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oUr poinT of VieW film, UeZ cuts come as no shock Recommendations made to the Chris Christie team on tax incentives, and their responses, are telling for New Jersey businesses — particularly those in fi lm or in one of the state’s urban enterprise zones, which the administration wants to end. That’s hardly a surprise: The fi lm tax credit, in particular, has been spotted walking around with a bull’s-eye on its chest. The report found the program paid for itself, though the state contests the fi ndings, saying an end to tax credits won’t end fi lming in New Jersey. But studio owners say business has been much quieter since the state froze the credits, and the program was credited with creating more than 900 jobs, paying an average of about $47,000, in 2009. But it’s best to judge the credits closer to 2015, when the program sunsets. The UEZ program, on the other hand, was labeled a complete bust in the report. The major attraction — allowing retailers to charge half the sales tax — gives an unfair advantage to these cities, which invest the difference in sales tax collection into local restoration work. Suburban downtowns do this sort of work without getting a break on the sales tax. And there are now nearly three dozen UEZs in the state, including tiny Hudson County, which has seven UEZs in its 12 municipalities. Why not just waive the sales tax outright for the entire county? ■ ■ ■ In January, responding to Christie’s ill-advised decision to recruit executives from Illinois, we wondered: “What would Honest Abe say?” Well, the Land of Lincoln has responded, with an ad campaign in New Jersey media touting the Garden State’s horrid tax climate — which is really going to give pause to the two business owners who were thinking of relocating here for the taxes. Continuing its rub-your-nosein-it campaign, Illinois is set to follow that with commercials on NJN listing the ways the Bulls are better than the Nets. OPINION leTTerS To THe eDiTor eDA is no rubber stamp I applaud NJBIZ’s in-depth coverage of the EDA’s award of an Urban Transit Hub Tax Credit for Panasonic’s proposed move to a new offi ce building in downtown Newark. New Jersey’s business paper of record should keep close tabs on the administration of this and other economic incentive programs. However, NJBIZ says this grant “… goes against the mission of the Urban Transit Hub program, which was designed to encourage urban developers and tenants to make big capital investments in long-suffering cities” (“A good idea is becoming a giveaway,” Our Point of View, Feb. 21). In fact, this project fi ts that stated mission like a glove: it is a major investment in new construction, at prevailing wages, in a city, and shifts commuting from cars toward mass transit. This project creates signifi cant new ratables for Newark and Essex County. This project represents hundreds of well-paying construction jobs desperately needed in our still stagnant economy. Moreover, the other objection expressed by some — that the UTHTC program did not envision moving jobs from one location to another in the state — is dead wrong. The Legislature revisited and substantially revised the UTHTC in 2009, making clear that a “credit shall not be reduced if [a business] relocates to an urban transit hub from another location or locations in the same municipality.” The Legislature sought to encourage existing in-state New Jersey businesses to build new facilities in our cities. Necessarily, they would move from elsewhere in New Jersey. My fi rsthand experience representing applicants is that our EDA’s leadership does an excellent job vetting applications to ensure New Jersey jobs truly are at risk of being lost to other states, and take pains to ensure the project will provide greater tax benefi ts to the state than the amount being awarded. EDA board members spend hours grilling EDA staff each month on proposed incentive awards; they are no rubber stamp. Notwithstanding a still-soft economy, the Legislature, the governor and the EDA have fi nally convinced businesses and developers to make huge investments in our urban cores. The EDA is thoroughly vetting applicants. NJBIZ should be applauding this watershed moment. Paul Josephson, partner Hill Wallack LLP Newark Urban transit tax credit is brilliant legislation One of the largest line items in the state’s overburdened budget is aid to cities (“A good idea is becoming a giveaway,” Our Point of View, Feb. 21). The Urban Transit Hub Tax Credit is designed to get the cities back on their feet and off the public’s back. The UTHTC is a brilliant piece of legislation and is critical to New Jersey’s economy and future