Chamber Position on Financial Restructuring and Debt Reduction Plan

William J. Marino, Chairman, New Jersey Chamber of Commerce

Press Conference Remarks
January 29, 2008

I would like to start by thanking Governor Corzine for hosting us here today for this important announcement. The New Jersey Chamber of Commerce Board of Directors, after reviewing all the information available at this time, has voted to support the Governor’s Financial Restructuring and Debt Reduction Plan.

The Chamber has always acknowledged that one of the most critical components of a healthy and vibrant economy is a high-quality transportation network that is continually maintained and upgraded. A system that is able to efficiently move people and products throughout our state and region is vital.

As many of you are aware, half of our roads are in dire need of repair – and a third of our bridges are structurally deficient. Our residents suffer some of the longest commutes in the nation.

However, New Jersey’s perennial state of fiscal emergency hinders the allocation of necessary resources to address this growing problem. As a result, there is always a looming transportation funding crisis – and a temporary band-aid applied to get us through the next few years.

I am not here to go into all the reasons we got into this mess – they are quite evident and well documented. Instead, it is time to forge ahead with the best option on the table to get us out of the deep hole we’re in.

That’s why the State Chamber Board applauds the Governor for putting forth a bold and aggressive plan designed to reduce out-of-control state debt and create stable, long-term funding for much needed transportation projects. Addressing these two issues is key to fostering economic growth in the state.

The Governor’s proposal represents a new way of thinking in Trenton and his out-of-the-box approach must be commended and seriously considered as an important first step. The Chamber Board was especially pleased that the Governor recognizes the need to match stable revenue sources with controlled spending.

Specifically, the Chamber supports the proposal to freeze spending at the current level, we support the proposal that spending will not be allowed to exceed current revenue, and we support the proposal that all future debt issued outside of a dedicated recurring revenue source must be approved by the voters.

The Chamber Board also supports the creation of an adequately funded Public Benefit Corporation. This support is based upon the understanding that revenues will be irrevocably secured and unavailable to future Legislatures for purposes other than those implicit in the mission of the PBC.

The Chamber Board is supportive of the plan in part because of the inclusion of critical fiscal restraints designed to slow state spending growth. This is an essential element for the success of this plan and will help prevent New Jersey from ending up in the same precarious financial situation in the future that we find ourselves in now.

The Chamber is supportive of the plan’s provisions to freeze spending, a limit of future spending to revenue growth, and to require voter approval of future debt. This will create a framework of fiscal responsibility desperately needed in our state.

Already a strong plan with new thinking, the Chamber Board’s desire is for it to go even further to forcefully address systemic expenditure problems within our state’s fiscal structure that have plagued Administration after Administration. You will find our full recommendations in the hand out.

The first seeks the creation of legislation and a Constitutional Amendment that will prohibit incremental spending levels from exceeding certified recurring revenues.

In addition, we seek the implementation of safeguards to ensure that future Administrations do not undo the good work proposed by this plan. Specifically, we believe the funds in the Public Benefits Corporation need to be irrevocably secured and available only for the purpose of paying down transportation debt, specified state debt and maintenance of transportation assets.

Our second recommendation calls for genuine reform in the area of state pensions and benefits. These include increasing the retirement age to 65 as well as replacing the defined-benefit hybrid plan for new hires with a defined contribution plan.

Likewise, additional modifications to retiree health benefits should be addressed such as negotiating one contract on behalf of all local workers where the state picks up the cost. If the state is required to pay for the benefit, the state should negotiate the agreement. The state should also begin now to phase out lifetime benefits for retirees, as has been done successfully in private sector.

Our third recommendation is that two groups created for the purpose of truly reforming the pension and health systems be immediately staffed and mobilized. They are the New Jersey Tax and Fiscal Policy Study Commission, and the Local Unit Alignment, Reorganization, and Consolidation Commission.

Our fourth recommendation asks the Governor’s Office and the Legislature to fully explore opportunities for creating efficiencies within government, including the elimination or consolidation of departments.

Finally, we believe the implementation of new programs and the expansion of existing programs should be suspended until we have the financial resources to pay for them – how you would run your household budget.

We look forward to working with the Governor and the Legislature on these key components, because their inclusion into our position statement was critical to our decision to be supportive.

I want to thank the Governor once again for making the state’s fiscal crisis his top priority. We are still in the early phases of a long-term process to address the fiscal challenges of our state. Our purpose at the Chamber is to participate constructively and substantively to that process. The end goal is to make New Jersey a pro-investment state so that there is economic opportunity for all. Thank you.

January 29, 2008