New Jersey Officials Close Out May with a Flourish

 

Atlantic City Bailout Bills Pass Both NJ Houses

New Jersey legislation that aims to help Atlantic City financially recover from poor gaming revenue and successful tax appeals now awaits Gov. Chris Christie’s signature, after passing both houses of the state Legislature on Thursday.

During their regular voting sessions, the New Jersey Senate and Assembly approved a pair of bills that would give city officials 150 days come up with a financial plan to avoid bankruptcy and would create a tax deferral arrangement for casinos.

The two Senate bills evolved from Senate and Assembly proposals that had been merged and advanced Monday by the Assembly Judiciary Committee, giving rise to new bailout legislation that leaves collective bargaining agreements intact and gives officials of the struggling resort town more time to hash out its budget before state officials intervene.

The two points of contention had sparked showdowns between Assembly Speaker Vincent Prieto, D-Bergen, and Senate President Steve Sweeney, D-Gloucester, but lawmakers hailed the latest versions of the Municipal Stabilization and Recovery Act, or S1711, and the payment-in-lieu-of-taxes plan, memorialized in S1715.

The two sides had worked on a series of amendments to the Senate versions to bring them in line with the Assembly’s vision. For example, casinos are not allowed to opt out of the PILOT program, and the Municipal Stabilization and Recovery Act — formerly known as the “state takeover” bill, before Prieto and unions decried the stripping of the city’s autonomy — now extends early retirement incentives to all full-time employees to save money.

The Municipal Stabilization and Recovery Act won 32-5 approval in the Senate and 60-12 passage in the Assembly. The PILOT bill got 33-4 approval in the Senate and 61-12 passage in the Assembly.

Twelve casinos had made up 70 percent of annual property taxes in Atlantic City as of 2013. But competition from surrounding states and other factors have left the city with eight operating casinos, after four closed in 2014, and a tax base that dropped from $20.5 billion in 2010 to $7.3 billion in 2015.

The dire situation prompted Christie in January 2015 to tap an emergency manager for the resort town, after which Moody’s Investors Service slashed the municipality’s bond rating.

The pressure to come up with a plan to avoid insolvency reached fever pitch in recent months as city officials braced for a shutdown and battled legal wars.

Previously, the state Department of Education sued the town to ensure its school district got its share of taxes, although a state court judge last month declined to freeze the city’s assets. Compounding the fiscal woes are $240 million the city allegedly owes to bondholders and $150 million for successful tax appeal, including $88 million allegedly owed to Borgata Hotel Casino & Spa.

Prieto and Sweeney locked horns again earlier this month, when Prieto said the Assembly was not going to consider the Senate’s state takeover, which was the only plan Christie had said he would endorse to fix the resort town.

NJ Assembly Passes $15 Minimum Wage Bill

The New Jersey Assembly on Thursday advanced legislation that would gradually boost the minimum wage to $15 an hour in phased increases over the next five years, an initiative touted by the chamber’s Democratic leaders as a tool to help reverse the trend of poverty in the state.

Unveiled in February, the bill previously passed the Assembly Labor Committee and now sits before the Senate after its 42-30-1 passage Thursday. The legislation heeds the call of the nationwide Fight for $15 movement and its advancement comes a month after New York and California signed the initiative into law.

Assembly Bill 15 would increase the state’s current base hourly rate of $8.38 to $10.10 at the start of next year and make incremental boosts annually from 2018 to 2021 until the minimum wage is $15

Stating their case for the proposal’s importance in the Garden State, the bill’s primary sponsors cited Legal Services of New Jersey’s estimates that the state is home to 2.8 million adults and 800,000 children living in poverty as of 2014, marking a 40 percent increase in the poor population since the recession of 2008, according to LSNJ estimates.

The take-home pay for a full-time minimum wage worker is less than $18,000 a year in a state that has among the highest costs of living in the country, the sponsors said.

The bill’s primary backers also include Assembly Budget Chairman Gary Schaer, D-Passaic/Bergen, and Assemblywoman Cleopatra Tucker, D-Essex.

An identical Senate version of the legislation sponsored by Senate President Steve Sweeney, D-Gloucester, and Sen. Joseph Vitale, D-Middlesex, was advanced by that chamber’s Labor Committee last week.

