Governor’s Race Filled with Drama and

 Melodrama for New Jersey Businesses

By Rod Hirsch 

As Election Day ’09 draws near over the next several months, New Jersey will be treated to almost daily visits by a “Who’s Who” of American politicians and public officials – from Bill and Hilary Clinton to John McCain and Rudy Giuliani. The state’s business community will be seated center orchestra watching the procession.

Much is at stake for both major parties in the Garden State as incumbent Gov. Jon Corzine, a Democrat, faces off against Republican challenger Chris Christie in a race that has national implications.

Gov. Jon Corzine and Republican candidate Chris Christie will square off on the issues this summer and fall, including those of significance to the state’s business community.

For Republicans, the gubernatorial contest is a litmus test, an opportunity to challenge the thrust of the Obama administration’s brush stroke 10 months after the inauguration. For Democrats, who experienced landside Congressional victories last fall, the election is a referendum and opportunity to reaffirm their policies.

Virginia has the only other gubernatorial race this fall, so all eyes are turned east. Yet it is only the local audience whose votes count.

In New Jersey Republicans see Corzine as vulnerable. In the weeks leading up to the June 2 primaries, a Quinnipiac College poll showed incumbent Corzine trailing Christie in a likely November contest. Among all registered voters, Corzine trailed Christie 45- 38 percent, with independent voters backing Christie 52-25 percent, according to the May 20 poll.

In addition, just two weeks prior to the primaries the poll also noted Corzine’s approval rating with voters had slipped to 38 percent.

Both numbers are likely to change as loyal Democrats, who outnumber registered Republicans in New Jersey by more than three-to-one, galvanize around their party’s candidate, according to Clay Richards, assistant director of the polling institute.

“Once the primary is over, Corzine will put on his million-dollar golden gloves and start to fight,” Richards said.

As predicted, Christie defeated former Bogota Mayor Steve Lonegan in the Republican primary. Lonegan is a staunch conservative who championed a 2.9 percent flat tax; Christie, a hard-nosed former prosecutor who sent more than 100 crooked politicians to jail, is considered a moderate.

As both candidates officially launched their campaigns last month, New Jersey unemployment was at a 15-year high, 8.4 percent as of April 30, although less than the national rate of 9.4 percent in May, according to the U.S. Bureau of Labor Statistics.

According to preliminary estimates from the New Jersey Department of Labor and Workforce Development’s monthly survey of employers, nonfarm wage and salary employment in the Garden State decreased by 14,400 jobs in April, to a total of 3,945,600. All the loss occurred in the private sector (-15,600), as public sector employment rose by 1,200, entirely due to hiring by the federal government for the 2010 census.

The numbers add up to an election that carries unusually high stakes for both New Jersey residents and businesses. And because business drives employment, the business community of New Jersey is watching closely.

For years, New Jersey has been ranked as one of the least business-friendly states in the nation, according to a number of ongoing national polls.

“For far too long our state has had an anti-business mentality, so it’s no surprise that New Jersey is known as the least business-friendly state in the nation,” Christie said. “I will immediately get to work fixing this.

“In addition to reducing corporate business tax rates to make New Jersey more competitive with our neighbors, I will consolidate the state’s fragmented economic development activities into the New Jersey Partnership for Action, which will act as a one-stop shop for new businesses to make opening in or relocating to New Jersey easier and more convenient.

“With this public-private partnership we will not only be able to walk new companies through regulatory processes and assist with tax incentives but we will give our private  sector a voice in the Governor’s office. I will make this agency one of the Lieutenant Governor’s principle responsibilities to ensure that this is an effective infrastructure for private sector growth.”

Corzine has worked tirelessly during his first administration to improve the state’s business climate and to overcome those negative perceptions, according to Sean Darcy, Corzine campaign spokesman. He will continue to do so during a second term, Darcy added.

“Gov. Corzine created the first-in-the-nation Economic Assistance and Recovery Plan,” Darcy said. “One of the components of this plan was to help attract and retain businesses to the state. One of the facets of the plan was the creation of Invest NJ, which provides $3,000 for each new job created and $70 million in grants to offset sales tax on capital investment. It also made significant long-term legal, tax and accounting adjustments sought by the business community, resulting in more than $125 million in savings for New Jersey businesses.