competitiveness. Anyone who feels this tax credit is a giveaway either doesn’t get it or is acting purely out of self interest. Sab Russo, president Mercer Oak Realty LLC Ewing panasonic credit worth it in long run The Urban Transit Hub Tax Credit for Panasonic is critical in keeping jobs in New Jersey. In the long run, this will more than make up We won’t lose any business to Illinois as long as Pat Quinn is the governor. He’s a disaster. Chris Christie on Illinois’ ads in New Jersey media for the $100 million, both in personal and corporate tax revenues. Regina Maurer, partner Maurer & Maurer, CPAs LLC Morristown protect against sudden disability If you were to suffer a sudden disability, how would you pay for all of the expenses related to your lifestyle? Would your business be able to continue generating income for you? Business owners should consider setting up a wage continuation plan for themselves and their employees. Such plans can help ensure that owners and employees will continue to receive salaries despite long-term disability. Key person disability insurance and disability overhead expense policies are two other important protective options. Key person insurance will pay a monthly benefi t as determined by the key employee’s pre-disability earned income. The monthly DI benefi t can then be used to provide revenue to hire and train a replacement, or to strengthen the company’s cash fl ow. A disability overhead expense policy can help pay for overhead expenses should you become disabled under the terms of the policy. Thus, if you are temporarily unable to generate revenue, the bills will continue to be paid without interruption. The real key to plan design begins with a realistic understanding of the risks involved. The right policy can then provide fi nancial security for you and your business to help mitigate the potentially devastating effects of a major accident or long-term illness. Louis A. Tucci L. Tucci Financial LLC Little Falls Quote marks 12 March 7, 2011 ◆ njbiz www.njbiz.com
Corner offiCe Banks, credit unions must compete on level ground New Jersey’s credit unions have been trying to make the case recently that they should be allowed to take municipal deposits in order to drive more competition. And while New Jersey’s banks welcome free competition, credit unions have an unfair advantage, because they don’t pay taxes and are not subject to the same requirements as banks. Credit unions have the special federal privilege of a tax exemption because their legal mandate is to serve people of modest means. However, with this special privilege come limitations, such as business lending and field of membership restrictions. Credit unions cannot serve the general public, and are charged with serving only consumers in their field of membership. To join a credit union, you must have a common bond. This common bond has now been stretched beyond recognition, as there are now 167 credit unions nationally with more than $1 billion in assets, including some that serve areas larger than states. There’s some evidence that credit unions are no longer fulfilling their mission of serving people of modest means. The National Community Reinvestment Coalition, a consumer group, released a study in September 2009 that found banks outperformed credit unions in serving people of modest means. Congress limited credit unions’ abil- nJBiZ opinion poll While business owners stand to gain quite a bit from Chris Christie’s budget plan, many responders to our most recent poll said the gains for executives are balanced by interests of residents. Still, business owners are heaping praise on the governor, with Pro Fire Systems’ Len Guancione’s “thank God for Christie” response summing up how most feel about the plan. Steve Struthers, of DynTek, said Christie “is taking the courageous route by doing what he thinks is the best thing for the economy, regardless of whose toes he steps on.” Richard Monsen, of Monsen Engineering Co., said the effort is “hardly a windfall ity to lend to businesses in 1998 because it wanted to ensure credit unions remained focused on their specific mission of meeting the needs of consumers, not businesses. As part of their “special status,” Congress “There’s some evidence that credit unions are no longer fulfilling their mission of serving people of modest means. ” – John E. McWeeney Jr. chose to cap credit unions’ business lending at 12.25 percent of assets. Business loans under $50,000 do not count against this cap, nor does the guaranteed portion of Small Business Administration loans. Yet, credit unions have been lobbying for expanded business lending. for business owners.” “If New Jersey is to survive, we must strengthen our