Republican leaders have expressed opposition to the legislation. In statements issued when the Senate proposal was announced, Sen. Christopher J. Connors, Assemblyman Brian E. Rumpf and Assemblywoman DiAnne C. Gove said seniors and small businesses would be hit particularly hard while Senate Republican Leader Tom Kean said the minimum wage increase — along with pushes to mandate paid sick leave and add more flexible leave and benefit options — would make life more unaffordable for all New Jerseyans.

The Ailing Transportation Trust Fund

With a crisis in Atlantic City apparently averted, Trenton’s attention will turn — after the Memorial Day weekend — to the virtually exhausted Transportation Trust Fund.

With competing schemes to revive the fund being floated, there will be plenty to argue about. And just to keep things interesting, lawmakers will also be pushing to wrap up a new state budget by the June 30 deadline.

The trust fund pays for more than $3 billion in annual road, bridge, and rail-network improvements, with money that comes from federal matching funds and New Jersey’s 10.5-cent per-gallon tax on gasoline and the its 4-cent per-gallon tax on the gross receipts of petroleum products. Revenue from the sales tax and highway tolls also help subsidize annual state spending of about $1.6 billion under a five-year financing plan that Christie put forward in 2011.

But money from the gas tax will be enough to service only the fund’s extensive debt starting July 1.

Up for debate: whether to create a new “tax-fairness package” that makes cut in the general budget to offset a gas-tax hike that is set aside of for transportation projects.

The alternative? A pay-as-you go system that trims existing budget lines but primarily relies on an expectation of tax revenue to grow each year.

The pay-as-you-go folks, led by Sen. Jennifer Beck (R-Monmouth) dug in launching a petition drive that’s intended to push back against the bipartisan tax-fairness package, which has gained momentum in the State House in recent weeks.

Gov. Chris Christie will also have a say, and over the next month the issue will likely put to a test two of his longest-standing records. He’s yet to approve a major tax increase since he took office early in 2010, and he’s yet to be overridden by a Legislature that’s controlled by Democrats, but not with veto-proof majorities.

Many in Trenton expect the issue will eventually be resolved with a bipartisan deal that will involve hiking either the 10.5-cent tax on gasoline, the 4-cent tax on petroleum products, or some combination of increases that will affect both levies. New Jersey has the second-lowest gas tax in the nation, which was last raised in 1988.

Democrats have been working diligently behind the scenes to secure votes for a gas-tax increase – which they’ve yet to define publicly – by offering up a series of tax cuts to entice Republicans into endorsing what’s being described as a broader “tax fairness” deal. They include proposals to phase out the estate tax over five years; increase current state income tax exemptions for retirement income like pensions and annuities; create a state income tax deduction for charitable contributions; and increase the state version of the Earned Income Tax Credit.

For his part, Christie hasn’t ruled out a gas-tax increase, but he also hasn’t clearly defined what he would like to see in any deal that could win his support. When asked about the issue by a woman calling into his monthly radio show on NJ 101.5 FM radio earlier this week, Christie said he expects to hear more from lawmakers now that they’ve resolved their differences on the Atlantic City rescue.

But Beck, the Monmouth County senator, has been clear in her opposition to a gas-tax increase. She’s launched an online petition to rally opposition that a recent Quinnipiac University poll measured to be 54 percent of New Jersey’s registered voters.

As part of a trust fund renewal plan that she’s put forward, Beck introduced two bills yesterday that are designed to help free up cash in the annual budget to pay for $1.6 billion in transportation upgrades each year through the 2023 fiscal year.

One bill seeks to save about $50 million annually by consolidating several state transportation agencies like New Jersey Transit and the New Jersey Turnpike Authority. But the bulk of the new revenue would come from another, more controversial measure that would reduce healthcare benefits for public workers at all levels and then repurpose most of the savings for transportation projects.

Beck’s plan is also relying on some new borrowing and at least 3 percent growth in annual revenues. She would also raise additional funds by increasing motor-vehicle fines and diverting more money from the state’s Clean Energy Fund.

Her efforts drew support from the New Jersey chapter of the conservative Americans for Prosperity organization, which has been making phone calls to stoke grassroots opposition to a gas-tax hike.

But transportation advocates and public-worker unions criticized Beck’s proposal yesterday, questioning whether her revenue sources and forecasts are realistic.

