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.

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.

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.

New Jersey Legislation & Regulation Watch For 2016

New Jersey’s weakened gaming industry, workforce pressures and vulnerable environment have driven legislative developments in recent months, giving interested folks plenty of pending bills to watch in 2016.

Atlantic City, the state’s only constitutionally-allowed gaming revenue resource, has suffered  from casino bankruptcies, closures and competition, driving lawmakers to consider tax incentives that would boost the resort town, along with a proposal to geographically expand the market share of casinos.

Casino employees, some of whom have gone on strike in the past year, represent just one industry characterized by a labor pool that wants a better work-life balance. Lawmakers have heeded their calls with legislation that has drawn objections from a recession weary business sector still struggling to cope with ongoing economic uncertainty.

On the natural resources front, the New Jersey Department of Environmental Protection’s proposed changes to rules governing the state’s flood hazard areas have riled conservationists who fear the updates lessen protections and pander to developers.

Here’s a summary of critical legislation and regulation that could affect significant  New Jersey State changes in 2016:

Atlantic City Fiscal Recovery Package

Pinning their hopes on reviving Atlantic City, lawmakers are continuing to push a financial incentive package spearheaded by Senate President Stephen M. Sweeney and Sen. Jim Whalen, D-Atlantic.

Three of the bills have passed both houses of the Legislature as of the Assembly’s Dec. 17 voting session and are awaiting Gov. Chris Christie’s signature. The anchor of the proposal, A3981, calls for a payment-in-lieu-of-taxes plan to stabilize the town’s fiscal health.  A3984 would reallocate a casino tax that’s being used for redevelopment projects to help the city pay debt service on municipal bonds, and A3985 would drop a five-year obligation to use casino revenue for marketing purposes so those funds can be redirected to the city.

In November, Christie signed into law another part of the package, A3983, that would provide additional state money to the city’s struggling public schools, but implemented an  absolute veto to A3982, that would have required casinos to provide proof they are providing “suitable” health care and retirement benefits to employees.

Constitutional Amendment to Expand Gambling

Looking beyond Atlantic City, lawmakers are considering  advisiability of  casinos in the Meadowlands and the Monmouth Park racetrack.  Legislation would reverse the state’s constitutional restriction, and the topic could be left up to voters.

The Senate Budget and Appropriations Committee on Dec. 17 approved Sweeney’s SCR185, that would pose the question of non-Atlantic City gaming in a public referendum next November, while the Assembly passed a twin version of the bill on to that house’s Tourism, Gaming and the Arts Committee.

The legislation would make for a “potentially huge” expansion of the New Jersey’s gaming industry, although the passage of a constitutional amendment is difficult to predict given the expected high turnout due to the presidential election.

Supporting New Jersey Families Act

Casino employees and the state’s labor force in general also stand to get a boost from pending legislation aiming to improve work-life balance and increase paid time off. Along with legislation that would help displaced casino workers prepare to re-enter the workplace, lawmakers are also considering a family-geared legislation package that was unveiled in May by Senate Majority Leader Loretta Weinberg, D-Bergen. The Supporting New Jersey Families Act, which has yet to undergo committee review, would require employers in all industries to provide shift workers with predictable schedules and time off to attend school activities, expand state employee family leave privileges and establish a commission to do a gender pay disparity study. The bills have twin legislation in the Assembly.

The first prong of Weinberg’s package, the Schedules that Work Act, S2933, provides a private right of action for employees seeking to change their work schedules.

Paid Sick Leave

Among the most controversial legislatative actions are those advocating for employees is the proposed Paid Sick Leave Law, S785 and A2354, under which workers would get the better of five to nine sick days or more generous packages provided under local laws.

The Senate bill, also sponsored by Weinberg, got full approval in Dec. 17, while the Assembly version is poised for a second reading by the chamber. That bill counts Assembly members Pamela R. Lampitt, D-Camden, Shavonda E. Sumter, D-Passaic, Raj Mukherji, D-Hudson, Jerry Green, D-Passaic, and Benjie E. Wimberly, D-Bergen-Passaic as primary sponsors.

