New Jersey Transportation Funding- key elements of Senate bill.

The New Jersey state Senate adjourned on Monday before considering any proposals related to renewing transportation funding or cutting taxes. But the Senate is back in session tomorrow, setting the stage for what is expected to be another long day of negotiations.

At the heart of a new bill that was  passed by the state Assembly early Tuesday morning  is a proposed 1 percent reduction of New Jersey’s 7 percent sales tax.The cut would be phased in, starting at 0.5 percent next year and reaching the full 1 percent in 2018. It would come as part of a broader deal to renew the state Transportation Trust Fund (TTF) for another 8 years with a 23-cent gas tax hike.

The proposal featuring the sales-tax cut that has emerged this week actually is an alternative to another bipartisan plan that came out of the state Senate earlier this month.

That plan, sponsored by Sens. Paul Sarlo (D-Bergen) and Steve Oroho (R-Sussex), also features a 23-cent gas-tax hike, but instead of a sales-tax cut it calls for phasing out New Jersey’s estate tax and making a series of other tax cuts. They include lifting state income-tax exemptions on pensions, 401(k) plans, and other sources of retirement income over the course of several years. The Sarlo-Oroho plan would cost an estimated $870 million once all the cuts were fully implemented.

The new proposal, backed by Governor Christie and Assembly Speaker Vince Prieto (D-Hudson), scraps most of the tax cuts that are included in the Sarlo-Oroho plan in exchange for the sales-tax reduction. It does, however, keep changes to retirement-income exemptions that the two senators proposed, adding another $200 million to the potential cost of the Christie-Prieto plan.

The Senate has yet to consider the proposal, but if it were to be enacted, the sales-tax cut would represent New Jersey’s first reduction of a broad-based tax since 1994. It would also come at a time when the state has been experiencing revenue problems, including a $600 million budget hole that had to be closed with a series of cuts and other adjustments just last month.

The budget impact of the proposed sales-tax cut would start out modestly at $376 million during the 2017 fiscal year. And because it is part of a broader plan that involves the gas-tax increase to shore up the TTF, the cut would initially free up roughly $350 million in sales-tax revenue that’s currently being used to prop up the deeply indebted trust fund.

Going forward, the impact of the sales-tax cut on the budget would rise to an estimated $1.6 billion once fully phased in during the 2019 fiscal year, according to the nonpartisan Office of Legislative Services. Because all of the more than $1 billion in annual revenue that would come in from the 23-cent gas-tax hike would be constitutionally dedicated to funding transportation projects,  the sales tax cut  would not be offset, leaving a gap on the state budget.

Supporters predict that gap would be closed by economic growth, but if that growth doesn’t materialize, the hole would have to be filled with spending cuts or other tax hikes since the state constitution requires a balanced budget.

Complicating the issue even further is a planned constitutional amendment, backed by Democratic legislative leaders and public-worker unions, that call’s for revenue growth to help fund a series of ramped-up state contributions to the presently underfunded public-employee pension system. If voters approve the amendment this fall, it would mandate spending on the pension payments to increase from $1.3 billion this fiscal year to over $3 billion just as the full impact of the sales tax-cut would take effect.

New Jersey’s sales tax is rooted in a 1966 law that established a 3 percent rate. That was increased to 5 percent in 1970, and to 6 percent in 1983. The rate was lifted to 7 percent in 1990 under then-Democratic Gov. Jim Florio, only to be reversed in a backlash in 1992.

Another increase restored the rate to 7 percent in 2006 under then-Democratic Gov. Jon Corzine, but only after a six-day shutdown of state government. At the same time, the range of services that are subject to the sales tax was expanded, though New Jersey still offers exemptions for clothing, groceries and necessities.

Unlike many other states, New Jersey does not allow sales taxes to be levied at the local level. In fact, specially designated Urban Enterprise Zones allow many struggling urban areas to charge a lesser rate of 3.5 percent.