“And the Main Street Business Assistance program provides $50 million in financing for small and mid-sized businesses.”

Darcy said Corzine will continue to press for similar business-friendly initiatives.

“This first-in-the-nation Economic Assistance and Recovery Plan has put us in position to take advantage as soon as the national economy rebounds,” he said.

Transportation is a major component of commerce worldwide and is an important issue for New Jersey businesses, as well.

“(Corzine) has invested in our public infrastructure by expediting public works projects for schools, roads and bridges to create over 10,000 jobs,” Darcy said. “He also championed the construction of the mass transit tunnel. It will create 6,000 jobs every year over the life of the project and generate 44,000 new jobs upon completion.”

On June 8 Corzine was among a group of elected officials who helped launch the $8.7 billion mass transit tunnel in North Bergen, the largest mass transit project in the country, which will be partially funded by federal stimulus dollars.

The new tunnel beneath the Hudson River – known as ARC, for Access to the Region’s Core – will link New Jersey with New York and eventually will double capacity on the nation’s busiest rail corridor, running from Washington to Boston, officials said.

“This is going to promote mobility, reduce commuter congestion, staunch carbon emissions, enhance regional competitiveness and lay a foundation for an extraordinary expansion of mass transit in the most densely populated state in the nation, New Jersey,” Corzine previously said.

Other transportation improvements of the last four years cited by Darcy include:

• More than 9,000 jobs created though programs and capital investment by the Department of Transportation, NJ TRANSIT and other agencies;

• Planned investment of $3.6 billion – $2.2 billion for highways and bridges and $1.4 billion for mass transit systems;

• Leveraging of the federal stimulus plan to replace and repair structurally deficient bridges, reconstruct and resurface highways, improve drainage and make important safety improvements on the state highway system;

• Opening of the state-of-the-art Statewide Traffic Management Center, which improves the management of and response to accidents, adverse weather, special events and congestion.

Christie believes that New Jersey’s transportation network is broken and needs fixing. “We have the worst roads in America, and this impacts our state in a myriad of ways,” he said. “It adversely affects our safety, our quality of life, and those trying to do business in New

Jersey. Our roadways are too crowded, poorly run, poorly maintained and far too expensive – and don’t forget Gov. Corzine’s proposal to raise tolls 50 percent every four years.

“The first step to fixing our roadways will be to restore solid, responsible management to the department. I will increase accountability and efficiency to make sure our tax dollars are being spent on expansion, modernization and infrastructure repair, not wasted on bloated bureaucrat salaries. I will end the use of project labor agreements, which drive up the cost of public construction projects and fail to deliver a public benefit at a time when the economy is shedding jobs and taxpayers are struggling to make ends meet. I will also save taxpayers hundreds of millions of dollars and expedite key projects by utilizing innovative procurement methodologies like Design/Build/Operate/Maintain (DBOM).”            

contd...

Christie also is critical of New Jersey’s business tax structure and myriad of regulations.

 “The taxation and overbearing regulation of the private sector is breaking our economy,” he said. “I am committed to fostering growth in our private sector to create jobs for New Jersey by slashing our state’s burdensome taxes, eliminating the double taxation on s-corporations  and cutting the corporate business tax rate to make New Jersey competitive with neighboring states. We can no longer allow these outrageous taxes and regulation to impede our private sector growth.”

Darcy counters that Corzine has made progress in retooling the state’s corporate and business taxes, and will continue to do so.

“Under the Governor’s first-in-the-nation Economic Assistance and Recovery Plan, launched in October 2008, the Governor made several important changes to the Corporation Business Tax,” Darcy said.

These included elimination of the “throw-out rule;” elimination of the “regular place of business” requirement; and extending the Net Operating Loss Carryforward from seven to 20, according to the spokesman.

“These changes have been sought by the business community in New Jersey for several years and are expected to result in more than $125 million in savings for New Jersey businesses,” Darcy said.

Corzine and Christie have similar approaches to environmental issues.

“While I am committed to protecting the environment, there also needs to be a commitment to cultivating our private sector growth,” Christie said. “One of the first things I will do is overhaul New Jersey’s excessive regulation by restoring balance and fairness with the creation of a permanent Red Tape Review Group. This group will review all current regulations and any new regulations to ensure their necessity. With this overbearing regulation comes additional fees and fines that cause even more hardship for our small businesses.”