Projections for 3 percent annual growth over seven years comes as the Christie administration was just forced to scale back its own tax-collection forecasts by a combined $1 billion for the current budget and the fiscal year that will begin on July 1. Growth has also been slow over the last decade, with revenues up just over 6 percent, from $31.2 billion during the 2007 fiscal year to a projected $33.2 billion for the current fiscal year.

Congress has busy schedule before Memorial Day recess

Congress has a busy schedule before each chamber takes a one-week break for Memorial Day recess.

The Senate returns to work on Monday and will vote on legislation to reauthorize the Adam Walsh Act, legislation initially enacted in 2006 to address child sex offenses. The major work of the week on the Senate floor will commence on Tuesday when consideration begins on the annual defense authorization bill. The Senate will aim to complete the bill before departing for the week. Debate on the bill is likely to be less contentious than the House’s consideration of its companion bill. As in the House, the most significant issue will be an effort by Armed Services Committee Chairman John McCain, R-Ariz., to increase the funding level for the military provided in the bill. The House increased the level of authorized funding by raiding the pool of funds designated for support of overseas operations. If adopted, the House approach would lead to a shortfall in operational funds next year, requiring supplemental appropriations from Congress. The Senate does not plan to raid that account. Instead, Chairman McCain is reported to be planning simply to seek to add new funds to the bill. Democrats have contested Republican efforts to add defense funds without adding like amounts to the domestic programs they tend to support. Some Republican deficit hawks likewise oppose additional defense spending. The fact that Chairman McCain did not seek to add his amendment during the committee’s markup of the bill suggests he did not have the votes in his own committee, and he is similarly unlikely to garner sufficient support on the floor for his effort. The Senate bill would also extend the requirement that 18-year-olds register for the draft to women.

Although the defense bill is likely to consume the balance of the week, it is possible the Senate will interrupt its consideration of the bill and move to the compromise chemical-regulation bill, the reform of the Toxic Substances Control Act, prior to the end of the week. Reform of the TSCA has been a lengthy process, and after years of deliberation, a bipartisan and bicameral consensus evolved around a compromise effort. The House will take up the bill this week, and once it does, the Senate could enter into a time agreement allowing for the bill’s consideration there as well. Enactment of the TSCA bill will be another in a series of significant accomplishments for the current Congress, a further indication that the Senate is again fulfilling its legislative role after several years in which it was failing as an institution (although Democrats point to the lack of progress on confirmations to argue that the Senate is still not performing its full set of constitutional responsibilities).

The House too returns to work on Monday with an unusually full schedule of 30 bills to be considered under suspension of the rules. Although on the surface this schedule appears very heavy, a large number of the bills simply name federal facilities, primarily post offices and Department of Veterans Affairs facilities. Among the substantive bills, the House will tackle the annual intelligence authorization bill, as well as bills from the Energy and Commerce Committee and two bills to improve the process by which the federal government disposes of excess property.

After the heavy suspension schedule, the House will turn on Tuesday to a bill to address the Zika virus under a rule. Last week, both chambers passed proposals to provide funding to address the Zika virus, but the Senate did so in the form of an amendment to an appropriations bill; the House did so as a freestanding bill. The Senate will need to take up the House-passed bill, amend it to include the Senate proposal, and request a conference before further progress can be made. In the meantime, the House will take up H.R. 897, the Zika Vector Control Act, introduced by Rep. Bob Gibbs, R-Ohio).

After the Zika bill, the House turns to the TSCA reform bill noted above. Following the TSCA legislation, the House plans to take up a bill to clarify the authority of Congress over the District of Columbia. Congress has authority under the Constitution to control the seat of the national government, but it ceded much of that authority when it approved home rule legislation for D.C. in the early 1970s. Recently, D.C. voters approved a charter amendment that purports to allow D.C. to expend its own locally raised funds without congressional approval. A judge of the D.C. Superior Court upheld the proposal, but House Republicans believe the charter amendment is invalid and beyond the ability of D.C. voters to adopt. Last week, the Oversight and Government Reform Committee, which oversees D.C. for Congress, reported H.R. 5233 on a party-line vote. The bill would clarify that D.C. must still obtain congressional approval before it may expend funds, even if the funds derive entirely from locally raised revenue. The bill is unlikely to get considered in the Senate, even after it passes the House, as it will.