During a Senate committee hearing in June, the legislation was hailed by unions, think tanks and groups such as the New Jersey Working Families Alliance. Business-centered organizations, such as the New Jersey Farm Bureau and the New Jersey State Chamber of Commerce, criticized  the administrative and expense ramifications.

Given New Jersey Governor Chris Christie’s previous opposition to mandated sick leave, the future of the legislation remains uncertain, since in the aggregate, the  legislative proposals would create new administrative burdens on employers, including smaller businesses and start-ups, and increase the risk of litigation as traditional employer prerogatives are legislatively  prescribed.

Flood Hazard Area Rules

The New Jersey Department of Environmental Protection’s planned changes to flood hazard area rules, announced in June drew not only a backlash from environmentalists but twin bills proposed explicitly to overturn the changes. They are presently pending public comment.

Among the biggest changes in store is the increase in the amount of vegetation in riparian zones — where regulated water meets land — that can be disturbed for construction, and the extension of that allowed disturbance to building projects that would normally require a hardship exemption.

Sen. Raymond J. Lesniak, D-Union, served as a primary sponsor of SCR180 that received full Senate approval in October and is pending before the Assembly. Identical legislation, ACR249, was introduced in November by Assemblyman John F. McKeon, D-Morris, and Assemblywoman L. Grace Spencer, D-Essex. Both bills have been advanced by the Assembly Environment and Solid Waste Committee.

These rules affect virtually all development in all sectors across the state, and also serve as one of the state’s few points of leverage over federally authorized projects, like pipelines and utility facilitiesThese rules also dictate rebuilding and resiliency policy in and near flood prone areas. The impact would reach beyond the shore to industrial sites, many in low-lying areas along New Jersey Rivers.

Where the state goes on these issue affects not only environmental quality but also the value of properties, and the costs and likelihood of future business expansion.

NJ Gov. Chris Christie has conditionally vetoed P3 Infrastructure Bill

Martin J. Milita Jr. Esq., senior director at Duane Morris Government Strategies, offers: ”NJ Gov.  Chris Christie has conditionally veto P3 Infrastructure Bill”.

Duane Morris Government Strategies (DMGS) supports the growth of organizations, companies, communities and economies through a suite of government and business consulting services. The firm offers a range of government relations and public affairs services, including lobbying, grant writing; development finance consulting, media relations management, grassroots campaigning and community outreach. Milita works at the firm’s Trenton and Newark New Jersey offices.

New Jersey Gov. Chris Christie has conditionally vetoed a Senate bill that would expand public-private partnership opportunities for government entities, calling for the removal of provisions mandating prevailing wage requirements and project labor agreements.

These modifications to S2489 would further competitive bidding for projects and reduce costs, Christie said Monday in a veto message that also recommended that the departments of Transportation, Education and Community Affairs take leading roles in building and transportation projects.

The legislation sponsored by Senate President Stephen R. Sweeney , that  cleared the Senate in July, permits Local and state government units and school districts as well to enter into the partnerships, in which the private entity assumes administrative and partial or full financial responsibility for a project, according to the bill.

“While I agree with the sponsors that we must take advantage of the opportunity to improve our infrastructure through private investment, we must take care to ensure that the state has a unified plan of development that considers the impact of projects on our residents, the economic benefits of such projects, and the long term goals of the state,” Christie said in the message, which specified municipal projects and transportation work on bridges, roads and tunnels.

The departments Christie highlighted Monday in his veto message would work alongside the Economic Development Authority, which under the bill would review and approve applications and to cancel procurement after a short list of private entities is developed for projects in the public interest.

Presently only state and county colleges can enter the partnerships, according to state law. Christie cited the successes of such partnerships in Montclair State University and said others were planned or underway at Rutgers University, Ramapo College and the College of New Jersey.

