New Jersey Chamber of Commerce Testimony before the Assembly Budget Committee

Regarding the Fiscal 2009 State Budget

Jim Leonard, Senior Vice President Government Relations, NJ Chamber of Commerce

June 18, 2008

Good afternoon Chairman Greenwald and members of the Assembly Budget Committee. Thank you for the opportunity to share with you the State Chamber’s views on the proposed Fiscal 2009 State Budget.

As far as general comments are concerned, the State Chamber believes it is important to pass a budget that sends the right message to the business community, especially in these challenging economic times. Overall we believe this budget does in fact send that message, and both you, your colleagues, and the Corzine Administration deserve credit. Our state has experienced significant job loss over the last several years and we are lagging behind many of our neighbors in the Northeast in terms of job creation. In this uncertain economic climate State Government must set an example for the rest of the state in terms of fiscal responsibility and prudent spending.

There are many general aspects of this budget that we find encouraging to the employer community and are pleased to support:

• We commend the legislators and the Corzine Administration for crafting a budget that reduces spending by $600 million below last year’s level. This shows the employer community that our government is serious about restoring fiscal solvency.
  
• This budget contains no new or increased taxes for the second year in a row, which brings much needed predictability to our business climate and makes us more competitive.

The specifics contained in the budget also represent priorities the State Chamber not only agrees with but applauds:

• The State Chamber appreciates efforts to streamline government operations and promote efficiency by trimming the state workforce. We request that the legislature support the Administration’s call to allow no more than 10 percent of these vacated positions to be backfilled. By doing so you will help lower the long-term budget obligation we face year after year.
  
• We appreciate the partial restoration of charity care funding, as well as the creation of the Hospital Stabilization Fund. These funds will help alleviate the financial burden faced by hospitals and will help reduce the overall costs of healthcare since unreimbursed care increases the costs for the insured population or takes away from the bottom line of our hospitals. Additionally, the increased funds for Graduate Medical Education (GME) will also help the hospital community. Hospitals that offer GME programs incur higher costs associated with training and liability and it is appropriate to increase spending to keep our best medical students in New Jersey. That being said, I must echo comments made by Betsy Ryan and others in the hospital community with regard to the reimbursement hospitals receive for Charity Care. Services provided to the uninsured population that are not reimbursed represent money lost and money that is impossible to make up. The creation of a long-term, stable funding source for Charity Care must be a top priority for the legislature before the next budget season begins.
  
• You have added funding for the State Comptroller for oversight activities and for audits. We supported the creation of this position and fully support his efforts to review contracts and identify waste.
  
• You have added language requiring local finance boards to report to you on the development of municipal performance measures that will help restore the public confidence of municipal activities and ensure that tax dollars are being spent for productive and relevant activities.
• You have added language and funding for school buses to pay for a diesel retrofit process, cleaning the air and improving health.
  
• You have asked for a report on disease and health management programs, thereby taking steps to identify ways to decrease the costs of health care. Disease management programs are proven to improve the quality of life for those suffering with a chronic disease and lower the cost of health insurance.
  
• You have added funding for Election Law Enforcement Commission activities, creating more transparency for the public and assuring the activities of this group can continue as intended.
  
• You have added money to the Business Employment Incentive Program, a program copied by other states because of the success it has had in growing jobs. Despite comments to the contrary, this program pays incentives only when a job is created. The BEIP is not a corporate hand out but a revenue sharing program that has a significant return on investment for the taxpayers of New Jersey.
  

My testimony in support for this budget would be incomplete without mention of additional areas that need to be addressed. The positive steps taken in this budget will be devalued unless you continue to take action on two areas of significant importance:

• The State Chamber strongly supports the public employee pension and benefits reform package that is moving through the legislature and is scheduled for full Assembly action on Monday. This legislation would achieve significant savings and help alleviate the state’s fiscal crisis. New Jersey’s long-term budget forecast is seriously threatened by the state’s current policies toward public employee health benefits and pensions. The unfunded liability faced by the taxpayers of New Jersey - $25 billion for pensions and $60 billion for health care - must not be allowed to increase. If this legislation is not enacted, benefit costs in the year 2010 will represent more than 20% of the state budget, limiting the ability of government to provide services for New Jersey residents and employers.
  
• We also support the bills moving through the legislature that propose constitutional amendments to require voter approval when the State borrows money. As members of the Assembly Budget Committee you are faced with making painful choices, and every year the state’s skyrocketing debt reduces the money available to fund services. We urge swift passage of this important legislation to control debt.

Thank you again for the opportunity to speak today. I would be happy to answer any questions that you might have, and I look forward to working with the members of this committee in the future.

July 2008