The House then finishes the week with two energy-related bills. It will take up its version of the Energy and Water Appropriations bill. The Senate passed its version two weeks ago, and the House will aim to complete action on the bill before breaking for Memorial Day. The Energy and Water bill is one of the more popular of appropriations bills, due to the funding contained in it for local projects across the country. In addition to the appropriations bill, the House will also take up its version of the energy bill. The Senate passed a bipartisan energy bill last year. The House will take up the Senate-passed bill but will substitute its own energy-bill text in place of the Senate-approved language. Once it completes consideration of the energy bill, the House plans to move to go to conference with the Senate on the energy legislation, and will likely consider in that context a Democratic motion to instruct conferees. If a conference committee can reach agreement on an energy bill that could pass both chambers, it would be yet another major accomplishment for this Congress, and the Senate, which, despite much maligning in the media has been very productive on a variety of legislative initiatives that have been stalled for many years.

In addition to the floor, the committee schedule is also very busy this week. Among the highest profile items is likely to be the House Natural Resources Committee’s markup on Wednesday of the revised bill to assist Puerto Rico tackle its debt situation. After several weeks of intensive negotiations following the introduction of the first version of the bill, last Thursday evening the House introduced a new version of the bill. The negotiations were led by the speaker’s office and the committee’s chairman, Rob Bishop, R-Utah. The revised bill has garnered cautious support from members on both sides of the aisle. Although there are provisions members of each party dislike, the urgency of the need to help Puerto Rico address its insolvency appears to have brought enough members together to allow the bill to move forward. The first step in the process will be a markup in committee on Wednesday. The full House is likely to turn to the bill when it returns following Memorial Day, and Senate action thereafter prior to the impending July 1 date when Puerto Rico faces a massive debt payment it cannot make, is likely. If Congress succeeds in enacting the bill, it will be a major victory for Speaker Ryan, who staked much on getting a bill done.

Other markups next week will see the Senate Judiciary Committee take up the E-mail Privacy Act on Thursday. The House passed its version of the bill unanimously, but what will happen in the Senate committee is uncertain. The Appropriations Committees in each chamber will be busy this week marking up additional bills for floor consideration. In the Senate, both the relevant subcommittees and the full committee plan to mark up the Defense and Homeland Security bills this week (Tuesday in the subcommittees and Thursday in full committee). On the House side, the full committee plans to mark up the Commerce, Justice, Science and Transportation-Housing and Urban Development bills on Tuesday, and on Wednesday the relevant subcommittees will mark up the Financial Services and Interior bills. Finally, the Senate Homeland Security and Governmental Affairs Committee will mark up pending legislation.

On Tuesday, the House Ways and Means Committee will hold a hearing on welfare reform. Also on Tuesday, the House Judiciary Committee will hold the first hearing it is promising to consider the impeachment of the IRS Commissioner, John Koskinen. Although Speaker Ryan has signaled his opposition to impeachment and senators have dismissed it, House conservatives, led by Freedom Caucus chairman Jim Jordan, R-Ohio, have been pushing for Commissioner Koskinen’s impeachment in the wake of the scandal over allegations of political targeting of conservative nonprofit groups by the IRS. At the initial hearing, the Judiciary Committee expects to hear from members of the Oversight Committee who, along with the Ways and Means Committee, have led the inquiry into political manipulation by the IRS. Other hearings of note this week include a Tuesday Senate Foreign Relations Committee hearing on the U.S.-India relationship; hearings by the Senate Baking and House Foreign Affairs Committees on aspects of the Iran nuclear deal; and a two-day hearing on Wednesday and Thursday by the House Homeland Security Committee into the dramatic airport-screening delays being experienced across the country.

 

This Week In Congress: Puerto Rico, Opioids and Energy

 

Members return to Capitol Hill this week after a one-week break and settle in for three weeks of legislative business before the scheduled Memorial Day recess. A new draft of legislation designed to assist Puerto Rico restructure its debt is likely to be released on Wednesday and potentially marked up by the House Natural Resources Committee next week.