business community to create jobs and pay taxes,” he wrote. Reader JoAnn Dixon, meanwhile, took issue with the Legislature, which “seem(s) to Credit unions want it both ways. They want expanded powers in the areas of municipal deposits and business lending, but they still want to hide under the cloak of their tax exemption. As credit union membership expands, so does the cost to American taxpayers, who underwrite the credit union industry’s tax subsidy to the tune of more than $1.3 billion a year. At a time when budgets are under severe stress, why are taxpayers still subsidizing credit unions? New Jersey’s banks have been serving consumers, businesses, and all levels of state and local government for well over a century. On the government side, this includes not just taking deposits, but also buying short-term and long-term debt, which provide critical funding to meet the government’s operating and capital needs. There is no shortage of competition for government deposits or any other type of banking services in New Jersey. If credit unions want to expand their services, they have the option of converting to a mutual savings bank charter. A mutual charter would preserve mutual ownership for their members and allow them to break free from restrictions, such as the one on business lending. New Jersey’s banks welcome free competition, but they deserve a level playing field. If there are credit unions in New Jersey that want to operate like banks, they should stop hiding behind their tax exemption, change their charter and become banks. That means paying taxes and reinvesting in New Jersey’s communities just like New Jersey’s banks do. John E. McWeeney Jr. is president and CEO of the Cranford-based New Jersey Bankers Association. A good budget for business, but it’s not a windfall Chris Christie's budget plan: 21.5% Is a runaway win for business owners 17.3% Cuts programs with proven economic strength 61.2% 64.7% Offers a balanced mix for execs and residents Critical to keeping jobs in the state be against anything he wants to do. I’m not a Republican, but the guy seems to be on track to lead New Jersey out of the wilderness and tax morass we’ve been in.” But reader David Melvin said some cuts went bone deep, like those to infrastructure. “The Swiss just built the longest train tunnel in the world, while we canceled the most important train tunnel in the world.” And fellow reader Pam Pernot said many of Christie’s cuts “are short-term, Band- Aid cuts. It’s time he starts to think long-term benefits to the state … beyond the next election.” NEXT WEEK: A plan to redevelop the Meadowlands HOW TO REACH US Mailing address njbiz, 220 Davidson Ave., Suite 302 Somerset, NJ 08873 Phone (732) 246-7677 Fax: editorial (732) 846-0421 Fax: advertising (732) 249-8952 Fax: oPerations (732) 846-0421 subscriPtions (866) 288-7699 rePrints For article reprints, please contact our reprint coordinator at Wright’s Reprints: 1-877-652-5295. For photos, please see www.njbiz.com/photos PubliSheR thomas F. curtin tcurtin@njbiz.com Advertising DiReCTOR OF SAleS Mark cialdella mcialdella@njbiz.com SeNiOR ACCOuNT exeCuTive Penelope spencer pspencer@njbiz.com ACCOuNT exeCuTiveS susan alexander salexander@njbiz.com ryan boyd rboyd@njbiz.com samantha d’amore sdamore@njbiz.com craig Fallon cfallon@njbiz.com jessica holmes jholmes@njbiz.com joe Malone jmalone@njbiz.com editOriAL eDiTOR sharon Waters swaters@njbiz.com DePuTY eDiTOR - NeWS joe st. arney jarney@njbiz.com DePuTY eDiTOR & RePORTeR health Care/Nonprofits beth Fitzgerald bfitzgerald@njbiz.com COPY/lAYOuT eDiTOR Meghan shapiro mshapiro@njbiz.com STAFF WRiTeRS Finance/Accounting/law Martin c. daks mdaks@njbiz.com Pharmaceuticals/energy/Retail jared Kaltwasser jkaltwasser@njbiz.com Trenton bureau/Sports and entertainment andrew Kitchenman akitchenman@njbiz.com Real estate/economic Dev./environment evelyn lee elee@njbiz.com Central Jersey laura Mortkowitz lmortkowitz@njbiz.com PhOTOgRAPheR christina Mazza cmazza@njbiz.com ReSeARCheR danielle neufell dneufell@njbiz.com Art / PrOdUCtiOn DeSigN MANAgeR darren Phillips dphillips@njbiz.com DeSigNeRS Kevin Paccione kpaccione@njbiz.com sara siano ssiano@njbiz.com DeSigN iNTeRN julie hertz design@njbiz.com events eveNTS DiReCTOR Wendy berg wberg@journalpub.com eveNTS AND MARKeTiNg COORDiNATOR sarah spangler sspangler@njbiz.com BUsiness OPerAtiOns buSiNeSS MANAgeR annMarie Karczmit akarczmit@njbiz.com MARKeTiNg MANAgeR anne beck abeck@njbiz.com ADMiNiSTRATive ASSiSTANT jessica Perry jperry@njbiz.com Published by Journal Publications inc. david a. schankweiler, ceo lawrence M. Kluger, President www.njbiz.com njbiz ◆ March 7, 2011 13
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