Corzine has tried to strike a balance between good business and wise stewardship of the environment, according to Darcy. The Governor established the Permit Efficiency Task Force to conduct a comprehensive analysis of DEP permitting and implemented numerous recommendations, including a new electronic permitting service, Darcy said.

He also signed the Permit Extension Act of 2008, which extends permit duration at a period of economic upheaval. As financing has been difficult to obtain, the permit extension allows development to resume immediately as the economy begins to recover – without requiring a return to the DEP to renew the permitting process.

Corzine also championed the Site Remediation Reform legislation and recently signed the landmark bill that will enable the private and public sector to remediate 20,000 sites throughout the state, allowing for increased environmentally responsible development, according to Darcy.

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That could be good news for local tourist attractions such as restaurants, bed and breakfasts, museums and the like, and particularly good news for the Jersey Shore. The poll also found that 20 percent of those planning a trip this summer will stay closer to home due to economic worries.

The Jersey Shore is less than one gas tank away for more than 91 million people, according to Jennifer Stringfellow, tourism manager for the New Jersey Department of Tourism, making it an ideal destination for many budget-minded families.

The Department of Tourism is hoping to lure vacationers from nearby New York City to the Shore region, having opened a “pop-up” Jersey Shore Store on Broadway near Union Square in Manhattan for the summer. The store includes pictures of “iconic” Shore attractions, such as the boardwalk, and will be staffed with travel experts who can help families plan the perfect Shore vacation.

Many hotels and tourist attractions also have put together special packages for the summer and Stringfellow believes the new Aces train to Atlantic City will be an added draw for city dwellers looking for a weekend away.

“We want to remind New Yorkers of the great vacation opportunity they have right next door,” she said.

Towns along the Shore are gearing up to woo stay-at-home vacationers with a wide variety of festivals, free events and special packages.

“There’s a whole litany of activities planned throughout the summer and into September,” said Maria Maruca of the Ocean County Chamber of Commerce. Popular vacation spots in Ocean County include Seaside Heights, Point Pleasant and Long Beach Island.

“There are free events planned each week, everything from concerts, to movies on the beach, to fireworks and children’s entertainment,” Maruca said. “Our motto is the fun doesn’t stop at Labor Day.”

Weekend festivals are planned in the early fall in honor of everything from chowder to decoys to barbeques.

Vacationers with the money and inclination to vacation farther afield will find now is the perfect time, as well, according Carmine Feola of Carlson-Wagonlit Travel. Airfares are down as much as 40 percent to many destinations, particularly Europe, he said. Mexico remains popular, despite the recent Swine Flu outbreak.

The cruise market has remained stronger than other vacation options, but there are still bargains to be had in this area, as well, Feola added.

“The deals for Alaska and Hawaii are unheard of right now, as much as 50 percent less,” he said.

If vacationing by air, travelers should be prepared for crowds at the airport and on the plane, Feola warned. About 207 million passengers are expected to fly this summer, an increase of about 2 million, or roughly 1 percent, over last year. But this small increase in the number of passengers will be offset by a 4 percent decrease in flights.

That may make sticking close to home seem even better, and Stringfellow said the Tourism department is cautiously optimistic about prospects for the summer.

“We have noticed that reservations are being made at the last minute, not as far in advance as in past years,” she said. However, rental properties and hotels are starting to fill up and second homeowners are returning. The campgrounds are full and the weekend traffic reports show an increase in traffic near the Shore – all promising signs for a good summer tourist season.

In the end, the Jersey Shore may turn out to be the most popular place to spend summer vacation this year – St. Somewhere and Margaritaville all in one.

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Never Better

Last November, in the aftermath of the stock market crash, I overheard two businessmen bemoaning the recession. They were wondering what the government would do to help stimulate the economy.

I wanted to shake them, to ask them, “What are you doing to boost your business? What new products and services will you offer to earn the right to more business? What new techniques will you try to lower your cost, boost your productivity?”

I imagined their reply: “Yeah, but what is the government going to do? After all, demand is off. We need the government to stimulate demand.”

Why not create your own demand?

