersey forward.

Members of FMRTL also participated in their second Go Red Jean Day to raise awareness and help the American Heart Association support ongoing research and education about women and heart disease. Firm members were encouraged to wear red and denim in exchange for a $5 donation to the American Heart Association.

City Fire Equipment Company will be seen on “Construction Intervention,” an all-new

Discovery Channel series, May 2. The new series follows construction expert Charlie

Frattini and a team of contractors and designers as they find businesses which are in danger of failing due to botched construction jobs and rescue them. City Fire Equipment Company was involved in the construction process for the story about a restaurant in East Rutherford, New Jersey, providing fire safety installation and inspection services, labor and materials. The episode will air May 2 at 10:00 p.m. eastern time. Check local listings for the channel.

_______________________________________________

The Robert Wood Johnson (RWJ) Rahway Foundation and the Rose Ball Committee recently announced that Northfield Bank is the 2010 recipient of the Order of the Rose and that the RWJ Rahway medical/dental staff is being inducted into the 2010 Guardians of the Rose. Northfield Bank was selected for its outstanding commitment through leadership and philanthropic support to RWJ Rahway. The foundation cited the RWJ Rahway medical/dental staff for their 93 years of service.

_______________________________________________

Berkeley College was recently named one of the Best Places to Work in New Jersey

for 2010 by NJBIZ. It is the fifth year the college has received the honor. The award identifies, recognizes and honors the best places of employment in the state, those

benefiting the state’s economy, its workforce and businesses. The Best Places to Work in New Jersey program recognizes 55 companies in two groups, depending on number of employees.

_______________________________________________

Mayor Richard Gerbounka of Linden accepts the award for Mayor of the Year.