The Assembly State and Local Government Committee had amended the original version of  the bill to allow the use of availability payments as a financing method, to specify that a contractor is precluded from taking on projects under $50 million if the contractor contributed more than 10 percent of the project’s financing, and to eliminate the $10 million project threshold and instead require that roadway or highway projects must include an expenditure of at least $10 million in public funds or any expenditure in private funds.

Other amendments make certain lease provisions permissive rather than mandatory, exempt private entities from procurement and contracting requirements applicable to the public entities, and exempt nonprofit projects from property taxation and assessments.

The committee prohibited the bundling of multiple projects and eschewed the requirement that a government entity assign a management employee to enforce the prevailing wage requirement. They added requirements of EDA approval prior to commencing procurement of the project; that the private entity establish a construction account to fully capitalize and fund the project; and that the general contractor, construction manager or design-build team would post performance and payment bonds, rather than the chief financial officer of the public entity.

Tax breaks would apply to nonprofits, and private entities are exempt from certain procurement and contract requirements that apply to public entities, according to the legislation.

The bill was introduced in the Senate in October and then reviewed by the State Government, Wagering, Tourism & Historic Preservation Committee.

Martin J. Milita, Jr., Esq. Senior Director

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Lawmakers in New Jersey and New York Pass Port Authority Transparency Bills

The New Jersey Senate on Thursday unanimously approved legislation that would subject the Port Authority to the open records laws of both New Jersey and New York, just a day after the New York Assembly passed a bill to reform the bi-state agency by making it operate more transparently.

In a news release Thursday, New Jersey’s Senate Democrats said the open records measure, sponsored by Sens. Bob Gordon, D-Bergen, and Loretta Weinberg, D-Bergen, includes technical changes recommended by the governor and is a counterpart to legislation approved by the New York Legislature and signed by Gov. Andrew Cuomo in December.

Under New Jersey bill S-2183, the Port Authority would be required to abide by the Open Public Records Act of New Jersey and the Freedom of Information Law of New York. Although the Port Authority adopted new policies and procedures concerning public access to its records late last year, the public does not have recourse to challenge the agency in court if the requested documents are not provided, because the authority is not subject to either state’s open records law, the release said.

The bill’s sponsors, who last week applauded parts of the New York Assembly bill but said it didn’t go far enough to ensure New Jersey’s voice would be heard on transportation issues, said in a statement Thursday that their bill helps bring some accountability to the Port Authority but more reforms are needed to overhaul the agency and protect state interests.

Approval of the New Jersey bill comes on the heels of the New York Assembly’s passage of the Port Authority of New York and New Jersey Transparency and Accountability Act of 2015, sponsored by Rep. James F. Brennan, D-Brooklyn. That bill, which was endorsed by Cuomo and New Jersey Governor Chris Christie last week, would replace the agency’s executive director and deputy with a new chief executive, prohibit the chairperson and commissioners from simultaneously holding staff positions and rotate the chairmanship every two years between the two states, among other measures.

Additionally, the Port Authority would be required to conduct a needs assessment and public hearings before raising tolls and fares, Assembly Speaker Carl E. Heastie said in a news release Wednesday. Enhanced annual reports, financial audits, and publication of capital plan and advance debt issuance reports would likewise be required.

The reform bills come after recent calls for enhanced transparency at the agency, which has been embroiled in the George Washington Bridge scandal, and has been characterized by Christie and Cuomo as a “dysfunctional organization suffering from a lack of consistent leadership,” according to the Assembly’s release.

By: Martin J. Milita, Jr. Esq., Sr. Director.

Please feel free to contact the author or your other Duane Morris Government Strategies LLC contact to learn more about this article and what it may mean to you.

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NJ High Court Allows Christie Pension Cut

The New Jersey Supreme Court on Tuesday upheld Gov. Chris Christie’s $1.57 billion cut in pension funding under the state’s current budget, finding that a state law at the center of the case couldn’t create the kind of contractual rights that public employee unions claim rendered the cut illegal.