I’m sure the conversation I overheard is not representative of our business culture. But I started speculating: what if it was representative?

Then I would have to conclude how far we have fallen – in our national ethos – from the early 1900s, when optimism was the national byword. When writers like Napoleon Hill and W. Clement Stone could teach us:

• How to Think and Grow Rich

• The value of a Positive Mental Attitude

We learned that, “What the mind of man can conceive and believe, he can achieve.”

It was the age of optimism, of “can do.”

This was the time when Bruce Barton wrote, “When you’re through changing, you’re through.”

What happened to America since the 1920s? What could cause today’s businesspeople to hesitate, to wait and ask, “What will the government do?”

A young, burgeoning, industrializing nation matured. We lived through the Great Depression. We fought the Second World War. We encountered cutthroat overseas competition, which cost millions of jobs. Later we fought the Viet Nam War. Certainly these are grounds for pessimism (despite paradigm-shifting technological advances – including the transistor, the computer and bioengineering.)

In this mindset, I was reminded of a saying identified with a retired salesperson: “Never Better.”

In the 1950s, America lived through two recessions of 10-month durations – one spanning 1953-1954, the other 1957-1958. During these recessions, the salesperson was disappointed to hear other salespeople – working for his company and working for competition – bemoan the terrible market conditions of that day. To make an optimistic counterpoint, to offer a positive view of life, when asked how things were, he responded, “never better.”

This is sound advice for us to embrace in this current recession.

Although a recession is disruptive and widespread, there is something that can be even worse, that businesspeople face constantly – the declining market scenario. A recession is just a special case of the declining market scenario, which merits discussion.

In a mature economy, with mature technologies, it is inevitable that many of our products, services and even industries are facing decline. (Consider the recent switch from CDs to IPODs, after CDs had replaced records.)

There are markets that decline 20-40 percent per year – think of print advertising as a result of the Internet.

It is the job of leadership to prolong the life cycle of declining businesses, to use the extra life cycle to fund new businesses being developed.

Salespeople have a pivotal role to extend the life cycle of declining businesses. They need to take a “do or die” approach – a “can do” attitude plus nonstop creativity. Best efforts are a recipe for disaster. Neither business owner nor sales people have a chance of success if they are waiting for the government to do something.

They need to embrace life with a “never better” attitude.

I have some knowledge of declining businesses – I have been hired by management in about a dozen declining businesses, to help arrest the decline.

I have been very fortunate to be inspired by that retired salesperson who always said, “never better.” This attitude helps me inspire sales teams in very difficult markets.

Yes, I have been fortunate. Since I was a boy my father – that retired salesperson – always taught me that things were “never better.”

A recession is just a special case of the declining market scenario, which merits discussion.

© Bombadil LLC 2008

I just returned from a national forum on educational reform conducted by the Institute for a Competitive Workforce and the Bill and Melinda Gates Foundation. The forum focused on workforce preparedness: are our kids coming out of school prepared to go to work in jobs where they are most needed and what reforms are needed in our schools to get them there?

The conference was fascinating. It brought together some of the leading reform advocates from think tanks and foundations around the country.

Interestingly, both sides of the political aisle seemed in harmony about the need to continue systemic reform and every indication is that the Obama administration is going to be inclined to a continuation and a refinement of the policies underway.

Not surprisingly No Child Left Behind was a major topic of discussion. Here the focus was primarily on urban school districts where the legislation seems to have a dramatic and positive effect. There was also a good deal of discussion on how some states try to subvert the process by making tests too easy, thus giving the impression that they are doing a good job teaching.

There is a new initiative to create national standards called the Common Core State Standards Initiative. I’m proud to say that New Jersey is one of the 46 states that have signed on to this proposal.

Only Alaska, Missouri, South Carolina and Texas are lagging in coming on board.

However, I am very troubled by the determination of these new standards.

Over and over we read that the United States is falling behind in math and science. But are math and science the best measures of how well a society is doing? I think not. Though I did my graduate work in advanced applied mathematics, I know a lot of people who are very successful even though they can barely add.

We are told there are not enough people being trained to work in labs. We read that in our universities a disproportionately large percentage of the math and science students come from foreign countries.

We are warned they are stealing our jobs at home, taking our technology abroad and soon we’re going to be a backwater nation.