On Wednesday, House members will consider another 11 bills under suspension of the rules related to opioid abuse and recovery assistance. The proposals range from expanding access to Naloxone (medication that reverses the effects of an opioid overdose) and improving care for pregnant and postpartum mothers and infants affected by substance abuse or withdrawal symptoms, to increasing access to medication-assisted treatment and allowing prescriptions for certain controlled substances to be partially filled. The House will also consider H.R. 4641, subject to a rule. This legislation would establish an interagency task force to review, modify and update best practices for pain management and how pain medication is prescribed.

During the remainder of the week, the House is expected to consider H.R. 5046, subject to a rule. H.R. 5046 would authorize annual appropriations to the attorney general to make grants to state, local and tribal governments for programs to combat opioid abuse.

Following the expected passage by the House of these opioid-abuse and recovery-assistance bills, the House plans to request a conference with the Senate to resolve the differences between the House-passed bills and the Senate version, the Comprehensive Addiction and Recovery Act (CARA), which passed in March by a vote of 94-1.

The House Judiciary Committee Executive Overreach Task Force continues its series of hearings on “overreach” by the executive branch this week. A hearing scheduled for Thursday will focus on presidential actions in foreign affairs; two previous hearings focused on executive actions involving domestic affairs.

On Wednesday, the House Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade (CMT) will host a highly anticipated hearing on daily fantasy sports, a multibillion dollar industry whose popularity has surged in recent years. Despite the activity’s very large and growing following (an estimated 60 million online users), public debate over whether fantasy sports activities qualify as gambling has led to increased scrutiny, with several states battling industry leaders FanDuel and DraftKings in court over their legality and others passing legislation to establish regulations and consumer protections. In announcing the CMT Subcommittee hearing, the first congressional hearing on daily fantasy sports, Subcommittee Chairman Michael Burgess, R-Texas, stated that the event will provide “a forum for all stakeholders to discuss the many aspects of this complicated issue” and “consider whether there is a federal role to play” in oversight.

Continuing the recent trend of hearings focused on the U.S. tax code and tax reform, the House Ways and Means Tax Policy Subcommittee is scheduled to meet Thursday to discuss member proposals on how to improve the tax code.

On Wednesday, the House Oversight and Government Reform Committee meets to discuss potential reforms to the U.S. Postal Service, an agency that has been plagued with operations issues and financial losses in recent years, largely stemming from the increase in technology and electronic communications.

By its own rules, the House is unable to consider any annual spending bills on the floor prior to May 15, as Congress has not adopted a budget resolution, but this restriction has not stopped the House Appropriations Committee from moving forward with the annual appropriations process. The full committee has already approved its Agriculture, Energy and Water, and Military Construction and Veterans Affairs Appropriations bills for the upcoming fiscal year. The Defense Subcommittee is scheduled to meet Thursday evening to consider its funding bill for FY 2017.

On the committee front this week, the subcommittees of the Senate Armed Services Committee will begin marking up the Senate version of the National Defense Authorization Act for 2017. On Monday and Tuesday, each of the six subcommittees will meet to consider its portion of the annual defense spending blueprint. The full committee will meet in closed session to mark up the bill on Wednesday, Thursday and Friday. The Armed Services Committee is expected to complete its markup this week, allowing for consideration in the full Senate prior to Memorial Day; House action on its version of the bill is also expected this month.

The Senate is still working to find a path forward on the Energy and Water Appropriations measure for fiscal year 2017 and other FY 2017 spending bills, while the House will take up several measures to address opioid abuse and provide addiction-recovery assistance. In the background looms the now-settled selection of Donald Trump as the Republican presidential nominee and a split in Republican ranks over whether to support him, raising questions on the potential impact Trump will have on Senate and House races in November.

The Senate returns to legislative business on Monday and resumes consideration of the legislative vehicle (H.R. 2028) for the FY 2017 Energy and Water appropriations bill, a $37.5 billion funding measure that had previously been viewed as fairly noncontroversial and appeared set for final passage before last week’s recess. The appropriations bill is now held up over an amendment offered by Sen. Tom Cotton, R-Ark., that would prevent the administration from spending any funds to purchase heavy water from Iran. Sen. Cotton has been a leading opponent of the president’s deal with Iran. Opponents of the amendment, all likely to be Democrats, argue it would directly and adversely affect the implementation of the president’s nuclear deal with Iran. The amendment has prompted a veto threat over the underlying bill from the administration, and Senate Democrats have called Sen. Cotton’s amendment a “poison pill.” Prior to the recess, Majority Leader Mitch McConnell, R-Ky., twice attempted to achieve cloture on the Energy and Water bill, but failed to achieve the necessary 60 votes to limit debate. Democrats fear the amendment will pass and will force some of their members, especially those up for reelection, to cast a difficult vote. Leader McConnell will likely try for a third cloture vote this week, although he has given no indication that an agreement has been reached to move forward.