The split decision reverses Judge Mary Jacobson’s ruling in February that the cut violated Chapter 78, a 2011 law that increased employee pension contributions while giving workers a contractual right to statutorily mandated pension contributions from the state.

But the 5-2 opinion handed down by the high court now presents a whole new set of challenges to the politicians in both parties, namely, just how to get more money into New Jersey’s chronically underfunded pension system.

Justice Jaynee LaVecchia said in her 68-page opinion for the court that Lawmakers and Christie himself, who signed Chapter 78 into law, didn’t have the authority to enact a legally binding and long-term financial agreement through the statute, adding that such an agreement would also clash with the constitution’s appropriations clause.

“Chapter 78’s contractual language creates, at best, the equivalent of appropriations-backed debt that is accompanied by a strong legislative expression of intent to provide future funding,” the justice said.

It’s also not the place of the Supreme Court to wade into how pension contributions should be prioritized as part of the state’s annual budget, Justice LaVecchia added. The position of public employee unions would have left courts in the tenuous position of ruling on budgetary decisions each year where pension contributions weren’t made in full, according to the justice.

“The majority didn’t view it’s decision as striking down Chapter 78. Rather, the ruling makes clear that it is subject to appropriation and the annual budget process.

Justice Barry T. Albin sharply disagreed in a dissent joined by Chief Justice Stuart Rabner, arguing that the decision eviscerates a promise that the political branches of state government made to public workers.

“The decision unfairly requires public workers to uphold their end of the law’s bargain — increased weekly deductions from their paychecks to fund their future pensions — while allowing the State to slip from its binding commitment to make commensurate contributions,” Justice Albin said. “Thus, public workers continue to pay into a system on its way to insolvency.”

Justice Albin’s hinged his dissent on the federal contracts clause of the U.S. Constitution. Chapter 78 is a binding contract that the clause prevents the state from breaking, according to the justice.

“Chapter 78 was not an aspirational or moral promise, but a solemn contract, which, once made, is binding on the State and cannot be nullified without offending the Federal Constitution’s Contracts Clause,” he said.

In a statement, Christie said the decision was a victory for taxpayers and “limited, constitutional government that recognizes the proper role of the executive and legislative branches of government.”

“The court’s position is clear, as is mine, it is time to move forward and work together to find a tangible, long-term solution to make our pension system and public employee health benefit costs affordable and sustainable for generations to come,” the governor said. “In light of today’s decision, I urge all interested parties to come back to the table and partner with me to finally solve this problem once and for all.”

Christie last year blamed revenue shortfalls when he announced a $2.4 billion reduction in pension payments under the 2014 and 2015 fiscal year budgets. In June 2014, Judge Jacobson refused to block the reduction for 2014 but didn’t rule on the 2015 contribution until earlier this year.

Reacting to the decision, Democratic leaders of the state Legislature pledged to make a full pension payment as part of the budget they send to Christie for the upcoming fiscal year, though there’s little doubt now that the governor will have the final say. Christie has proposed a $1.3 billion pension contribution for fiscal year 2016, well below the $3 billion contribution that unions have argued is statutorily required.

The  public-worker unions, meanwhile, now have to consider whether they want to wage a lengthy and potentially costly appeal to the U.S. Supreme Court or throw their support behind some other scheme to secure their retirements, like a constitutional amendment requiring more state pension funding.

There are also implications for the pension system itself, which covers the retirements of roughly 773,000 current and retired workers, and for the next state budget, which must be in place by July 1. Christie and legislative leaders remain far apart on the pension-funding issue and many other important fiscal matters.

The case is Christopher Burgos et al. v. State of New Jersey et al. v. Communications Workers of America AFL-CIO et al. v. Chris Christie et al., New Jersey Education Association et al. v. State of New Jersey et al. and Probation Association of New Jersey, Professional Case-Related Unit et al. v. State of New Jersey et al., docket number 75736, in the Supreme Court of New Jersey.