To me this smacks of xenophobia. It is natural that foreign students gravitate to the sciences as language skill is less important in those pursuits. Also, a very large proportion of these students end up staying in the U.S. and fill the lab tech jobs we keep hearing about. Immigrants have always filled jobs in the U.S.; this has made us the country we are. As for taking technology home, the wealthier the country, the more valuable trading partner it is.

Many times during the forum the success of Singapore was highlighted. Singapore consistently scores at the highest end of the spectrum in math and science. Singapore is also the cleanest, greenest, most modern city in the world.

However, Singapore is a city, and not an especially big one. But it has the revenue of a county. In other words, the equivalent of all federal, state and local taxes together, with property taxes and sales taxes included, all go into its budget. Singapore has a lot of money to spend. I moved to New Jersey from Singapore, and I can attest to this first hand.

Yet Singaporeans are not sought-after managers. Their workers are incredibly skilled and able to do to perfection that which they have been taught to do. Whether working on an assembly line, in a lab running experiments or making accounting journal entries, they are super. Don’t put a problem before them that they have never seen, however, because you will be disappointed with the results.

This brings me to my big fear. The U.S. education system has been structured to teach people how to think. Unlike most of the world, we have not traditionally been taught by rote to simply memorize facts to regurgitate them on a test.

However, as we move toward national standards, this could become a very real possibility. We may get real good at turning out lab techs, but not musicians and writers and entrepreneurs.

New Jersey state leaders are now rummaging through couch cushions searching for spare change in a desperate attempt to close the $2 billion deficit in the state’s 2010 budget. The Corzine administration has proposed a number of radical steps to balance the budget by July 1, as required by the state’s constitution, including spending cuts, an increase in income taxes on higher earners and other revenue-producing measures.

However, one crumb discovered in the couch cushions by state Treasurer David Rousseau will prove very unhealthy to the state if ingested, his proposal to increase premium taxes paid by health insurance carriers.

Health insurance carriers operating in New Jersey currently pay a 2 percent tax on premiums paid for both general and HMO coverage. The proposal calls for raising those taxes by .25 percent and 1 percent, respectively. Collectively, the increases would generate an additional $116 million in revenue for the state in fiscal 2010, according to the Asbury Park Press.

Under such dire budgetary circumstances, $116 million sounds like not such bad medicine to help stop the state’s hemorrhaging. In reality, the tax increases are more akin to widening an already festering wound – the rising cost of providing healthcare coverage that each year weakens businesses and drives more employers to reduce or eliminate health benefits for workers and their families.

According to the 2008 Health Benefits Survey conducted by the New Jersey Business and Industry Association, employer health insurance costs rose by 9.4 percent in New Jersey in 2007. (Results for 2008 have not yet been released.)

Smaller companies are feeling the pinch even more intensely than larger businesses. Insurance costs for companies with 2-50 employees rose 9.8 percent; companies with 2-19 employees continuing to provide coverage to workers has dropped to 75 percent, down from 92 percent just four years ago; and many of the smaller companies continuing to provide health benefits reported scaling back hiring plans and/or pay increases to be able to afford coverage.

The proposed premium tax increases will translate into even more bad news for the state’s employers, and ultimately their employees and families.

The insurance carriers are precluded from passing along the premium taxes – and tax increases – to their customers and are thereby forced to absorb those expenses, eroding their earnings. There are only about one dozen carriers serving New Jersey and a further erosion of profits might be the final blow that flat lines the continued presence of some of those carriers in the state.

For example, AmeriHealth, a New Jersey-based health insurer solely focused on meeting the needs of New Jersey-based businesses, would have to cut back on programs that help to contain costs for employers – such as innovative wellness initiatives. It could also threaten their continued viability as an insurer in New Jersey.

Were AmeriHealth and other carriers to cease doing business in New Jersey, the ultimate sufferers will be the state’s residents, employers and healthcare providers. Whenever competition is reduced in any arena – any time there are fewer options for buyers – prices tend to increase and services tends to decline.

In addition, just as the overall burden of providing health coverage to employees falls disproportionately heaviest on smaller employers, so will a reduction in coverage and carrier options, with the employees of these smaller companies ultimately taking the hit in one way or another.