Should the issue over Sen. Cotton’s amendment be resolved, the Senate expects to complete action on the Energy and Water appropriations bill this week. Leader McConnell previously indicated that the Senate will likely take up the Transportation, Housing and Urban Development (T-HUD) funding bill as its second FY 2017 appropriations measure. The legislation, reported unanimously out of the Senate Appropriations Committee in April, provides over $56 billion in funding for the Departments of Transportation, Housing, Urban Development, and other related agencies for the fiscal year that begins on Oct. 1. The Military Construction and Veterans Affairs appropriations bill and the Commerce, Justice and Science appropriations bill have also been reported favorably by the Senate Appropriations Committee and await action by the full Senate. The ability of the Senate to tackle these appropriations bills depends on whether it can find a path forward on the Energy and Water bill. If it cannot, then Leader McConnell’s hopes for completing Senate action on all 12 appropriations bills are likely to collapse amid partisan rancor and recrimination.

If the Senate is unable to move forward on the appropriations front, it is likely to turn its attention to criminal-justice and sentencing-reform legislation. The legislation was favorably reported by the Judiciary Committee several months ago on a 15-5 vote, but the Republicans on the committee split 5-5. Since then, Judiciary Committee Chairman Chuck Grassley, R-Iowa, has been seeking further compromises to attract more Republican support. Prior to last week’s recess, he announced a compromise agreement that has attracted some additional Republican support, making the bill a realistic candidate for floor consideration if the appropriations process on the floor collapses.

The Senate Judiciary Committee will be considering privacy issues at two hearings this week. The full committee meets on Tuesday to discuss oversight and reauthorization of the FISA Amendments Act, the law governing federal surveillance of electronic communications. The current law, which came to widespread public attention through the Edward Snowden leaks, will expire at the end of next year. Leaders of the House and Senate intelligence committees have identified reauthorization as a major priority, though other committees share jurisdiction over the authority and agencies involved. Privacy and civil liberties experts and a representative from cybersecurity industry are scheduled to provide testimony before the committee on Tuesday. The House Judiciary Committee held a closed hearing on the FISA Amendments Act reauthorization in February. The Senate Judiciary Subcommittee on Privacy, Technology and Law meets on Wednesday afternoon to examine the Federal Communications Commission’s proposed privacy rules for internet service providers (ISPs). The privacy proposal, adopted by the FCC on March 31, would limit the ability of ISPs to track the web history of subscribers for targeted advertising purposes by allowing subscribers to opt out, or by requiring the ISPs to obtain express consent before using and sharing the customer data with third parties. The FCC is currently accepting public comments on the proposal through May 27. FCC Chairman Tom Wheeler and Commissioner Ajit Pai are scheduled to testify at the Wednesday hearing, as are Federal Trade Commission Chairwoman Edith Ramirez and Commissioner Maureen Ohlhausen.

 

What Is the Process of an Internal Investigation?

Duane Morris Government Strategies, LLC pic
Duane Morris Government Strategies, LLC
Image: dmgs.com

Attorney Martin Milita serves as senior director at Duane Morris Government Strategies, LLC, in Trenton, New Jersey. A member of the Business Law Section of the American Bar Association, Martin Milita draws on his skills and experience in business law to walk companies through the process of conducting an internal investigation.

A number of events can trigger an internal investigation within a company, including an allegation or suggestion of wrongdoing or misconduct. The allegation or suggestion may come from an outside source, such as a regulatory agency, or an internal party, such as an employee or shareholder.

Once a company deems an internal investigation necessary, the company should first locate and review any documents related to the inquiry. Then, it should conduct interviews with anyone who may be involved or have knowledge relevant to the investigation. Finally, the company should compile all findings and report to company leaders and to those responsible for triggering the investigation.

The process of an internal investigation can be complicated and time consuming, but companies can save time and stress by employing the services of an attorney experienced in business law.