Notably, sales tax collections have been on the rise; while income tax is subject to significant volatility, the sales tax has been a steady performer for the state budget over the last several years. It generated $7.5 billion in revenue during the 2010 fiscal year, and $7.8 billion during the 2011 fiscal year. Sales tax collections then steadily improved from $8 billion during the 2012 fiscal year to $8.8 billion through the 2015 fiscal year. The latest projection for the current fiscal year, which ends at midnight tomorrow, is for $9.3 billion, and Christie’s administration is forecasting a $9.6 billion haul during the 2017 fiscal year.

Advertisements

Knights of Columbus Recognized as a World’s Most Ethical Company

Knights of Columbus pic
Knights of Columbus
Image: kofc.org

Since 2012, Martin Milita has served as senior director at Duane Morris Government Strategies (DMGS) in New Jersey, where he provides public affairs and government relations services. Martin Milita complements his professional endeavors with support for various nonprofit groups and charities, including the fraternal service organization Knights of Columbus.

In a recent press release, the Knight of Columbus announced that it was recognized as a 2016 World’s Most Ethical Company by the Ethisphere Institute, one of the top groups in the world dedicated to advancing ethical business practices. Ethisphere has named the Knights of Columbus as one the world’s most ethical companies for three consecutive years, and it is one of just two life insurance companies included on the list. According to the CEO of Knights of Columbus, the company applies Catholic values and ethical standards across all of its business activities, from investments to daily operations.

Ethisphere has been identifying ethical companies for a decade based on their ability to foster corporate trust, align ethical standards with action, and model innovative best practices. By upholding ethical standards, Ethisphere explains that companies generate more value for stakeholders and establish a sustainable business advantage.

How Second Amendment rights may affect the fate of congressional appropriations bill and the funding process?

Forced votes in the U.S. Senate on firearms issues in the wake of the Orlando nightclub massacre may affect the fate of the underlying appropriations bill and the funding process moving forward.

The Senate returns on Monday to resume consideration of H.R. 2578, the vehicle for the Senate Committee-reported FY 2017 Commerce, Justice, Science (CJS) Appropriations bill. Votes are scheduled on four amendments related to gun control, two Democratic amendments and two competing Republican amendments. Sens. Chuck Grassley, R-Iowa, and Ted Cruz, R-Texas, have an amendment pending to increase the availability of records to the National Instant Criminal Background Check System (NICS) and increase resources for the mental health system. A background check amendment proposed by Sens. Chuck Schumer, D-N.Y., Chris Murphy, D-Conn., and Cory Booker, D-N.J., to close the so-called “gun-show loophole” and require background checks for gun purchases online and at gun shows will also receive a vote.

Sen. Dianne Feinstein, D-Calif., has proposed an amendment to bar the sale of a gun to any individual on the federal terrorist watch list or any individual who has been on such a list in the past five years. A competing amendment offered by Sen. John Cornyn, R-Texas, would give the Justice Department 72 hours to delay the sale of a gun to any suspected terrorist on the watch list, giving the agency an opportunity to seek an ex parte judicial determination that the prospective purchaser poses a credible threat of terrorism, in which case the court could block the gun sale.

Republicans argue that the Democratic proposals go too far in restricting Second Amendment rights, and Democrats criticize the Republican measures as inadequate. The Cornyn and Feinstein amendments were each considered by the Senate last December, following the terrorist attack in San Bernardino, California, but both measures failed to achieve the necessary 60 votes for passage. The Feinstein language received 45 votes and the Cornyn proposal had 55 votes in support.

Each of the amendments to be considered on Monday will be subject to the same 60-vote threshold for adoption and each is expected to fail to gain enough support for inclusion in the underlying bill.

However, it is possible Senate Democrats will attempt to filibuster the underlying $56 billion spending bill following these votes. Should they allow a vote on final passage of the CJS appropriations bill this week, it is possible Democrats will continue to force the issue on other appropriations bills considered by the Senate this summer. The fate of the appropriations process, so far successful in the Senate, may hang in the balance.