There is no dispute that New Jersey’s leaders must take drastic steps to close the budget gap and balance the budget. There is no denying that every proposal made by the state’s leaders for cutting spending and/or generating revenue is met by a chorus of naysayers who claim their interest or sector of the community is too vital to the state’s economy, culture or quality of life to absorb such punishment.

Yet no sector of New Jersey is immune from the rising costs of health insurance that each year claim a larger share of employee paychecks, business budgets and state funding. Any steps that threaten to exacerbate the health insurance crisis instead of easing it are heading in the wrong direction.

The proposal to increase health insurance premium taxes is the wrong prescription for the state’s budget ailments. The Governor and Legislature should spit this pill out.

New Jersey businesses operate in what is arguably one of the toughest political and legal environments in the United States. New Jersey is widely considered one of the most highly regulated and, unfortunately, business-unfriendly states in the nation.

Over the years, government entities at the state, county and local levels have enacted a myriad of laws and regulations in an attempt to control business and protect the residents from any negative consequences of business activity. At the same time, the same government entities have come to realize that a real partnership between government and business is required to provide the best outcomes for state residents.

“Home Rule,” the preference for a strong local government, has a long tradition in New Jersey.

While most believe that it is the federal government that has the most influence on business, one might argue that the local government is at least as powerful.

For example, New Jersey has the highly developed Municipal Land Use Law that gives local governments wide powers over business activities in their respective municipalities. Zoning is one area where politics plays a major role in determining the value of real estate. Most business owners are unaware that a small group of individuals that lobby a governing body can often have longstanding zoning laws overturned in a few months.

For example, landlords with buildings located on major highways planned for “big-box” stores can have their projects wiped out when a zoning ordinance is enacted that limits the square footage of stores. In fact, the “Time of Decision” rule in New Jersey allows governing bodies to enact legislation “on the fly” to react to projects that are filed with the Planning Board or Board of Adjustment. This means that new laws can quickly be created to stop potential business activity in its tracks, well after investors have expended capital, time and effort for projects that have no hope of coming to fruition due to the actions of local politicians.

While the aforementioned example is just the tip of the regulation iceberg, the real question for New Jersey business leaders is how to deal with the powerful state political system and be able to not only survive, but actually thrive. The best recommendation is to practice proactive engagement.

Businesses must not only engage elected officials, but also the hundreds of appointed members of state, county and local boards that have power over their businesses.

It is also important to remember that businesses cannot vote. As such, the options for engagement are limited. Business people would be well advised to get to know their local, county and state officials by attending political dinners and other events. Getting involved with political campaigns can also be a great way to get to know those in the political arena.

Many business people choose to become even more active by seeking appointments to boards.

Politicians, like business people, tend to work with people that they know. Political contributions to the campaign funds of politicians should also be thought of in the same way one thinks of buying tickets to a sporting event. There is really no difference between supporting your favorite sports team and supporting your favorite politicians in their quest for re-election.

Education is another way to engage elected officials and board members. Invitations for officials to visit businesses, such as during grand openings or for tours, are great ways to break the ice and help these officials to understand what the issues are from the business perspective. Too often the true intentions and nature of business issues are not communicated to these powerful players in the political process.

Engagement is the key to bridging the gap between the political and business worlds. In New Jersey, the two are inextricably intertwined, so proactive engagement is the key to making New Jersey politics work for New Jersey businesses.

Dr. Joseph Scuralli is a member of the faculty of the management department of Berkeley College.

The Trinitas Health Foundation recently raised more than $460,000 for Trinitas Regional Medical Center at its 2009 annual gala. The Foundation acknowledged the dedication of the Trinitas medical and dental staff with its Humanitarian award; the generosity of Wachovia/Wells Fargo with its Philanthropy award; and New York Knicks forward Al Harrington, a Union County native, for his commitment to underprivileged children of New Jersey.

ConocoPhillips Bayway Refinery of Linden recently assisted Trinitas through a donation to help in a medication cart project designed to ensure medication dispensing safety. Trinitas also announced that Mary Lebreck Kelley, dean of the Trinitas School of Nursing and director of education at Trinitas Regional Medical Center, has been awarded an honorary Doctorate of Laws degree by the College of Saint Elizabeth in Convent Station.