2010 - New Challenges and Opportunities for Change

As we reflect over the past year of daunting economic challenges within our industry, one cannot help but choose to be optimistic that 2010 will bring new opportunities for increased business prosperity and a more stabilized workforce.

Yet, for firms in New Jersey, no one can deny the state’s own critical fiscal crisis.

New Jersey voters in record numbers voiced their desire for change in Garden State politics last November by electing Republican Christopher Christie as their new head of state by an overwhelming majority. Governor elect-Christie and New Jersey’s first-ever Lt. Governor Kim Guadagno took office Jan. 19. Some may argue that his victory was more an anti-Corzine vote than a pro-Christie one, but the demand for new leadership and high level of expectation for results was—and remains—a major one. The Christie team is committed to making government reform, along with business retention and expansion, their key goals. The printing industry and others in the private sector will work hard to help them achieve them.

Christie has already called for a 90-day moratorium on all new regulations that impact business, until their economic impact can be assessed objectively, especially those affecting small firms, and is establishing a task force to review the plethora of regulations that businesses face. He has asked the Legislature not to extend two laws that increased taxes and were due to expire next June: one on small businesses, corporations and individuals with incomes over $400,000 and the other one that levied a 4 percent surcharge on businesses.

With the state facing a $6 billion deficit, and the legislature comprised of a Democratic majority in both houses, the Governor-elect’s task is a most unenviable one. While the Legislature has already agreed to avoid authorizing bills with any additional spending, its lame duck session, which ended on Jan. 11, will undoubtedly contain the usual array of pork barrel projects. Christie has pledged to not raise taxes, but that may prove a hard promise to keep. Unless drastic steps are implemented, New Jersey is expected to run out of money in March.

One of the most serious immediate problems facing the business community is the insolvency of the Unemployment Insurance Fund. Years of the legislature tapping it dry for unrelated purposes have really come home to roost. From 1989 to 2005, legislators and governors from both parties have diverted $4.8 billion from the UITF to pay for other things. Even with an automatic tax hike for employers this July, the fund’s deficit is expected to increase by fivefold—from $926 million now to $4.5 billion by April 2011.

New Jersey is not the only state facing this same problem. The U.S. Department of Labor expects the funds within 40 states to become insolvent by next year. New Jersey, along with 25 other states, has been borrowing money from the federal government to pay claim. It currently owes more than $926 million. New York owes $2 billion and others even more.

The Legislature recently approved a bill calling New Jersey voters to approve a referendum in November that would prohibit the state from diverting unemployment insurance funds for anything but their intended purpose. Approval will no doubt stem further tides, but it remains to be seen what will happen during the interim to replenish the Fund against impending insolvency in the short term.

No matter what the suggested solutions may be, one thing is certain: that Printing Industries Alliance and other business organizations will be advocating strongly on our collective members’ behalf. But we again urge readers to speak out personally to their elected officials about unemployment fund concerns and other issues impacting your ability to do business. Tell them that you expect thoughtful and significant action now. Share your thoughts and ideas with those who represent YOU. Your input not only CAN, but WILL make a difference!