Several press reports indicate that several other senators are working on a bipartisan proposal to restrict gun sales to suspected terrorists, but a draft has not yet been made available and it is unclear whether such a compromise bill would have enough support to meet the 60-vote threshold that will be required for passage.

Thus the Senate must  overcome the possible derailment of the process from the firearms issues, if it is  to take up  appropriations bills as it aims for the July 15 start of an extended summer recess.

Nuts and Bolts of New Jersey’s Proposed 10-year, $20B Infrastructure Funding

On Friday we reported that New Jersey State lawmakers announced a bi-partisan agreement to  raise enough revenue to support a decade-long, $20 billion Transportation Trust Fund, and said their plans should be coupled with  tax cuts.

Actually,  released minutes apart in afternoon press releases and just 20 days before the trust fund ends its five-year authorization and 20 months after the state’s now-former transportation commissioner began warning of an impending “crisis” that could doom the roads and bridges New Jerseyans rely on every day a second proposal was released..

Both plans call for increasing the state’s taxes on oil companies, known as the gross petroleum product receipts tax.

Still, it was made clear the proposals would mean higher prices on the roads: The concept offered by Democratic Sen. Paul Sarlo and Republican Sen. Steve Oroho includes an increase in the petroleum taxes that, if passed onto the consumer, would mean a 23-cent increase in the state’s gas tax, to 37.5 cents per gallon.

The two lawmakers, who won support for their proposal from Assembly Majority Leader Lou Greenwald and other members of the lower house from across the state, argued the tax would still be lower than what is paid by motorists in New York and California. Oroho — the only Republican to support either measure — said it is also important to note that an estimated one-third of drivers who buy gas in New Jersey are from other states.

The other proposal, which comes from some senior Assembly Democrats, led by Speaker Vincent Prieto, is much more vague and does not say exactly how much the petroleum tax would need to be increased. It would likely be by a similar margin, given that both plans call for trust funds of the same size. The Assembly version, though, also calls for a “modernization” of how the state taxes jet fuel. Currently, jet fuel is taxed at 4 cents per gallon and only for quantities used during taxiing and takeoff.

Both of the plans announced Friday include similarly ambitious proposals for cutting taxes, notably by phasing out the estate tax, which generates some $600 million in annual revenue and is paid on inherited wealth worth more than $675,000. The Senate version would end the tax in just three years — two years faster than Sarlo and Oroho had previously called for. The Assembly measure would take four years.

Both proposals would boost the tax exemption threshold for retirement income and increase the earned income tax credit from 30 percent to 40 percent of the federal benefit.

The Assembly proposal does not include an income tax deduction for charitable contributions, one idea Republicans have been aggressively pursuing. The Sarlo and Oroho legislation would create a write-off for charitable contributions to specific organizations involved in social services. It would also allow a write-off for those who spend more than 1 percent of their income on the gas tax.

The lawmakers behind both proposals said it was critical that a new trust fund be authorized before the current one runs dry. They also said the status quo is unacceptable. After years of mismanagement, the trust fund is buried in debt and the current gas tax — not raised in more than two decades — can’t support any new construction.

Still, the plans are very similar, differing in just a few ways. There’s really only one notable difference when it comes to actual administration of the trust fund. The Prieto framework calls for doubling transportation aid to municipalities, from about $200 million to about $400 million per year. While Sarlo has previously said he wanted to do that, their plan makes no specific mention of increasing municipal aid.

Most advocates for infrastructure spending reacted positively to the proposals, saying both offer appear to offer realistic approaches to funding transportation projects for the next decade.

Martin Milita – Medicaid Fraud Control Units

Medicaid Fraud Control Units pic
Medicaid Fraud Control Units
Image: oig.hhs.gov

With experience in legislative and regulatory lobbying, business development, and law, Martin Milita serves as senior director at Duane Morris Government Strategies, LLC. In this position, Martin Milita has investigated matters related to fracking, environmental permits, and Medicaid fraud throughout the state.

Jointly funded by the U.S. Department of Health and Human Services’ Office of Inspector General and by their home states, Medicaid Fraud Control Units prosecute people who violate the Medicaid system. They investigate claims of patient abuse and neglect in healthcare facilities, violations of the Civil False Claims Act that impact Medicaid, and fraud against any part of the Medicaid system. First established in 1977, these organizations consist of lawyers, investigators, and legislators who understand the Medicaid system. Currently, 49 states and the District of Columbia all have their own Medicaid Fraud Control Unit.

Pharmaceutical manufacturers remain a key area of focus for Medicaid Fraud Control Units. Over 60% of the civil settlements and judgments they obtained throughout FY 2013 came from investigations of actions committed by these companies. The same year saw the largest criminal recovery in the program’s history following an investigation into a pharmaceutical manufacturer. Among the conglomerate’s illicit actions were illegal marketing, false statements about safety, and illegal payments made to healthcare practitioners.

Senate Panel Sends $164M Health, Labor Funding Bill To Floor

Yesterday, the U.S. Senate Committee on Appropriations sent a $164 billion funding bill to the Senate floor that would increase money for health care research; restore year-round grants available to college students and work to fight opioid addiction.

The first bipartisan bill to fund the U.S. Department of Labor and the U.S. Department of Health and Human Services in seven years passed the committee by a 29-1 vote.

The Bill would provide $162 billion in base spending, about $270 million less than last year’s amount and $2 billion less than President Barack Obama requested. It also includes $2 billion in cap adjustment funding that aims to prevent waste, fraud, abuse and improper payments in the Social Security, Medicare and Medicaid programs.

Specifically, the bill would eliminate 18 duplicitous or unnecessary federal programs in addition to the 18 eliminated by last year’s funding bill, and provide $34 billion to the NIH, an increase of $2 billion. In all, the U.S. Department of Health and Human Services would get $76.9 billion, an increase of $1.4 billion, under the bill. It also would provide $126 million more to combat opioid abuse, an increase of 93 percent.

Those increases come at the expense of other programs, with $117 million cut from after-school programs, $74 million cut from workforce training grants to states and $118 million cut from the Centers for Disease Control and Prevention. Nevertheless, earned broad bipartisan support.

Both Republicans and Democrats lauded the restoration of year-round Pell grants for more than 1 million students nationwide, a measure that Sen. Patty Murray, D-Wa., the subcommittee’s ranking member, included in the bill.

The bill would provide students with, on average, an extra $1,650 to help pay for college accrding to the legislative statements.

The bill wouldn’t provide new funding for Affordable Care Act measures, but would continue prohibitions that aim to stop the administration from using discretionary funding to prop up the ACA’s risk corridor program, which collects contributions from insurers with lower risk enrollees and transfers them to those with higher risk ones.

N.J. Supreme Court upholds freeze on pension cost-of-living adjustments

The New Jersey Supreme Court ruled 6-to-1 Thursday that the state can continue to freeze cost-of-living adjustment payments to those collecting public pensions.

The decision upholds a 201l reform law to suspend the payments that was supported by Democrats and signed by Christie. According to the Associated Press, the ruling will save the state approximately $17.5 billion in added pension liabilities.

Thursday’s ruling received cautious optimism from Moody’s Investors Service, which said it “eliminates a major threat to the state’s fiscal stability, which is already challenged by narrow reserves and large, rapidly growing pension costs.”

“New Jersey’s finances have been more stable in recent years, and the state projects that 2016 reserves will remain on target and above prior years at $550 million,” Moody’s said. “However, reserves at this level will provide limited cushion against further budget volatility.”

Earlier this week, the Assembly Judiciary Committee advanced a measure that seeks to task voters with deciding on a constitutional amendment to require regular pension payments.